2019-01-10

Xiaomist Inc.

We will not stop the increase in electricity prices. Government subsidies will be ineffective in some cases

Subsidies of electricity prices may prove ineffective in some cases. The rises waiting around the corner can not be blocked forever

For now, the European Commission is not threatening Poland with a finger for the law on subsidizing electricity prices. Let us remind you that there is a real threat that such support may be considered by the European Commission as illegal state aid. Then the government's idea that the electricity bills would be lower, however, slept.

Under current electricity market legislation, Member States have the option of imposing public service obligations that must meet certain criteria in order to be legal. The European Commission is in contact with the Polish authorities to get a full picture of the effects of the new law and assess it in terms of these criteria - PAP Anna-Kaisa Itkonen, spokesperson for the European Commission , told PAP.

It is difficult to judge today what sentence the EC will have about the act. We already know that the regulations adopted at the end of last year have defects accentuated unsuccessfully by the Association of Polish Cities.

What is going on? The fact that regulations on subsidizing electricity prices require returning to the dates from before 30 June 2018. Thus, the prices "not higher than prices and gross rates of taxation applied on June 30, 2018 should apply, taking into account the reduction of the rate of excise tax on electricity ". Everything is clear, but what if the given entity can not refer to earlier orders because they were not there? Or the purchasing group on the occasion of the last tender was a completely different thread now. Then what?

Price subsidies may not be effective for some?

In this situation, mainly local governments will be. Often, when tenders for energy are organized, they are grouped to negotiate smaller unit rates. These buying groups can change even every tender. And then the transfer of energy prices from the previous period becomes complicated. In addition, there is no support in the regulations.

Another example, when the law on subsidizing electricity prices may turn out to be ineffective, it is a situation in which a given entity conducted a previous tender for the purchase of energy quite a long time ago. At that time, regardless of for inflation differences, is it also going back to the old rates - according to the law?

The Upper Silesia-Zagłębie Metropolis has this problem - the entity established by the Council of Ministers in July 2017. Officially, this union of municipalities began to operate from January 2018. The energy was purchased by a predecessor - the Upper Silesian Metropolitan Union, which had a completely different structure than the present Metropolis. Another thing is that this tender was decided in 2016.

Therefore, today with a candle, look for the Metropolis who will ensure that subsidizing electricity prices will work here.

Analyzes are under way, of course we would like to take advantage of the possibilities offered by the law. We are waiting for implementing regulations to the act - says Katarzyna Mucha-Kuś, director of investment from the Górnośląsko-Zagłębiowa Metropolis, for the Wysokienapiecie.pl portal .

The regulation is intended to be an antidote to these problems.

Local government officials are waiting nervously for the regulation. Apparently there is to be a record saying that when a given entity after June 30, last year. for the first time it will enter into a contract with a new electricity supplier, it should present an earlier contract with another supplier. And they are to apply those rates.

Observers of the energy market submit such a mechanism to doubt. They wonder what arguments will be used in relation to energy sellers, so that they will respect the previous rates negotiated by someone else. Another issue to be resolved: is it enough for the implementation regulation alone or will it be necessary to amend the entire act.

Without the appropriate regulatory initiative, the risk that subsidizing electricity prices, however, will not apply to all becomes quite real. Let's look at the already mentioned Metropolis, which for the time being has 41 cities (at least three municipalities have already expressed their desire to join). Former entity: Upper Silesian Metropolitan Union was much smaller. It consisted of 14 municipalities.

In the tender organized in 2016 (order for the years 2017-2018), the Metropolitan Union negotiated a price per 1 MWh at a level of approximately PLN 255. In total, the then contract concerned over 900 GWh. Now, according to the tender from November 2018, the volume is smaller - it concerns 468 GWh. For definitely the largest shopping group in Poland: 289 entities, among which we will find individual cities included in the Metropolis, but also the Silesian Stadium, or the Song and Dance Ensemble "Śląsk". The most advantageous offer, worth PLN 192.4 million, was submitted by Tauron. This gives the price per 1 MWh within 410 PLN. In comparison with the unit price from 2016, it is an increase of over 60%. And for now such arrangements are in force.

Electricity suppliers have until the end of March.

The Act on subsidizing electricity prices clearly states that energy suppliers have time to correct invoices sent earlier by the end of March. With the date from January 1, 2019. They will be waiting for this with Warsaw Innogy Polska SA clients who from December 21, 2018 (ie before making regulatory changes) received new energy bills. With new, higher tariffs, set "due to a very large increase in energy prices on the wholesale market".

In the case of at least some local governments, the correction of an earlier invoice may not be sufficient. Perhaps the doubts will be dispelled by the implementing regulation. For now, you have to wait.



We will not stop the increase in electricity prices. Government subsidies will be ineffective in some cases

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