Marek Dolatowski, Karolina Przygoda

Amendments to the Energy Law concerning gas

Some of the issues of particular relevance to gas businesses under a recently adopted proposal to amend the Energy Law

On 21 June 2013, the Sejm (the lower house of the Polish Parliament) passed the Act Amending the Energy Law and Certain Other Acts. The act fully implements the Renewables Directive (2009/28/EC) in Poland and amends the implementation of the Electricity Directive (2009/72/EC) and the Gas Directive (2009/73/EC). When they become law, the amendments will have a significant impact on the functioning of gas businesses and may influence decisions of prospective investors considering entering the Polish energy market.

The act will now be submitted to the Senate, and should it decide to introduce any amendments, the act will be referred back to the Sejm. The act is expected to come into force in autumn this year.

Unbundling

More precise provisions regarding the functioning of transmission grid operators have been proposed to fully separate production and trade in gas from transmission of gas.

It would be prohibited:

  • to serve simultaneously as a management board or supervisory board member of a transmission grid operator and another business that produces, generates or trades in gaseous fuels
  • for board members to exert “significant influence” or other rights in relation to another business producing, generating or trading in gaseous fuels or to appoint board members of such businesses.

The President of the Energy Regulatory Office will issue “certificates of independence” which will be a precondition for applying to be a transmission grid operator or a combined system operator.

Grid operators will have six months to achieve compliance with the act after it enters into force.

Rules regulating the activity of distribution grid operators have generally not been amended, save for editorial changes.

The act shifts supervision of transmission grid operators from the Minister of Treasury to the Minister of the Economy.

Gas trading obligation

The act requires energy businesses trading in gaseous fuels to sell an indicated percentage of gas piped through the transmission grid each year on the Polish Power Exchange. This applies to natural gas piped through liquefied natural gas terminals, upstream pipeline networks, and points of entry to the national transmission grid.

The amount of the gas to be sold on the Polish Power Exchange will be

  • 30% from the effective date of the act through the end of 2013
  • 50% through the end of June 2014
  • 70% from July 2014 onwards.

This gas trading obligation is meant to create a wholesale gas market on which imported and domestic natural gas would be freely offered.

The gas trading obligation will not apply to, inter alia, obligatory natural gas reserves, natural gas for personal use, and natural gas sold to gas system operators to enable them to comply with their statutory duties. Energy undertakings trading in gas with foreign entities will be exempt from the gas trading obligation when the capacity of their points of entry to the national transmission grid in the previous calendar year constituted less than 10% of all such entry points (combined capacity in the case of capital groups).

All energy businesses would be entitled to become members of the Polish Power Exchange. Members trading in gas would be able to trade in their own name instead of through a broker. That should mean savings for businesses and further growth of the Polish Power Exchange.

Other amendments

The act seeks to ensure the independence of the President of the Energy Regulatory Office through direct appointment by the Prime Minister and requiring specific grounds for dismissal. The President of the Energy Regulatory Office would be appointed for a term of five years and would be eligible for reappointment only once.

Other provisions include:

  • Rules for international cooperation in joint development projects and renewables
  • Protection for household gas consumers, requiring specific information in contracts on the consumer’s rights, complaint procedures and dispute resolution
  • Specification of end users’ right to terminate contracts with an energy supplier
  • Introduction of the category of “sensitive consumers” of gas and electricity, enjoying special protection and entitled to gas and electricity subsidies.

Marek Dolatowski and Karolina Przygoda, Energy Law Practice, Wardyński & Partners