Our outlook and market consensus for oil, coal, gas and CO2 emissions allowance prices in the EU ETS in 2024 do not point to any significant room for lower prices in the wholesale electricity market in the next months. Provided current market prices stabilize, the new government will have to decide in the coming years on any upward regulatory adjustments to household electricity prices.
We estimate that the surcharge of around 80% for the energy component of the electricity bill and around 60% for natural gas can be gradually eliminated to soften upward pressure on other prices. Poland needs adjustments in electricity and gas prices, but not another shock.
Therefore, unless market prices decline substantially, authorities will be forced to take further measures to contain the magnitude of energy price adjustments starting in July 2024. We expect the adjustment to be carried out carried out in several steps. Our base case assumes that the electricity bill will increase by 15% and the gas bill by 10%, contributing about 0.9 percentage points to overall CPI inflation. This will likely reduce the National Bank of Poland’s willingness to cut interest rates in the second half of 2024.