2019-01-24
FOR communication 2/2019: The Monopolisation of the Energy Market is Progressing
- On 19 December of the previous year, the President of the Energy Regulatory Office opened an investigation into the dramatic increase in energy prices. The question remains to what extent this increase is due to the progressive monopolisation of the sector by state-owned companies.
- The Energy Regulatory Office points to a rapid increase in power generation industry concentration, which reversed the deconcentration trend of the last decade. In 2017, the market share of the three largest entities (all state-controlled) increased from 54.9% to 69% - the highest share in at least a decade. Under the slogan of "repolonisation", state-owned companies with the support of the government buy out the assets of foreign investors and increase their monopolistic power.
- The Energy Regulatory Office indicates that the recent increase in energy prices is not only the result of the increase in the price of hard coal and the cost of CO2 emission allowances. The price of electricity, excluding the cost of coal and CO2 permits on the Polish Power Exchange increased rapidly in the period after 1 September 2018 to double the price from previous years. Industry experts are divided on the extent to which this is influenced by the growing monopolisation - a similar increase has also taken place in other EU countries at the time. However, even if it turns out that the recent price increase was not caused by increasing monopolistic power, it is to be expected in the future that state-owned companies will take advantage of their position.
- State ownership of companies always creates a conflict of interest, and at the same time places the state in the role of a market maker and owner of companies operating on the market. This conflict is not completely eliminated by the existence of an independent Energy Regulatory Office. The example of Engie and EDF being entered on the list of strategic companies by Minister Tchórzewski, probably in order to obtain the right of veto on the sale of their assets, or the changes introduced by Parliament in the substitution fee model to protect state energy companies against the effects of previously signed contracts for the purchase of green certificates, clearly show that the Law and Justice party governing Law and Justice favours state energy generation companies.
Author:
Rafał Trzeciakowski, economist
rafal.trzeciakowski@for.org.pl
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