Thursday with Energy: The end of maximum prices for the SME sector

kancelaria prawo energetyczne Adam Madejski Senior Associate
17 April 2024
Thursday with Energy: The end of maximum prices for the SME sector

The website of the Prime Minister’s Office has published assumptions of the new law, which is intended to be an extension of the shielding solutions for certain electricity consumers after June 30, 2024. Households that meet the income criterion will be eligible to benefit from the “frozen prices” included as an energy voucher.

The above means that entrepreneurs in the SME sector will be taken out of the circle of entities entitled to benefit from the maximum prices. However, this is not entirely bad news, since in many cases electricity supply contracts concluded during the period of maximum prices contain provisions that are unfavorable to customers, extending the application of the statutory rate until the end of the contract term. Given the current electricity price quotations on POLPX, this means that entrepreneurs will overpay in this situation.

1. Changing the contract – renegotiating the rate or price formula

The most important issue to be determined at the outset is the price formula that is included in the contract (either a variable price or a fixed price). The variable price is most often based on the quotations of the Commodity Exchange and, as the case may be, is an average of the quotations for a given period, weighted by the volume received by the customer. The fixed price, on the other hand, is in principle valid for the entire term of the contract, and is most often subject to indexation.

If the contract for the sale of electricity includes a fixed price, set as a statutory maximum price, it is likely that after June 30, 2024, such an arrangement will not be beneficial to SME business customers. The current fluctuation of quotations on the Towarowa Giełda Energii oscillates between 300 and 600 zlotys for hourly indices, and for daily quotations is in the range of 400 and 500 zlotys. It is easy to see that with a constant energy consumption profile, the gap between market prices and the statutory maximum price is significant.

The variable price formula also does not protect the trader from potential overpaying for electricity. If the price formula is to change from a statutory maximum price to a variable price after June 30, 2024, it is worth checking what components go into the final price. This is because it may turn out that the variable rate is only one component, and trade charges, charges related to the seller’s obligation to purchase certificates of origin or other similar price drivers should be additionally taken into account. Then it may turn out that, when added together, the final price is higher than the statutory maximum price that will apply until June 30, 2024.

In any of the above cases, it is worth undertaking negotiations to adjust electricity prices to market conditions. Most often, such a procedure is carried out on the basis of the procedure described in the contract – it can be a simple amendment to the contract occurring at the request of one of the parties or a special clause concerning, for example, a change in economic circumstances, negatively affecting the situation of one of the parties. Using such a solution allows you to open the way to amend the contract in terms of pricing.

But what if the contract does not contain any provisions on the possibility of changing the price, or even explicitly stipulates that the price must remain the same? Of course, this does not close the way for the customer to try to negotiate changes, since the contract for the sale of electricity can be changed at any time by agreement of the parties. Everything in such a situation depends on the seller and his approach to negotiations. It may happen that, given a choice of lowering the price or changing the price formula, the seller will agree to the customer’s proposal, since refusal to negotiate will entail termination of the contract by the customer.

2. Change of supplier – contractual aspects

If it turns out that the current contract for the sale of electricity will be unprofitable for the entrepreneur, and the seller is not interested in renegotiating the terms, the customer may terminate such a contract. It is then worth remembering the following rules contained in Article 4j paragraph 3a of the Energy Law:
1. termination may entail negative financial consequences for the customer, but only explicitly provided for in the contract,
2. micro and small entrepreneurs can be charged only such amounts for termination that represent direct losses to the seller from the termination of the contract.
Particularly point important in this case, because the regulation in this regard was introduced into the energy law only last year and few customers are aware of its existence. Meanwhile, it is a very important provision, because limiting the liability of customers only to the direct starts of the power company protects against the often high and therefore disproportionate penalties for early termination of the contract.

When considering a change of vendor, it is worth making an overall calculation as to whether a change in terms and conditions and thus a realignment of electricity prices will ultimately lead to savings, even taking into account the need to pay compensation to the existing supplier.


Thursday with Energy: The end of maximum prices for the SME sector
17 April 2024

The website of the Prime Minister's Office has published assumptions of the new law, which…

kancelaria prawo energetyczne Adam Madejski Senior Associate
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