What are the increases in electricity and gas prices? The head of ERO is in charge

Looking at what is happening in the Polish energy exchange, we must tell ourselves directly that we will not avoid high energy prices. Certainly, these increases will be greater than last year and greater than the rate of inflation – confirms Rafai Gawain, head of the Office of Energy Regulatory in an interview with Business Insider Polska. There is also another gas price increase waiting for us. – The head of PGNiG rightly expects further increases – Gawain admits.

Energy companies are currently preparing applications to the ERO for new tariffs for the sale and distribution of electricity for 2022.
It is difficult to expect energy companies not to raise prices in the current market environment. However, the formation of household tariffs is a joint responsibility of the regulator and energy companies – stresses the head of the Energy Regulatory Bureau
The European Union has forced Poland to completely liberalize energy prices. According to the regulator, it is too early to do so, because Poland must meet several conditions
Replacing coal-fired power plants with less readily available units, such as wind farms or photovoltaics, could make us highly dependent on energy imports in the future.
More such information can be found on the home page of Onet.pl

Barbara Oksińska, Business Insider Polska: Energy prices in the wholesale market are breaking records. Does this mean we can also expect record increases in our electricity bills?

Rafa Gawain, President of ERO: Given what is happening in the Polish Energy Exchange, we have to say clearly that we cannot avoid increases. The recent price increases in the wholesale market are primarily a result of EU climate policy and more costly CO2 emissions allowances.

An additional growth factor is the rapid growth in gas prices, which has a direct impact on electricity prices. It is hard to expect that energy companies will not raise prices in such a market environment. However, it must be remembered that the formation of household tariffs is a joint responsibility of the regulator and energy companies. First, the companies calculate the costs, and then the regulator assesses whether these costs are justified and whether they can be included in the tariff.

So how high can we expect prices to go up?

Let’s wait for tariff applications for energy companies. Let us also remember that a rationally functioning enterprise does not buy all the necessary amount of electricity or gas for its customers at the same time and at the same price. This process is carried out in stages over time. Therefore, today it is difficult to point to a specific reference point that shows us what is increasing energy prices We can expect it in 2022 Certainly, these will be higher than they were a year ago and higher than the rate of inflation.

Let us remind you that in 2021 electricity prices alone rose by less than 20%, increasing your entire electricity bill by about 10%. The bill also clarifies a number of other fees, including power distribution fees. Exactly – are prices expected to rise here too?

When it comes to power distribution tariffs, we’ve been in talks with companies for some time. Today it is difficult to determine whether prices will also rise in this area, because we have the so-called regulatory calculation mechanism. Thanks to him, if there is a correction in certain cost categories while the current tariff is in effect, this correction will increase or decrease the regulated revenue of the company in the next year. On the other hand, if I were to answer Which could become more expensive next year – energy distribution or energy trading, it will almost certainly be traded.

In September, it agreed to increase gas prices for homes by 7.4%. This is the third increase this year. Meanwhile, the head of PGNiG announced that another demand for a gas price increase was inevitable. correct?

The reason for the additional changes in the PGNiG OD tariff is the reason that has been going on since the beginning of the year Gas price increase On the Polish Energy Exchange, which is the main source of gaseous fuels by this entrepreneur.

We all note what is happening in the domestic and European gas markets, and it is currently one of the main topics of public discussion, as well as in the European Forum. Therefore, the head of PGNiG rightly expects further increases. We will see the details when the entrepreneur’s request for approval of the 2022 tariff is received by the ERO.

Poland ready for the complete liberalization of electricity prices?

I think a large part of that market has already been deregulated. Nearly 40 per cent. Energy consumers no longer benefit from rates approved by the regulator, but from market offerings, which are increasingly appearing in the display of power sellers.

In such a market offer, entrepreneurs offer consumers not only the electricity itself, but also a number of other services that may be attractive to the customers. On the other hand, the tariff rate applies to the basic and simpler offer. I compare it to a car without metallic paint, without power steering and many other amenities. Fewer and fewer individual customers are using such a basic tariff. I suspect In this area, much remains to be done on the part of energy companies, which must better meet consumer expectations and make their offerings more attractive. If they make the right effort, I think the market will gradually free itself.

When we reach a large enough number of beneficiaries using market offerings, we can then start a discussion about the administrative liberalization of energy prices.

EU regulations directly state the need to liberalize prices. However, without the regulator, the energy companies would have no brakes on raising prices.

EU directives impose such an obligation on member states, but it is not an absolute requirement and it must be remembered that it must be accompanied by a number of important conditions that must be met. The key is to protect consumers who are at risk of energy poverty, that is, the poorest.

Currently in the foreground Social protection for this group of beneficiaries The Ministry of Climate and Environment is working. I think this work is going in the right direction and I expect that support will be provided. This is a prerequisite for us to be able to talk about full energy price liberalization at all.

