Poland plans to reduce impact of sharp rise in electricity prices

The Polish government is looking to reduce the impact of surging electricity prices on households, either by helping suppliers or giving tax relief for consumers, the Parkiet newspaper said, quoting draft regulations prepared for the energy ministry.

Such a move would be the latest costly proposal from the ruling Law and Justice (PiS) party ahead of municipal elections this month. The party, which took power in 2015, has also promised to boost spending on roads and air quality.

The energy ministry was not immediately available to comment.

Electricity prices on the Polish power exchange have leapt 60-70 per cent in the year to September, on the back of higher coal prices and the rising cost of carbon emissions permits.

Poland has liberalized power prices for companies but still regulates them for households.

While the head of the energy market regulator said earlier this year the higher price would have to be reflected in households bills, the energy minister has said prices will remain unchanged.

Parkiet said the energy ministry had worked out two proposals to help households, both to be financed with proceeds from the sale of EU carbon permits.

One would include support for mostly state-run electricity suppliers, although this could run afoul of EU state-aid rules, Parkiet said. The other proposal is potential tax relief for households.

"We are aware of the weight of the problems resulting from electricity price increase. We are planning to launch a package of shielding solutions for citizens and industrial consumers. These could be reliefs from various payments or even compensations for (the) CO2 emission price," Parkiet quoted the energy minister as saying.

The current electricity tariff expires at the end of this year.

Analysts say Poland's state-run utilities are unlikely to ask for regulatory approval to raise power prices for households ahead of regional elections next month and a general election next year, although this may hit their profits. 

(With inputs from agencies.)