Separating the retail and wholesale within PGNiG, activating the wholesale gas trading via the exchange, protecting vulnerable recipients, and diversification of supply sources in the future – to name a few postulates of the Office of Competition and Consumer Protection as regards the gas market in Poland. The Office has issued a special report concerning this issue

For many years can be observed the process of introducing competition in sectors, where rendering services depends on the accessibility of infrastructure that is not possible or not profitable to copy – e.g. in telecommunications, energy and postal services. The gas sector is the market where liberalization processes are performed at the lowest pace. Still in 2009 the European Commission addressed Poland to remove the existing irregularities, appearing in the opinion of the EC due to failure to fulfill obligations determined in the EU directive of 2003, in particular regarding releasing gas prices for industrial recipients.

The Office of Competition and Consumer Protection decided to examine this market, and consequently drew up the report titled Directions for the development of competition and consumer protection on the gas market in Poland. The report includes not only a description of market condition, but also suggestions of UOKiK concerning the potential further stages of liberalization process. A lot of attention was devoted to the condition and protection of vulnerable market participants, i.e. consumers.

Polish gas market, in respect of exploitation, storing and sales, does not experience competition. Companies from PGNiG group run the most significant distribution networks, posses 100% of storing space and enjoy a position similar to monopoly at all levels of trade. Within last few years, many actions were undertaken aimed at developing competition, inter alia companies dealing with the distribution and storing gas were established on the basis of PGNiG, and additionally, laws enabling independent entities to access the infrastucture were introduced. However, these changes did not result in emerging strong competitors of PGNiG on the market.

According to UOKiK, making it impossible for the market dominant to transfer its market power form its initial gas supply area to lower levels of trade provides the basis for the effective functioning of gas market. A serious threat may be posed by the margin squeeze. A company enjoying a dominant market position on the wholesale market operates based on conditions under which it could apply excessive pricing in the wholesale so as to eliminate the competition. Financial and accounting separation within PGNiG consisting in establishing the wholesale and retail part may prevent such event and simultaneously act for the benefit of independent gas sellers. Moreover, it would be the first step to create competition in retail sale of gas.

Another step, which could safeguard the functioning of alternative retail sellers, should be establishing the conditions for emergence of wholesale market, and most of all, establishing the wholesale market price of gas. It seems best way to oblige PGNiG to offer, via the system of exchange auctions, a part of gas the company supplies itself to other entities. Emergence of wholesale market price of gas is necessary for the functioning of competitive retail market.

Only after undertaking such actions would it be possibile to release gas prices. According to UOKiK, this process should happen gradually as sudden and uncontrolled releasing prices accompanied with no competition, entails the risk of negative consequences for the market, and also to consumers at its final stage. In such situation it is possible that prices of this fuel will increase significantly, which would in turn cause the increase in costs incurred by large industrial plants, and would affect the price of many products. Moreover, this could negatively impact the competitiveness of Polish undertakings on foreign markets. It is more reasonable to introduce maximum prices first, which along with seeing first signs of competition in retail sale could be replaced by more flexible methods of fixing tafiffs. It seems considerable to e.g. gradulally release prices for particular groups of recipients, starting from large industrial plants, with consumers in the last turn.

The Office describes actions which should be undertaken in a close perspective, and additionally points the changes on the Polish gas market desirable in the long run. The basis should be diversification of gas sources through developing the cross-border infrastructure for transportation and storing the fuel as well as searching the alternative sources of gas.

Introducing competition on the maket will certainly improve the position of consumers. Competition of a greater number of undertakings operating on the liberized market would result in the decrease in prices and enhancing the quality of rendered services. Apart from this, in its report UOKiK indicated many proposals aimed at direct improvement of position of weaker market participants, one of them is supporting the so-called vulnerable recipients.

The Office gives a positive assessment to the solution proposed at present by the Minister of Economy, consisting in e.g. providing, based on criteria of social support, the poorest persons with the lump sum, which would decrease their gas bills, or prolong the deadlines for cutting off gas in case of delay in payment. Providing incorrect forecasts of gas consumption on received invoices presents a series of other consumer problems. Introducing legal guarantee where charges are based on calculation made on monthly basis, taking into account real gas consumption, and avoiding any forecasts, could serve as a solution here. Another irregularity raised by consumers is the low caloric value of gas. Instalation of gasometers measuring not only the consumption of gas but also the caloric value of supplied fuel might prevent such situations. Moreover, it is necessary to increase consumer konowledge of their rights or more efficient resolution of disputes with undertakings, e.g. by establishing conciliation courts.

The discussion on the report and postulates of the Office will be the core issue of debate which will be held on 11th September 2012 at the premises of UOKiK.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Phone: +48 22 827 28 92, 55 60 106, 55 60 430
Fax: +48 22 826 11 86
E-mail: [SCODE]bWFsZ29yemF0YS5jaWVsb2NoQHVva2lrLmdvdi5wbA==[ECODE]