Electricity market

The demand for electricity is related to the economic growth in the country. According to the preliminary estimates of the Central Statistical Office (GUS) in 2019 the GDP grew by about 4.0% yoy (against the growth of 5.1% yoy in 2018).

According to the data of National Power System (NPS), the national demand for electricity in Poland in 2019 dropped to the level of 169.4 TWh against 170.9 TWh in 2018, which is a drop by 0.9% yoy (in 2018 the growth amounted to 1.7% yoy).

The weighted average BASE price on the day-ahead market reached in 2019 the level of 229.62 PLN/MWh, which is up by 4.91 PLN/MWh against 2018 (+2.19% yoy). The corresponding price for December amounted to 184.80 PLN/MWh, which means a monthly drop by 33.10 PLN/MWh and the lowest monthly value in 2019 (-15.2% yoy). (source: TGE)

On the derivative market in turn the weighted average price of a one-year futures contract BASE_Y-20 amounted in the whole 2019 to 266.40 PLN/MWh, which is up by 24.00 PLN/MWh against the price of BASE_Y-19 in 2018 (+9.9% yoy). In December the corresponding price of BASE_Y-20 dropped compared to November by 13.76 PLN/MWh, to the lowest in the whole of 2019 value of 242.14 PLN/MWh (-5,4% yoy). (source: TGE)

The volume of electricity trading on the PPE in 2019 amounted to 228.9 TWh, which is up by 1.3% against 2018, and therefore the best result in the history of this commodity trading on the PPE. Also the volumes on the DAM and IDM were record ones, and on the whole spot market the volume grew by 22.4%, to the level of 33,9 TWh. The volume on the Day-Ahead Market (DAM) amounted to 33.7 TWh (up by 22.1%), and on the Intra Day Market (IDM) 174.5 TWh (up by 125.3%). On the Commodity Derivatives Market (CDM) the volume of trade dropped by 1.7%, to the level of 195.0 TWh.

According to the valid principle of Third-Party Access (TPA) to the network, all final customers have the right to freely choose the seller of electricity and natural gas. Final customers using the network of a local supplier can individually choose the seller of electricity or gas that will offer most attractive conditions of sale. The President of the Energy Regulatory Office conducts a cyclical assessment of the factual use of the right to choose the seller.

In the past year one could observe a decrease in the number of customers who changed the seller in the tariff groups A, B and C, and also in G tariff group (households). Data presented by the distribution system operators demonstrate that in tariff groups A, B and C in 2019 a change of seller was made by 8.9 thousand of customers compared to 12.8 thousand in 2018 (down by 30.1 yoy), but in the tariff group G in 2019 a change of the seller was made by 52.6 thousand of customers compared to 57.7 thousand of customers in 2018 (down by 8.9% yoy). At the end of 2019 the number of TPA customers from tariff groups A, B and C amounted in total to 210 thousand, but in tariff group G (households) in total 657 thousand since the moment the possibility of changing the seller had been made available (incremental data) (source: URE).

An important element of the market environment in the electricity segment is adopted on 28th December 2018 law on amending the law on excise tax and several other laws, that is so called law on electricity, amended on 21st February 2019 and 13th June 2019 apart from a decrease in excise duty for electricity, decrease of transition charge (distribution) foresees obliging energy enterprises that conduct activity in the scope of electricity trading to apply in 2019 prices and rates of payments for electricity not higher than applied on 30th June 2018.

The amendment of 13th June 2019 significantly limited the scope of the law’s application – the mechanism of maintaining/reducing the prices and rates of payments for electricity in settlements with final customers for the 2nd half of 2019 will have a limited scope and will cover exclusively final customers: (i) from a widely understood so called G tariff Group (customers from this group do not have to take any further steps to utilise the mechanism of maintaining/reducing the prices and rates of payments), (ii) being micro-entrepreneurs or small enterprises in terms of the law – The Law of Entrepreneurs, (iii) being hospitals, (iv) being units of public finances sector, (v) being other than specified in items (ii) – (v) public organisational units without legal personality. The customers from the categories described in items (ii) – (v) in order to utilise the mechanism of maintaining/reducing the prices and rates of payments have to submit to the electricity supplier a declaration of their status, i.e. declare that they belong to one of the abovementioned categories.

Energy enterprises were obliged to adjust contracts with final customers and introduce the abovementioned prices and rates within 30 days as of the day of entry into force of the implementing provisions, effective as of 01.01.2019. The implementing provisions will enter into force on 14.08.2019. Energy enterprises will be able to claim compensation for lost revenues from Fundusz Wypłaty Różnic Cenowych (Price Difference Payment Fund), created within Zarządca Rozliczeń S.A., in the form of amounts to cover the difference between the average weighted price of electricity on the wholesale market, calculated according to the formula specified in the regulation, and the volume of revenues resulting from applying the prices and rates as of 30.06.2018.

The Law on Electricity refers exclusively to settlements with final customers in 2019. As of the day of the present statements preparation a Project of the law on compensations due to increase of electricity prices in 2020 was presented in the Public Information Bulletin (BIP) of the Council of Ministers and the Prime Minister’s Office. The draft of the law introduces a system of compensations only for final customers being households and the Group’s Companies do not conduct sales to them.