On Thursday, the Sejm passed an act abolishing the exchange obligation, i.e. the obligation to sell electricity through the exchange. The bill will now go to the Senate. The idea is criticized by experts who remind that the government of Law and Justice introduced such an obligation for the same reason – to make electricity cheaper.
It is about the government act amending the act – Energy Law and the act on renewable energy sources. 264 deputies voted for the lifting of the obligation, 34 were against, 134 abstained.
The act abolishes the obligation to sell electricity through the stock market. It also sets a penalty for market manipulation – it will be a fine of up to 5,000 daily rates, from one to 10 years in prison, or both. There are identical penalties for using inside information to trade in energy products on the wholesale market. A fine of up to 2,500 daily rates and 3 months to 5 years in prison are to be punished for disclosing inside information or recommending the purchase or sale of products based on it.
In the justification of the bill, the government indicated that the obligation is a regulation restricting the freedom of operation of entities on the electricity market, and competition is achieved in a different way. After the exchange obligation is lifted, commercial transactions will continue to be concluded on commodity exchanges, while each market participant will decide independently, according to their own market strategy, to use this form of trading – it was noted.
As argued by the government, the exchange price of electricity is generally determined as the marginal price, i.e. the highest of the accepted price offers, which means that among the sale offers there are offers with the lower price. This creates the potential to sell at individual prices below the marginal price. The risks of an unjustified increase in electricity prices as a result of the use of market power or other forms of market manipulation are currently effectively mitigated by mechanisms preventing abuse on the electricity market – assessed.
PiS reform withdrawn
In 2018, the government submitted a bill, later adopted by the parliament, providing for an increase to 100 percent from 2019. obliga, then amounting to 30 percent. As the government argued at the time, the increase in the obligation was to improve the position of consumers on the domestic electricity market in the long term, it was supposed to “limit possible increases in electricity prices on the wholesale market, not resulting from factors affecting the cost of its production or obtaining from neighboring systems”.
At that time, the Government Information Center forecasted that the risk of significant price fluctuations would decrease in connection with the increase in the obligations, thanks to the improved liquidity and transparency on the Polish Power Exchange, and by limiting the possibility of influencing the price by participants with a strong position.
In the justification of the law adopted on Thursday, the government wrote that the current level of development of the domestic electricity market indicates that the increase in the level of the obligation to 100 percent. from January 1, 2019, it achieved the goals that were set by the legislator at that time. Since the introduction of the regulation in question, the structure of the domestic electricity market has changed significantly, many new entities have appeared that conduct business activities consisting in the generation of electricity and trade in this energy, and their presence has intensified the market game, positively influencing the development of competition mechanisms – indicated in the explanatory memorandum.
“This is an absurd idea”
Maciej Bando, the former president of the Energy Regulatory Office, criticized the abolition of the power exchange obligation on Thursday in the TVN24 program “One for One”. “This is an absurd idea,” he said. – Please note that the stock exchange obligation was introduced by the PiS government. It was supposed to be the best remedy for preventing the market from being manipulated, so that you could trade transparently, emphasized Bando.
The former president of the Energy Regulatory Office remarked that “during the years when the stock exchange has been operating, we could have encountered the alleged price manipulation several times”. – The first such case was in 2018, the second in 2019. It seems that two years ago or a year and a half ago, the president of the Energy Regulatory Office also had such suspicions and conducted the proceedings – he said.
Bando stated that “trading on the stock exchange is subject to some supervision, there are eyes to see if everything is really cool”. – If these eyes are not there – kick your soul, there is no hell. I will sell it cheaper, and you will not know that I sold it cheaper – emphasized Bando.
Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl, spoke about the “great risk” in an interview with TVN24. – If we break this thermometer in the form of an energy exchange, we will never know again what this price should actually be – said Jakóbik.
The idea of abolishing the stock exchange obligation was also criticized by, inter alia, Bartłomiej Derski from WysokieNapiecie.pl. “In 2018, the exchange obligation was to fight the increases in electricity prices. In 2022, the liquidation of the obligation is to fight … against increases in electricity prices. PGE and Enea, which produce more electricity than they sell, will benefit from trade within their own groups. The rest may lose shares at most. in trade. So much “- he wrote on Twitter.
As he added, “the fundamentals of the economy say that a market closer to perfect competition is much more effective than an oligopoly or monopoly.” “Politicians who are convinced that manual control of the markets is better than the competition, i.e. the decisions of millions of entities, are characterized by a shoe and a lack of memory of the successes of the People’s Republic of Poland” – assessed Derski.
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