Polish government broke promise to keep electricity prices down, reports state auditor

The Supreme Audit Office (NIK) has criticised the government for breaking its promises to keep electricity prices low for households. It has found that costs have risen by almost 20% since the start of 2020, and last year grew faster than in any other European Union country.

Poland relies on coal for around 70% of its electricity generation. However, due to the inefficient domestic production and EU environmental policies, this has led to a steady rise in the price of electricity in recent years.

In response, Poland’s Prime Minister Mateusz Morawiecki, as well as other senior politicians, have made repeated pledges that consumers would be protected from growing costs.

However, a new report by NIK – a state body responsible for auditing public spending – claims that the government has not done enough to keep its word.

“The minister responsible for energy did not prevent a surge in electricity prices,” write the auditors. They find that a law adopted in 2018 to prevent electricity prices hikes in the coming year was “prepared hurriedly” and amended four times (twice to avoid breaching EU law).

In that year, the government introduced a reduction of excise duty on electricity (from 20 to 5 zloty per MWh), a reduction of the transition fee, as well as a system to freeze electricity prices from the start of 2018 until the end of 2019, with compensations to distributors.

NIK notes that none of those companies participated in work on the bill, which it takes as evidence of poor preparation of the drafts as well as a breach of the principle of stability and certainty of legal regulations for the concerned businesses.

Moreover, last December the government also abandoned a promise that it made at the start of the year to fully compensate every household for any rise in electricity prices in 2020.

The pledge had been made by the minister for state assets, Jacek Sasin, who said that the government would refund the increase in electricity prices in 2020 to individual customers. He blamed EU climate policies for “imposing extra costs” on Poland.

The difference was meant to be paid out of state coffers in 2021 when accounting for the previous year had closed, with an estimated total cost of around 3 billion zloty (€660 million). However, in December the government backed out of the plan, saying that, instead, it would focus on helping only “the most vulnerable consumers”.

In the second half of last year, while electricity prices on average dropped in the EU, they rose 14.1% in Poland, most than in any other member states, notes Business Insider Polska.

NIK’s new report is the latest in a series of disputes between the ruling Law and Justice (PiS) government and the institution’s president, Marian Banaś, who is himself a former minister from the current ruling coalition.

In May, NIK notified prosecutors of potential crimes committed by four members of the government, including the prime minister, in connection with last year’s abandoned presidential elections.

In November, NIK issued a report revealing the limited progress the government had made in its flagship electromobility programme, highlighting poor implementation and wasted spending on a number of programmes.

Banaś has himself been investigated by the Central Anticorruption Bureau (CBA) over his personal assets, including a property that was reportedly used as a brothel. He has also been investigated in connection with his subordinates in a previous role at the finance ministry, who have been charged with VAT fraud.

Main image credit: OtoZapletal/Pixabay (under Pixabay License)

Maria Wilczek

Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.