WARSAW – Poland's government proposed draft regulations on Tuesday that would allow big electricity consumers to receive compensation for surging power bills.
Wholesale power prices in Poland, which generates most of its energy from coal, jumped in the autumn last year following the rising costs of carbon emissions and coal prices.
To prevent a surge in prices for households and bigger consumers ahead of elections in the European Union and at home, the ruling Law and Justice (PiS) party passed legislation in December aimed at freezing power prices at mid-2018 levels for all Poles.
While the cap worked for households, which represent a regulated segment of the market, it was not effective for companies and local authorities that normally buy electricity based on market prices.
The cap for big clients did not work because the energy ministry did not issue supplementary regulations to clarify technical issues related to the prices at which companies buy electricity.
As a result the Polish parliament removed the power price cap for big consumers last week and on Tuesday the government proposed legislation on future compensation.
"The aim of our legislation is to reduce costs for energy intensive companies. Thanks to this, we want to reduce the risk of production moving out. We want Poland to be an attractive place for industrial investment," Entrepreneurship and Technology Minister Jadwiga Emilewicz told a press conference.
The minister said around 300 companies will be entitled to compensation, provided they submit appropriate documents to the energy regulator by end of March every year.
Poland will spend around 900-million zlotys ($237-million) a year on the compensation starting from 2020, and the money will come from Poland's sale of spot EU carbon permits, which Emilewicz said amounted at 5 billion zlotys in 2018 and are expected to double this year.
The draft regulations now have to be discussed and adopted in Parliament and signed by the president.
ArcelorMittal Poland said in May it would temporarily halt its furnace and steel plant in Krakow due to rising power prices.
Poland's biggest electricity consumers includes copper producer KGHM and the national railways.