29 December 2018, News Wires — Poland’s lower house of parliament on Friday passed legislation to cut tax on electricity as the ruling Law and Justice (PiS) party looks to prevent a jump in energy bills ahead of a parliamentary election next year.
The legislation, which needs to be adopted by the upper house late on Friday and then signed by the president, is expected to become binding on January 1.
State-run utilities have proposed raising household bills by more than 30 percent next year to claw back revenue hit by a 65 percent jump in wholesale electricity prices and a 400 percent leap in carbon prices this year.
Just ahead of the lower house sitting, the PiS party unexpectedly raised its proposal for compensation for utilities to 4 billion zlotys ($1.1 billion) to help offset their lost revenue.
“The need to impose the bill is related to dynamic growth in wholesale electricity prices in 2018. The growth is strongly related to the European Union’s climate policy,” the proposed legislation said.
The proposed compensation prompted a jump of between one and five percent in the shares of state-run utilities Energa , Tauron and PGE in early trade.
Poland has liberalised power prices for businesses but still regulates them for domestic users. The current household tariff expires at the end of the year.
The PiS party, which has faced waning support following a corruption scandal related to the country’s financial markets regulator, has insisted on keeping household power prices unchanged.
Its legislation would come at some cost, however, with the proposed lowering of excise tax on electricity set to reduce next year’s state budget by 1.85 billion zlotys.
The government also plans to reduce the so-called transitional fee, a component of electricity bills, which will help lower energy costs for consumers by 2.24 billion zlotys.
To offset those losses, the government plans to sell extra CO2 emission allowances worth around 4.5 billion zlotys.
Critics accuse the government of too much market intervention.
“This legislation is aimed at ensuring PiS remain in power,” Stanislaw Tyszka, a member of anti-establishment group Kukiz’15, told lawmakers at the lower house’s televised sitting.