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Business entities which have failed to comply with the limitations on energy consumption may face hefty penalties

Audits by the Energy Regulatory Office

Legal Alert (18/2016)

In August 2015, Poland imposed limitations on the consumption of electricity, which have had an impact on the operations of a number of business entities. Recently, the Energy Regulatory Office has been placing a strong focus on verification of whether entrepreneurs comply with the demanding requirements introduced at that time. Administrative proceedings have been instituted against a number of entities to impose penalties for non-compliance.[1] According to press reports, the Energy Regulatory Office is planning to instigate a number of such proceedings.

Audits concern those entities which are subject to the consumption limitations, i.e. users of electricity for which the contracted capacity exceeds 300 kW[2]. Thus, the said proceedings may be brought against numerous large enterprises, mainly those from the manufacturing sector.

What is important (and what typically does not follow from notices of proceedings sent by the President of the Energy Regulatory Office to business entities), the penalty for non-compliance with the limitations imposed in August 2015 may reach 15% of the revenue generated by the entity in the preceding fiscal year[3].

What is more, the Energy Regulatory Office has access to detailed data about the consumption of energy by each user on an hourly basis for each day since the electricity consumption limitation was imposed. Such information is provided by the Distribution System Operator.

The proceedings to impose a penalty may be instituted even if entrepreneurs have exercised due diligence and have been unable to comply with the electricity consumption limitations for technical reasons or due to the manufacturing technology used. The President of the Energy Regulatory Office relies on data obtained from the Distribution System Operator, which show only whether the acceptable limit has been exceeded or not.  Thus, he does not know the reasons for non-compliance.

When giving notice of proceedings, the President of the Energy Regulatory Office demands that the enterprise adopt a position on the matter at the same time. While responding to the notice of proceedings, the enterprise should prove that despite non-compliance with the acceptable electricity consumption limit, it should not be subject to the penalty. It is particularly important to prove that non-compliance with the acceptable electricity consumption limits was not through the fault of the enterprise and to provide the President of the Energy Regulatory Office with the requested data.  The position adopted by the entity may be of crucial importance to the resolution of the administrative proceedings, thus to the imposition of a penalty and its amount.

 

[1] Such proceedings are instituted under Article 56.1.3a of the Energy Law of 10 April 1997 (Journal of Laws 2012.1059, consolidated text, as amended, hereinafter referred to as the "Energy Law").

[2] Section 5.1 of the Regulation of the Council of Ministers of 23 July 2007 setting out detailed rules and the procedure for the imposition of limitations on the sale of solid fuels and the supply and consumption of electricity or heat.

[3] Article 56.3 of the Energy Law.

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