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(Bloomberg) — Poland’s government has proposed capping electricity prices for local governments and small businesses to prevent the electricity crisis from spreading to cities, hospitals and schools ahead of next year’s general election.
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The proposal put forward by Prime Minister Mateusz Morawiecki on Tuesday will set the maximum electric power value for municipalities and small and medium-sized enterprises next year at 785 zlotys ($157) equivalent to megawatt hours. This is far below the point that several peoples have said. They have been asked to pay in recent weeks.
In addition, the government should introduce a profit cap on the wholesale energy market aimed at utilities, a mechanism that would be the main source of investment for the value cap. The value that energy equipment would rate on the market would be based on its costs, a margin of “reason” and an additional budget needed for investments, according to Climate Minister Anna Moskwa.
The government is bowing to pressure from local governments, which have accused Morawiecki of not doing enough to help them cope with rising prices. The ruling party has noticed a drop in recent polls and is trying to postpone local elections until 2024.
Radom, about 100 km south of Warsaw, said it proposed to buy electritown by next year for 10 times the value of 2022. The proposal for the western city of Poznan exceeded the 2022 point by 370%. Warsaw’s bill will more than double to 950 million zlotys. On Friday, local government officials took to the streets of Warsaw to protest the increases.
Zloty bass
The government’s plan to cap energy prices is also expected to curb inflation, which accelerated to 17. 2% in September, its highest point in nearly 26 years.
“This anchors inflation and restricts its growth, while increasing predictability for businesses,” Pawel Borys, head of public progression fund PFR SA, said on Tuesday.
According to him, the value of electricity in Poland would be one of the lowest in Europe, which would lead to a slowdown in inflation from the current quarter, while maintaining an economic expansion of 1 to 2% next year.
“That would mean a comfortable recession scenario,” Borys said. “However, the zloty exchange rate remains a threat because further weakening of the currency is negative and increases inflation. “
(Updates with comments from a senior official in the paragraph. )
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