When the decision concerning further consolidation of the Polish power sector was made in 2006 the aim was considered the establishment of economically strong companies which would be able to incur the investment costs and be competitive on the European electric energy market. Today, it seems that some program stipulations were not understood correctly.

The problem lies in the regulations of law which allow for too broad an interpretation. Latest decisions of the Energy Regulatory Office with regard to the act on the stranded costs bear an enormous impact on the functioning and future of Polish power sector – namely those vertically organized power groups which are independent and capable of competing on both Polish and European electric energy markets.

Once Long-term Contracts were dissolved, the Act regulating the coverage of costs generated by the electric energy manufacturers as a result of the premature termination of long-term contracts for electric energy sales as of 29 June, 2007. The energy manufacturers were given the right to cover the so-called stranded costs i.e. the investments costs incurred, which will not be covered with the revenue once after the long-term contracts termination.

As far as 2008 is concerned, our company motioned for and received the total compensation due to the stranded costs amounting to PLN 192 108 000. However, by virtue of the Energy Regulatory Office Chairman’s decision of July 31, 2009, the value of the stranded costs advancement annual adjustment from 2008 was determined at the level of (-) PLN159 508 000 the sum of which the Company was obliged to acquit by September 30, 2009 at the latest.

The main explanation why the Energy Regulatory Office adopted such a position was the statement that PKE does not sell electric energy on the competitive market but only exclusively inside the Group thus the Group profits from such a situation. The Company lodged an appeal to the District Court in Warsaw against the decision of the Energy Regulatory Office Chairman motioning for the suspension of the negative adjustment payment as calculated for the Company. The Energy Regulatory Office claims that we are to return almost PLN160 million, on the other hand we – PKE claim that we should receive additional PLN80 million. The issue will be settled by the court.

I am of the opinion that system solutions are required in this case and it is high time every person responsible for the power sector sat at the table and reanalyzed the government program stipulations and justifications which will allow the sector to assume and implement the amends to the energy law which are being currently discussed. The target is clear – powerful and competitive Polish companies on the power market.

JAN KURP
Chairman of the Management Board