Poland’s energy regulator has announced that electricity prices for households will increase 37% on average in the new year, citing growing wholesale costs and rising European prices of emissions. That means that power bills – which include electricity price and distribution fees – will jump 24%.
The state agency has also approved increases in gas prices, which it estimates will increase the average bill by 54%.
Under the current system, electricity sellers submit applications to the Energy Regulatory Office (URE) with proposals for new tariffs for households, which officials must then approve. Prices for wholesale of electricity are decided through market mechanisms.
On Friday, URE announced that electricity prices from the country’s largest utility providers – Enea, Energa, PGE and Tauron – will increase by 37% at the start of January, reports Business Insider Polska. The four state-owned companies provide electricity for 13 million Polish households.
Power bills for households are a composite of electricity price and distribution fees. As a result, from January households will on average pay 24% higher monthly bills, or around 21 zloty (roughly €4.5) more, according to URE’s estimates.
Average prices of electricity on the Polish Power Exchange (TGE) based on futures contracts for 2022. Source: URE
However, the price hike is still smaller than the increase in wholesale costs paid by companies. URE noted that the wholesale price for future deliveries of electricity stood at around 242 zloty/MWh in November 2020, and nearly doubled to 470 zloty/MWh in one year.
A second factor cited by URE has been a steady increase in the price of carbon emissions under the EU’s Emissions Trading Scheme, which has ramped up the price of coal-fired energy which accounts for around 70% of Poland’s generation.
URE notes that the price of allowances has increased from 100 zloty per tonne of carbon dioxide in May 2019 to 310 zloty per tonne in November this year. Coal has also become more expensive globally, as its price soared to an all-time high in October.
In the past year, energy providers have complained about the growing gap between the low URE-regulated prices for households and the rising ones available to business customers throughout the year. Negotiations between state energy companies and URE in 2020 yielded a price increase of between 9 and 10%, or 8 zloty per month.
Wojciech Dąbrowski, CEO of the largest utilities provider PGE has called for an end to controls on electricity prices to help utilities bear the additional costs linked to the European Union’s climate targets.
Also on Friday, URE approved a new gas tariff for state-owned giant PGNiG. The regulator estimates that the average household bill will rise 54% as a result.
The regulator noted that the price hike would have been higher had it not been for new regulations allowing for the increase to be spread over the next three years, reports Business Insider Polska.
In response to rising energy prices – which have been driving Poland’s highest inflation in two decades – the government has pledged to introduce tax cuts and special allowances to help households deal with the costs.
Main image credit: Torange.biz (under CC-BY 4.0)
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.
