– In order to avoid the risk of energy shortage, it is necessary to introduce limits to its consumption, purchased at the prices indicated in the deed. I’d suggest 90 percent. last year’s wear. Whoever needs more, should pay the market price – says Kamil Sobolewski, chief economist at Employers of the Republic of Poland.
- – Unfortunately, the law on maximum electricity prices only slightly motivates domestic and vulnerable consumers, SMEs and local governments to save – says Kamil Sobolewski, chief economist at Employers of Poland.
- – Setting maximum prices for the sale of electricity without significant limits on its consumption can lead to an energy shortage. We are entering a system that ignores the possibilities of producing electricity, he believes.
- “It is a mistake that in times when energy is scarce, there is no strong incentive to save energy,” he says.
- Last week, the Sejm approved the law introducing maximum electricity prices for households, local administrations, micro, small and medium-sized enterprises. Now the Senate is dealing with it.
What does the law on emergency measures provide to limit electricity prices and support some consumers in 2023, or the so-called law on maximum electricity prices?
– The law on maximum electricity prices assumes that the maximum net selling price of electricity for households will be 693 PLN / MWh for energy consumption above the limits specified in a separate law, and for the electricity sector. SMEs, local authorities and so-called sensitive customers – net 785 PLN / MWh. The VAT rate will also affect the price.
At first glance, this law helps energy consumers, because it limits the increase in electricity prices for the next year to the level of 700-800 PLN / MWh net, in a situation where market prices have already exceeded 2,000 PLN / MWh. It is therefore a picture of the price risk for most economic entities and households in Poland.
Prices at the level of 2,000 PLN / MWh did not come for no reason, but only due to the lack of gas availability. In view of the risk of coal and gas availability, it may turn out that producing the last few units of electricity to meet demand in the winter will again cost significantly more than PLN 800, or even PLN 2,000 / MWh …
Unfortunately, the act gives only few incentives to save families, vulnerable consumers, SMEs and local governments. This means that the costs of any shortages and very high electricity prices will have to be borne entirely by other entities, mainly large companies.
It will be painful for large companies, but more importantly it will cause them to react: reduce production, which means there will be less merchandise on the shelves, and some small companies will face supply problems.
Limiting production in large companies will also reduce orders from small companies, and therefore the entire economy may be forced to reduce employment. Then this act may not be a relief, but a stone in the neck for families and the SME sector …
“We are entering a system that ignores the possibilities of producing electricity”
Why shouldn’t there be energy?
– If we set the maximum price for anything and electricity has been set, there may be shortages.
The price affects the behavior of both parties, i.e. the supplier and the recipient. If we tell consumers that they can buy electricity at three times lower prices than market prices and sellers that they have to sell the same amount, consumption will be greater than it would have been without price intervention and production will be less than it would have been without. ‘intervention.
What can happen with electricity is well illustrated by the situation on the coal market, which should have been PLN 966 per tonne. There was a law – and everything was correct on paper, but there was no coal at this price.
The same can be true for electricity, that is, with maximum prices, demand can increase, but producers will not necessarily want to sell electricity at limited prices that will be determined by the government.
Setting maximum prices for the sale of electricity without significant limits on its consumption can lead to an energy shortage. We are entering a system that ignores the possibilities of producing electricity.
The recipients indicated in the act can use unlimited quantities of energy purchased at maximum prices, which means that its possible shortage and the need to deal with it will fall on the producers and major recipients of energy.
Where do you think the energy shortage might manifest itself – in which segment of the electricity generation market?
– Last year around 170 TWh of electricity were produced in Poland, of which 80%. from coal, 12 per cent from RES and 8% from gas.
According to recent government reports, the coal used by the energy sector comes from Polish mines. This is not a common opinion and coal production in Poland is declining. The energy sector may be dependent to some extent on imported coal, which would have an impact on production possibilities. However, maintaining gas production remains the most problematic. The availability of this fuel is not obvious.
“We need guarantees of availability of electricity for the most strategic consumers”
– I believe that if we reduced electricity consumption by 20%, energy could actually be supplied at prices between 785 PLN / MWh, because more expensive power plants, such as gas, would not have a significant impact on prices. The only risk would be a possible significant increase in the prices of the emission certificates.
And without significantly reducing energy consumption, we make electricity prices dependent on prices, the availability of gas and, to some extent, also on the prices of imported coal.
Guarantees of electricity availability are needed for the most strategic consumers, including in the health sector. The promise of universal availability, however, does not guarantee uninterrupted power. Health protection should be fully guaranteed at low electricity prices; the condition should not be a contract with the National Health Fund.
It has happened more than once that the laws have been changed. What do you think would avoid the risk you are presenting, namely the lack of energy?
– To avoid this it is necessary to introduce limits on the consumption of energy purchased at the prices indicated in the deed. I would suggest a 90 percent level. last year’s wear. Those who consume the most should pay the market price, not the legal preferential price.
First: in this way the risk of scarcity is marginalized; everyone at home, the local government or business will introduce savings. Secondly: we will avoid the risk of arbitration, a few months ago I heard of a small promoter who used electricity from the resident sockets of the previous phase of the investment.
“The law in its original form would overthrow commercial companies”
What was the situation of electricity sellers and commercial companies?
– The deed in its original form would overthrow the commercial companies, because they would have had to receive compensation under incorrectly established rules.
After the first reading, the government listened to the industry’s voice on the issue. The fee for trading companies related to prices in 2023 applies to all contracts concluded after February 23, 2022, regardless of the date, and is calculated on the basis of the actual purchase price of energy by the trading company on the market forward, and not the spot price in 2023.
Producers must donate 100 percent. the excess of revenues from the sale of energy over the revenues for the price of energy to be determined by the government. What is your opinion on the planned setting of this limit on electricity prices / revenues for energy producers?
– Would energy production have continued from the professional electricity sector, while forcing the selling price below costs? It would be an economic decision against the company’s interests, but it can be taken under pressure …
Then it will hit the producers until their financial capacity is exhausted. And these opportunities can be overestimated, because the costs and demand for working capital have also risen for energy producers, so it’s impossible to pay all recent profits.
This may result in a certain percentage of the energy consumed by non-preferential consumers being available at very high prices or not being delivered.
You can limit deliveries, but it should be a well thought-out plan, not the effect of a leaking security system resulting in an accident, chaos, especially if this chaos were to include, for example, health protection.
“It is a mistake that in times when energy is scarce, there is no strong incentive to save energy.”
In summary: what – in your opinion – is happening, what will be the general effects of the so-called law on maximum electricity prices?
– We are divided in the demands of various interest groups – energy consumers, commercial companies, electricity producers … This is a cacophony of sound that must be heard, but it must not obscure the underlying problem of the act on the maximum prices of the ‘electricity.
Its main problem is that the prices guaranteed by the state to consumers must be binding without a significant limit on energy consumption, which could cause a shortage.
It is questionable whether the limit on energy consumption at preferential prices should be 85% for households, local authorities and businesses. or maybe 105 percent of last year’s consumption, but above all it should be paid at market prices … It is a mistake that in times when energy is scarce, there is no incentive to save energy.
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