The Polish energy sector will change, we have more and more renewable energy sources, including consumer ones. In the meantime, it turns out that national power grids have already reached the limit of green energy integration. Do you think that the planned network investments by energy companies are sufficient?

Network operators submit their two- or three-year investment plans to the ERO, while the situation in the energy market is changing very rapidly. I think the plans presented to us recently are quite old. It’s not about the size of the expenses, but mainly about the direction of the investments. The development of renewable energy sources, that is, unstable energy sources, requires the use of new technological solutions. Here it is not enough to expand distribution networks alone. Investment in energy storage appears to be necessary, and we don’t see that in the network operators’ plans yet.

At the same time, operators are talking more and more about network stability problems, especially in terms of voltage. Energy storage would be a good answer to these problems. Next year will be a good moment for investment decisions, as companies will present their plans for the next two or three years to the head of the Energy Regulatory Office. However, this perspective is still very short, which is why I decided to create a team that would analyze the necessary investment trends to be made over the course of the decade.

The composition of the team is very broad – apart from the ERO, it also includes, among other things, the distribution companies, Polskie Sieci Elektroenergetyczne, but also the ministries responsible for specific areas related to energy and market experts. The first meeting took place at the beginning of October, and I hope that the business will gain momentum and be completed by June 2022, so that the solutions developed will be reflected in decisions regarding the financing of investments in the sector for 2023.

What are your expectations from this team?

Our main objective is to learn about the potential of the sector related to energy conversion and the needs arising from the country’s energy policy, as well as to maximize the use of EU funds for investments in grid infrastructure. I would like these meetings to result in the signing of a sectoral agreement that guarantees stability and predictability for energy companies From the activities carried out and comfort in making long-term investment decisions.

If we are talking about RES . development, then we must also take it into account in network investments. The development of smart meters, the digitization of the network, the security of energy supplies and the quality of these supplies are equally important.

We’ve been hearing about smart electricity metering for years. The new goal is to install at least 80 percent modern meters. Customers by 2028 Will that be possible?

The schedule was announced after a long work, so I suppose it’s realistic. You definitely need to design at work, not put off investments. The plan also includes some milestones that will show us the achievement of in the coming years, where we are and how far we still have to reach the goal.

The stability of Poland’s energy supply depends mainly on the operation of coal-fired units, which will lose state support after 2025. Do you fear the stability of the electricity supply after that date?

We all ask ourselves this question: What will happen after 2025? At the same time, we all put a lot of effort into preparing the Polish system for this transformation and ensuring the proper energy balance. I think that during the transition period it will be necessary to use gas energy on a larger scale, because we will have to wait longer for nuclear energy.

However, corn in the end is a good trend and a proven technique. I have always believed that long-term strategies should be based on what we know and what can be predicted. But the atom is a long-term perspective. In the meantime, another technology must emerge, and perhaps the greatest potential lies in gas power. And this despite the fact that large-scale financial support cannot be relied upon.

Yes, there is a risk that one day gas units will become unprofitable. but As we’ve found a way to support coal-fired power plants, we can also find a way to enable gas-fired units to run longer.

However, the ERO report notes that the energy balance of the energy system will shrink significantly over the next 13 years. This sounds like a warning of a power outage.

In the report we showed a certain trend and indicated that we are replacing stable units, such as coal-fired power plants, with units with much lower availability, such as wind farms or photovoltaics. Unfortunately, in the case of RES, the power utilization factors are very low and therefore this balance appears to be disturbing.

However, this is not a concern Will the electricity run out? But it is more about how dependent we will be on energy imports in the future. If Libra does not close, we will expose ourselves to market risks, because not only Poland, but also neighboring countries, may need more energy simultaneously. However, I will not paint disastrous visions hereBecause I listen to energy company announcements and it seems that investments in gas power, for example, can help ensure a proper energy balance.

Echo Richards

Echo Richards embodies a personality that is a delightful contradiction: a humble musicaholic who never brags about her expansive knowledge of both classic and contemporary tunes. Infuriatingly modest, one would never know from a mere conversation how deeply entrenched she is in the world of music. This passion seamlessly translates into her problem-solving skills, with Echo often drawing inspiration from melodies and rhythms. A voracious reader, she dives deep into literature, using stories to influence her own hardcore writing. Her spirited advocacy for alcohol isn’t about mere indulgence, but about celebrating life’s poignant moments.

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Barbara Oksińska, Business Insider Polska: Energy prices in the wholesale market are breaking records. Does this mean we can also expect record increases in our electricity bills?

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What are the increases in electricity and gas prices? The head of ERO is in charge

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Echo Richards

Barbara Oksińska, Business Insider Polska: Energy prices in the wholesale market are breaking records. Does this mean we can also expect record increases in our electricity bills?

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