The government aims to cushion Polish citizens from the steep increase in energy costs anticipated when the existing price caps expire in July 2023. Credit: ABCDstock/Shutterstock.com.

Poland is set to reduce the maximum electricity tariff that utilities can charge by 19% from July 2024, Bloomberg has reported.

The reduction is an effort by the government to alleviate the burden of state subsidies and mitigate the impact of rising energy costs on households.

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The Polish Climate Ministry has proposed to recalculate the maximum tariffs to 598 zlotys ($148)/MWh from the current 739 zlotys and to maintain this until the end of 2025.

The final tariff levels will be determined through negotiations between the country’s energy regulator and utility companies such as PGE, Enea and Tauron.

Household electricity prices are currently fixed at 412 zlotys, with the government compensating suppliers for the difference.

Under the new proposal, the consumer price cap would increase but not exceed 500 zlotys, with a simultaneous reduction in the tariff utilities are permitted to charge.

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The anticipated cost of the new energy regulations, which also include vouchers to support low-income individuals, is projected at 6.4bn zlotys for 2024 and 1.8bn zlotys for 2025.

The draft has sparked debate, with the Ministry of State Assets expressing concerns over the potential weakening of utility companies’ financial health.

The government is deliberating on the proposal’s specifics amidst a busy economic schedule. The cabinet is also expected to review a three-year fiscal strategy, which will disclose the total expenditure on new social initiatives following the formation of a new coalition government in December 2023.

Decisions regarding the allocation of EU recovery funds are also on its agenda.