The amendment to the Energy Law Act lowers the rank of the Poland's energy policy
The draft amendment to the Energy Law (October 2018) prepares the implementation of the EU requirement to submit integrated national plans in the field of energy and climate. The regulations proposed in this form, however, lower the rank of the national energy policy. They also change the mode of appointing the President of the Energy Regulatory Office, which may affect its independence. This is worrying.
The latest proposed amendment to the Energy Law Act introduces many meaningful changes such as single definition of electricity storage, schedule for installing remote reading meters, a new category of closed distribution system, which may support the idea of energy clusters. At the same time, in connection with the new regulation on the governance of the Energy Union, the Ministry of Energy proposed amendments to Chapter 3 of the Act (Articles 13-15b) concerning Poland’s energy policy. The aim is to ensure that the Poland's energy policy is compatible with the 2021-2030 national energy and climate plan (NECP) submitted to the European Commission.
Lower status of Poland’s energy policy
As we read in the explanatory memorandum, changes in the Polish law are necessary in order to increase flexibility in shaping of the energy policy. However, the amendment diminishes the importance of the state's energy policy, thought shouldstrengthen it. It significantly changes the objectives (Article 13) and the scope of this document (Article 15), abolishes (by deleting Article 15(2)), the obligation to update it every 4 years or repeals the obligation to announce the policy after its adoption by the Council of Ministers (by amending Article 15a). The NECP will certainly be an important new instrument for shaping energy policy, but it cannot replace Poland’s energy strategy.
What is more, we are of the opinion that Poland’s energy policy, should be the subject of broad political consensus and, preferably, should be supported by all political forces present in the Parliament. This is how the energy strategy is adopted, for example in Denmark. Taking into account the current difficult situation in the energy sector, as well as the long term perspective of investment processes, only the agreement of various stakeholders will increase the probability of implementing key energy projects for Poland. T Minimising the political risk is not only fundamental for those projects to materialise, but it will also allow to reduce their costs (by reducing the cost of capital, which at the moment is higher for Poland than for the neighbouring EU countries).
Currently, the Energy Law Act does not require consultation on the draft energy policy, but such a requirement should be included directly in the Act. Poland's energy policy should be the subject of national debate and public consultation. Energy is the motor of the whole economy, affecting directly and indirectly society, business and even international relations. It is hard to imagine that such an important document is not subject to broad consultation. The consultations will allow not only to take into account the public opinion on key investments, but also to ensure the compliance with EU law of those projects that benefit from EU funding. The society deserves information on the future directions of energy development. Poles bear the costs of political and business decisions taken in this strategic sector of the economy. They are also affected by the environmental and health consequences resulting from the energy activity. Therefore, a strategic environmental impact assessment of the Poland's energy policy is also necessary. This obligation results directly from Article 46 of the Act on the provision of information on the environment and its protection, public participation in environmental protection and on environmental impact assessments (Journal of Laws 2008 No. 199 item 1227, as amended).
Poland’s energy policy prepared in such a way will not only ensure continuity of the energy strategy and minimisation of risk for priority projects. It will also form the basis for the adoption of a long-term low-emission strategy, which is required by the Regulation on the governance of the Energy Union.
(In)dependence of the President of the Energy Regulatory Office
Modernisation and renewal of the national energy generation assets are necessary. At the same time, these changes must comply with the requirements of environmental and climate protection. As a result, the Polish economy, including households, faces the challenge of rising electricity prices. The independence of the President of the Energy Regulatory Office is crucial in this situation. Its task is to regulate the market while respecting the statutory principle of balancing the interests of energy utilities and energy consumers.
However, the change in recruitment process for the position of the President of the Energy Regulatory Office (Art. 21 par. 2e) will not be supportive of a neutral regulation aimed at balancing the interests of the parties. According to the amendment, the President of the Energy Regulatory Office will be elected not by the team appointed by the Head of the Chancellery of the Prime Minister, but a team appointed by the Minister of Energy, who at the same time supervises energy utilities. The explanatory memorandum to the proposal does not indicate either any arguments against the current solution or reasons to change it.
The proposed amendment also raises serious concerns as to its compliance with independence requirements of a regulator guaranteed by the third energy package. EU legislation states that regulators should be independent (legally and functionally) not only from the energy sector, but also from any public institution, including the government.
In this context, the Minister of Energy's proposed right to appoint Deputy Presidents in the event that the newly appointed President of the Energy Regulatory Office does not do so (Art. 21.5ca) is a violation of the regulator's independence. This interpretation in the European Commission's explanatory note on regulatory authorities 1 clarifies that, irrespective of national administrative rules, the regulatory authority has sole responsibility for the way in which it operates and manages, including staff appointment. At the same time, the independence of the regulator applies to all persons who have the right to make binding decisions.
At a time when changes in the energy sector are taking place so quickly, it is not only the independence of the President of the Energy Regulatory Office that is important. What is needed is a consumer ombudsman who will watch over consumers' rights. Producers or energy-intensive industries have their own sectoral organisations. Still, an ordinary Pole can only individually claim his rights by contacting the Office of Competition and Consumer Protection (UOKIK) or the President of the Energy Regulatory Office. That's not enough. We need not only a strong regulatory authority, but also the re-establishment of the Ombudsman for Energy Consumers.
Changes in the approach to shaping Poland's energy policy are necessary and require amendment of the Energy Law Act. But it needs to be underlined that Poland's energy policy should be given higher priority so that it is treated with due seriousness as a programme and strategic document for the energy sector. This will only be possible if there is a broad political and social consensus. At the same time, in the period of energy transformation, the national regulatory authority should be strengthened so that decisions taken by the President of the Energy Regulatory Office are autonomous, transparent and balancing the interests of enterprises and consumers. The proposals of the Ministry of Energy go in the opposite direction.
Author: Dr Aleksandra Gawlikowska-Fyk
Date of publication: 16 November 2018
- Commission Staff Working Paper, Interpretative Note on Directive 2009/72/EC concerning common rules for the internal market in electricity and directive 2009/73/EC concerning common rules for the internal marker in natural gas. The regulatory authorities, Brussels, 22 January 2010.