I. Current status of legislative work
The act on extraordinary measures to reduce electricity price levels and support certain end-users in 2023 was adopted by Parliament and has entered into force on 4 November 2022. The Act establishes rules to “contribute to the Fund” to finance the “price freeze” for households, SMEs, and selected public-social sector end-users in 2023. The Act aims to implement Article 6 of Council Regulation 2022/1854 concerning the mandatory cap on market revenues and the distribution of excess revenues to electricity end-users.
II. What issues does the Act address?
The Act introduced the maximal electricity prices of PLN 693/MWh for households and PLN 785/MWh for micro businesses, SMEs, and selected public-social sector end-users.
According to the Act, companies that are engaged in electricity generation or trading and are obliged to apply maximum prices will be entitled to compensation. To finance the compensation, the Act imposes an obligation on energy companies engaged in electricity generation or trading to “contribute to the Price Difference Payment Fund” for the period from 1 December 2022 to 31 December 2023.
Regardless of the above, the Act provides a solution that allows, in the event of shortages in the market of ammonia water necessary for the proper operation of equipment to reduce nitrogen oxide emissions into the air, the temporary admission to operation of generating units, with a capacity of 50 MW or more, fuelled by hard coal.
III. Who will be obligated “to contribute to the Fund”?
Under the Act’s current wording, the obligation to contribute to the Fund will apply to:
- energy companies engaged in power trading, and
- generators of power in plants using:
- wind energy,
- solar energy,
- geothermal energy,
- hydropower,
- biogas, agricultural biogas, biomass, and bioliquids (except biomethane),
- waste,
- brown coal,
- hard coal,
- liquid fuels, and
- gaseous fuels.
Generators are exempted from the obligation to contribute when generating electricity in a generating unit:
- with a capacity of not more than 1 MW,
- which is a demonstration project,
- which is a renewable energy source installation for which the generator benefits from the following support systems: (i) a feed-in tariff or feed-in premium, regulated under Articles 70a-70f of the Renewable Energy Sources Act, (ii) the auction system, or (iii) settlements carried out between the energy cooperative and the obligated seller under Article 38c(3) of the Renewable Energy Sources Act.
However, the exemption in such case is limited only to electricity sold under the terms of these support systems (the remaining electricity generated and sold is the basis for calculating the contributions).
