Under the new tariff regulation, effective from July 2013, trade in gaseous fuel has been functionally separated from the network service, which in practice means that the network charge has been abandoned and replaced by a distribution or transmission charge, set by the Distribution System Operator or Transmission System Operator, as applicable.

The tariff for high-methane gas household and industrial customers will rise by an average of 1.5%, which is still below the projected inflation rate for 2014.

A comparison of nominal household gas prices across the European Union shows that the end cost of gas to customers in Poland remains among the lowest, and will continue to do so even after the revised tariff has been implemented.

The 2012 renegotiation of terms with Gazprom Export led to a reduction in the price of gas purchased under the Yamal Contract, which coupled with a refund from Gazprom Export on overpayment for gas supplies permitted PGNiG SA to further cut its retail customers' charges. Although the effect of the refund has now been exhausted (meaning that as of January 1st the household rates, which had so far enjoyed additional price discounts, will be subject to change), the price reduction negotiated with Gazprom Export will continue to be reflected in the new tariff. And with the new Gaseous Fuel Tariff in place, the price of gas will continue to remain below the level charged before the 2012 price reduction.

Monthly bills for households using natural gas for cooking (mainly Group W-1.1 customers) will rise by an average of approximately PLN 1.08, while the monthly cost of gas to households using gas for both cooking and heating water (mainly Group W-2.1 customers) will be about PLN 3.64 higher. Customers using natural gas for heating their houses (mainly Group W-3.6 customers) will pay an average of around PLN 19.75 more in their monthly bills.

It is important to note that these gas prices also reflect the effect of PGNiG SA's obligation to carry mandatory gas stocks, which are of great significance to Poland's energy security. Accordingly, the new prices also factor in the value of mandatory stocks, whose volume has increased 6% since October 1st 2013, mainly on the back of stronger domestic demand.

Subscription fees remain unchanged under the new tariff.

A new model for the Polish gas market

The changes to the gas prices result from the introduction of a new gas market model, and the incorporation of some of the components of the former network charge in the new prices. Concurrently, the new distribution and transmission charges are lower than the old network charge used to be, by the amount incorporated in the new gas prices. The changes brought about by the new gas market model have a neutral effect on the overall price of gas paid by consumers.

Other changes brought in by the new Gaseous Fuel Tariff are in the denomination of prices and fees. From January 1st 2014, all prices and fees will be expressed in grosz (1/100 złoty) per cubic metre (g/m3), instead of złoty per cubic metre (PLN/m3). This anticipates the introduction of settlements by energy units (kWh instead of m³), also from January 1st 2014, and follows from the provisions of the new tariff regulation.

Effective tariff term

PGNiG SA has once again applied for an effective tariff term of less than a year. The rationale behind the Company's consistent pursuit of shorter effective periods is that they would allow it to react promptly to changes in global gas prices, with important implications also in the context of the domestic gas market's liberalisation. This approach is in line with the expectations of PGNiG SA's customers of having the new gas prices align with the gas prices in European markets. Following a decision of the President of the URE, the new tariff will remain in effect until the end of July 2014.

CHANGES IN NATURAL GAS SUPPLY CHARGES TO CUSTOMERS CONNECTED TO THE DISTRIBUTION NETWORK

Presented below are the rates of increase in all-inclusive monthly bills, incorporating the price of gas as a commodity and the cost of its delivery to the end consumer (net of VAT).

HIGH-METHANE GAS (E GROUPS, formerly designated GZ-50)

NITROGEN-RICH GAS (Lw SUBGROUPS, formerly designated GZ-41,5)

NITROGEN-RICH GAS (Ls SUBGROUPS, formerly designated GZ-35)

PGNiG SA Press Team