Changes to energy legislation in Poland

On 10 December 2021 there entered into force the amendment of the Polish law on energy. The changes introduced by this amendment, which relate to the principles of tariff calculation, aim to avoid the risk of a single cumulative increase in gas prices for households in 2022, while ensuring that gas sellers can cover their costs of purchasing gas for their customers in the long term. As a result, household gas prices may fall at some point, but revenue will be recovered in subsequent years by applying prices that take account of such latent costs. This means that gas prices in these years will be higher than the current cost of buying this fuel, even if wholesale gas prices fall again.

New tariff system

The new mechanism incorporated to the tariff system is a one-of-a-kind solution deriving from the existing state of the national and European gas markets. It assures that gas sellers can carry forward the present rise in raw material purchase prices over the next few years rather than simply factoring them into the tariff as it is now calculated. Until 30 June 2022, gas sellers may submit to the President of the Polish Office for Energy Regulation a gas sales tariff for households calculated only on the basis of a proportion of the justified costs, i.e. a proportion of the gas procurement costs. On the other hand, the seller will be able to cover the part of the costs not included in the current tariff for the next three years, i.e. until the end of 2025, either from the tariffs applicable from the beginning of 2023, or from the prices and charges set on competitive markets.

Increases in gas prices. Compensation payments to undertakings

According to the draft law’s explanatory memorandum, the method will allow energy utilities to collect the actual expenses spent, the projections of which include major risks in the event of a dynamic price increase, at a later stage. The possibility of adding such costs to household prices over a longer period of time, i.e. 36 months from 1 January 2023, avoids the risk of a cumulative and one-off increase for 2022.

An electricity company carrying on a commercial activity in the field of trading gaseous fuels may submit to the President of the Polish Office for Energy Regulation for approval by 30 June 2022 a tariff calculated on the basis of a portion of the eligible costs of purchasing gaseous fuels during the period of the tariff.

The sellers estimate these charges in a specific method, according to the amendment, and they are considered fair costs. From 2023, the retailers have three years to include them in the next tariffs.

Increase in tariffs for gas sellers

The Polish energy law provides that the increase in the next tariff determined on the basis of the proposed scheme may not exceed 25% of the average price that would have been established in the absence of such adjustment during a 12-month period following the period of application of the tariff for which an adjustment for rising gas purchase prices is made.