Business versus rising energy costs

From January 2020, frozen energy prices will no longer apply, which means that we will face higher electricity bills in the new year. Although Deputy Prime Minister and Minister of Financial Assets Jacek Sasin has announced that work is already underway on a bill that would provide compensation for the difference in electricity prices, it should be borne in mind that this mechanism is still only at the speculation stage and, moreover, is not expected to be implemented until after 2020. In mid-2019, reports began to emerge that energy prices were to rise by as much as 40%, but such increases were not approved by the President of the Energy Regulatory Office, who is responsible for approving tariffs for the sale of electricity to households (group G).

Although tariff applications from sellers were submitted to the President of the Energy Regulatory Office on 15 November 2019, the tariff proceedings continued until the beginning of January 2020, as three of the four sellers (PGE Obrót, Enea, Energa) were granted an additional two-week period to propose new tariffs with lower prices. In an interview, URE President Rafał Gawin admitted that the tariff applications of these three companies were unacceptable from the point of view of the overriding objectives of the regulation. The URE President stated that PGE, Enea and Energa had not sufficiently justified their applications for energy price increases.

The President of the Energy Regulatory Office (URE) approved the request for a tariff increase for Tauron Dystrybucja / Sprzedaż, thereby setting the maximum increase in the average bill for the G11 group (households) at between 11.4% and 12.9%. At the end of December, the President of the Energy Regulatory Office also approved tariffs for the sale of energy to two other ex officio sellers – Enea and Enerdza Obrót. According to information published by the Energy Regulatory Office, in the case of the former, the increase in electricity prices will be 12.2%, while for the latter – 11.3%. The last approved tariff was that of PGE Obrót, which the President of the Energy Regulatory Office approved only at the beginning of January 2020. Bills for this entity’s customers are expected to increase by an average of 11.6%. The adjusted tariff came into force on 1 March this year. Of course, the increases described above apply to households – customers in tariff groups G, but they should also be considered by businesses, as they contribute to the discussion on prices in other tariff groups.

Currently, energy sold to businesses under newly concluded contracts has increased by 20 to 40% compared to the same period in 2018 (2019 is not a reliable benchmark due to the so-called ‘electricity law’ solutions).

The above argument may certainly make it easier for entrepreneurs to challenge price increases in court proceedings. Such a price change leaves no room for discussion, as the only alternative to an effective price increase is to change the seller, which in turn may result in contractual penalties being imposed on the customer for premature termination of the previous contract. It is also worth noting that virtually all energy buyers under third party access agreements will remain in a relatively unfavourable situation, although the larger the volume of such purchases, the greater the impact of the increase on the entrepreneur’s wallet. Of course, companies in energy-intensive sectors, such as metallurgy and chemicals, will be in the worst situation. In this case, there will be a very unfavourable accumulation of costs for CO2 emission certificates and energy price increases.

Finally, it should be added that distribution tariffs and the tariff of the transmission system operator (Polskie Sieci Elektroenergetyczne) approved by the President of the Energy Regulatory Office in mid-December 2019 have also increased. This will result in an increase in bills of between PLN 0.60 and PLN 1.80.