Price Caps for SMEs

Legal alert: New Regulation on Maximum Electricity Prices for SMEs

On 2 November 2022, the President of Poland signed the Act on Emergency Measures to Cap Electricity Prices and Support for Certain Purchasers of Electricity in 2023 (Ustawa z dnia 27 października 2022 r. o środkach nadzwyczajnych mających na celu ograniczenie wysokości cen energii elektrycznej oraz wsparciu niektórych odbiorców w 2023 roku) (“the Act”)  providing electricity price support for small and medium-sized enterprises.

The Act comes into force on 4 November 2022 and applies to:

(1) small enterprises, i.e. businesses which in at least one of the last two financial years, employ fewer than 50 employees on average per year and achieve an annual net turnover from the sale of goods, products and services and from financial operations not exceeding the PLN equivalent of EUR 10 million, or the total assets of its balance sheet drawn up at the end of one of these years did not exceed the PLN equivalent of EUR 10 million;

(2) medium-sized enterprises i.e. business which in at least one year out of the last two financial years employ on average fewer than 250 employees and achieve an annual net turnover from sales of goods, products and services as well as from financial operations not exceeding the PLN equivalent of EUR 50 million, or the sum of assets of its balance sheet drawn up at the end of one of these years did not exceed the PLN equivalent of EUR 43 million.

The Act aims to increase the protection for SMEs (as well as self-government and public services institutions) from drastic increases in electricity bills by introducing a maximum electricity price mechanism at 785 PLN/MWh net, where the prices resulting from the enterprise’s energy sale agreement are higher than the maximum price.

Settlements resulting from the application of a price cap will be made in monthly instalments between 1 December 2022 and 31 December 2023 for the total electricity consumption at the point of consumption of the electricity.

The price cap will apply to:

1. SMEs that have concluded or amended the terms and conditions of an energy sale agreement with regard to price, after 23 February 2022;
2. SMEs whose energy sale agreements provide for determining the price of electricity on the basis of the customer’s choice of the end date for the purchase of electricity on the commodity exchange.

The price cap also applies to the period from the date of conclusion/amendment of the electricity sale agreement until 30 November 2022.

To be entitled to the price cap, the eligible SME must submit a declaration in paper or electronic form to the relevant energy company by 30 November 2022. To comply with the legal requirements, the declaration must contain:

1. a declaration by the enterprise that the conditions for benefiting from the application of the price cap have been met (see above);
2. an indication of the data used to establish the estimated amount of electricity which will be used for the enterprise’s needs;
3. an indication of the estimated amount of electricity that will be consumed for the entrepreneurs’ needs as defined in point ii;
4. the number of the point of consumption of the electricity;
5. the date of the conclusion of the energy sale agreement or the comprehensive agreement.

Submission of a declaration after 30 November 2022 entails a delay in applying the price cap.

Should there be any change in the enterprise’s conditions for obtaining a price cap, the electricity company should be informed within seven days.

Feel free to contact us at the earliest possible opportunity for more information and assistance in applying for a price cap for your business: Sebastian Janicki or Aleksandra Oleszyńska.