EU confirms review of Poland's law cutting tax on electricity

The European Commission expects Poland to submit its new law cutting tax on electricity for European Union scrutiny to see if it complies with EU laws prohibiting illegal state aid to companies, a Commission spokeswoman said on Thursday. Poland's lower house of parliament passed on Dec. 28 legislation to cut the tax on electricity as the ruling Law and Justice (PiS) party looks to prevent a jump in energy bills ahead of a parliamentary election this year.

State-run utilities have proposed raising household bills by more than 30 per cent next year to claw back revenue hit by a 65 per cent jump in wholesale electricity prices and a 400 per cent leap in carbon prices this year. Just ahead of the lower house sitting, the PiS unexpectedly raised its proposal for compensation for utilities to 4 billion zlotys ($1.1 billion) to help to offset their lost revenue. The proposal lifted shares of state-run utilities Energa, Tauron and PGE by 1-5 per cent.

"A member state is obliged to notify to the Commission any state aid measures before they are put into effect," Commission spokeswoman Mina Andreeva told a regular news briefing. "EU law states that such measures need to be notified for the Commission to be able to look at them. So far, we have not been notified by the Polish authorities but we would expect them to do so," she said.

(With inputs from agencies.)