Annual Report | Regulatory environment

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Energa Group in 2018
Regulatory environment

Regulatory issues handled and addressed in 2018

List of key legal acts of relevance to the Group

Legal act	Purpose of legal changes	Opportunities	Threats/issues
The Act of 9 No-vember 2018 Amending the Pharmaceutical Law and Certain Other Acts.	Setting out the rules for re-serve sale of electricity and increased level of the power exchange obligation.	Improved liquidity of trading in electricity, increased security of energy supply to end customers owing to the adoption of spe-cific legal rules gov-erning the suppliers of last resort.	Exclusions from the power exchange obliga-tion regime may lessen the actual impact of that regulation on the electric-ity market.
The Act of 9 De-cember 2018 Concerning the Promotion of Electricity from High-Efficiency Cogeneration	Implementation of a new, ef-fective system of support for the development of CHP plants in Poland.	A new system based on several support mechanisms dedi-cated to plants with various technical characteristics. The support can be allocated to the maintenance of exist-ing plants through up-grading. Guaranteeing the proper functioning of the system by ensur-ing that performance is supervised at the level of the President of the URE.	The absence of an Euro-pean Commission deci-sion approving the new system as being compati-ble with the EU law means that the system is suspended. Lack of secondary legis-lation makes it impossible to estimate the extent of potential support from the new system.
Act of 28 De-cember 2018 Amending the Act on Excise Duty and Certain Other Acts.	Electricity price freeze and lowering of excise tax and transitional charge rates.	Potential price reduc-tions for electricity customers. An incentive to build new and upgrade the existing generating in-stallations. Upgrading existing and building new electricity generation sources to stabilise the National Electricity System and tap into Poland’s energy resources. Supporting the imple-mentation, in a com-petitive market envi-ronment, of the new power plant construc-tion project (Ostrołęka C).	The fact that the assump-tions of the act have not been consulted with the European Commission poses a risk to the poten-tial beneficiaries of the compensation scheme (energy undertakings). No proposal has been made for a regulation governing payouts from the compensation fund. Interpretation concerns relating to the provisions of the act have not been addressed.
The Act of 7 June 2018 Amending the Renewable En-ergy Sources Act and Certain Other Acts.	Ensuring a stable regulatory and business environment with respect to property tax imposed on wind farms and RES development opportu-nities with improved profita-bility prospects.	(1) Clarification of ambig-uous provisions (in-consistent judgments of Provincial Adminis-trative Courts) on wind farm taxation. Development of RES with the option to un-derpin investments with financial mecha-nisms ensuring pro-ject viability.	Lengthiness of the legis-lative process involved in the launch of the new system.

Regulatory issues handled in 2018 and continuing in 2019

List of legal acts of relevance to the Group

Legal act	Purpose of legal changes	Opportunities	Threats/issues
Clean Energy for All Euro-peans legislative proposals – the Winter Pack-age. COM/2016/0860 final.	Maintaining EU’s competitive-ness in the era of transfor-mation of energy markets to-wards clean energy in the framework of the Winter Pack-age. Plans to reduce coal sub-sidies, to increase the energy efficiency target to 30%, and to reduce CO2 emissions by 40% by 2030. The new legislation requires approval by the Coun-cil and the European Parlia-ment. The Winter Package in-cludes solutions promoting the development of decentralised electricity production and stor-age to develop ‘civic energy’. A key change for the energy mar-kets in the EU is the abolish-ment of the ‘priority dispatch’, i.e. priority of access to the grid for RES before conventional sources. The amendment will come into effect after 2020.	Introduction of consistent regulations improving the energy secu-rity of the Eu-ropean Un-ion. The Moderni-sation Fund will enable funding for renewable energy pro-jects (such as the Lower Vistula Cas-cade).	Starting from 1 Jan-uary 2025, limitation of capacity market support mecha-nisms for installa-tions emitting more than 550 g CO2/kWh. The need to bring the RES/CHP and energy efficiency support system in line with new EU regulations. Impact of the planned amendments on the notification pro-cesses under the Act on RES and the Capacity Market Act.
Government bill to amend the Energy Law and cer-tain other acts (No. UC 34).	Clarification of the compe-tences of the President of the URE with respect to supervi-sion over electricity undertak-ings, clarification of the rules of providing electricity storage ser-vices and a statutory delegation introducing an implementation schedule for smart metering in Poland.	Introduction of require-ments per-taining to the functioning of the President of the URE in the light of the Winter Package reg-ulations. Clarification of the princi-ples of avail-ability of me-tering data. Clarification of the rules concerning the.functioning and oversight of electricity undertakings.	Lengthiness of the legislative process.
Proposal for the Energy Policy of Poland until 2040.	Definition of the long-term en-ergy strategy of the country that will determine the ultimate en-ergy mix and outline the key development focus for power sector entities.	The update of the current energy policy of 2009 pin-points the long-term trends in the development of the energy sector. A strong em-phasis on the diversification of primary energy sup-ply for the economy. The policy envisages gradual phas-ing out of car-bon-intensive generating units.	Need to correlate the policy with the National Action Plan for Energy and Cli-mate, which must be consulted with the European Commis-sion in 2019 – a risk of diverging objec-tives and conditions. Lack of a compre-hensive vision for the development of electricity storage facilities. Limited vision for the development of on-shore wind farms, which is likely to re-duce the odds of achieving the tar-gets for the share of renewable energy in the power genera-tion mix. Absence of a com-prehensive strategy for the long-term availability of coal for power generation purposes. An option to include a share of nuclear power in the target energy mix.