December 17, 2019 / 3:52 PM / a month ago

Polish regulator approves Tauron's request to hike 2020 power prices

WARSAW (Reuters) - Households served by Polish power company Tauron will face higher bills in 2020 after the country’s energy regulator approved its request to hike prices but said Poland’s three other energy groups must continue to use existing tariffs.

Power prices became a hot issue in Poland last year when the ruling Law and Justice party (PiS) promised that households would not be hit by increases despite rising carbon emission costs and surging wholesale power prices.

“We have finished the proceedings and in the case of one entrepreneur we decided that the (higher) costs are justified - this is Tauron” said Rafal Gawin, the head of energy regulator URE.

The regulator said Tauron customers would face an average increase of about 9 zlotys ($2.31) a month, to cover a new power tariff and a distribution tariff. PGE, Enea and Energa must continue to use 2018 tariffs, which already carried over into 2019 because of a government cap.

All four companies are state-run.

URE said it had not approved requests from the other three utilities to raise prices as it did not consider they were justified. The utilities have now two weeks to respond to the decision.

Normally the regulator takes the final decision on setting household power tariffs, taking into account energy groups’ requests and their costs, as well as market conditions.

PiS capped household power tariffs last year to prevent a spike in prices in what was seen as a politically motivated move ahead of a general election in October.

It then launched a compensation scheme for the energy companies to recover any losses.

URE said that without the cap, household power prices would have increased to 299-313 zlotys per MWh in 2019 from 242 zlotys/MWh. A Polish household uses around 2 MWh of energy on average per year, URE said.

PiS has also pledged stable household power prices in 2020, but has not given details of how it will achieve this. The 2019 cap was possible because of a cut in the tax rate consumers pay on electricity and the so-called transitional fee, a component of electricity bills.

Prime Minister Mateusz Morawiecki said earlier on Tuesday that if URE were to raise 2020 prices, the government was ready to launch a scheme that would offset the impact on households.

($1 = 3.8990 zlotys)

Reporting by Agnieszka Barteczko, writing by Alan Charlish, Editing by Kirsten Donovan

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