The Polish parliament has passed a new law reducing the excise tax and so-called distribution charges on electricity. The new law, passed December 28, amends the 2008 excise tax law and other laws.

The goal of the new law is to avoid public discontent, after initial plans for tariffs on the largest electricity companies called for price increases of 50 to 70 percent for 2019. Facing both the elections to the European Parliament and the general elections during 2019, the government in December rapidly decided to prevent the planned electricity price increases and maintain prices at the 2018 level during 2019. It submitted the draft law to the parliament December 21.

The new law reduces the excise tax on electricity by 75 percent (from PLN 20 to PLN 5 per megawatt-hour) and reduces the distribution charges levied by the power companies by 95 percent. The new law establishes a special price differences payment fund, mainly financed by the income from trading in “green certificates” and designed to compensate the power companies for the loss of revenues resulting from the reduction of the distribution charges.

The new law also provides for allocation of approximately PLN 1 billion (about $270 million) to promote green energy.

The new law will enter into force January 1, 2019.

Janusz Fiszer, partner, GESSEL Attorneys at Law, Warsaw, and associate professor, School of Management at the University of Warsaw.