How much will we pay for energy in 2025?

The Energy Regulatory Office (URE) has announced new tariffs for the largest energy companies, which will be in effect until the end of 2025. These tariffs will become binding for us as soon as the freeze on energy prices ends, which will most likely be at the beginning of 2025. Prices are higher, but not everyone will feel the increases painfully. So, how much will electricity cost next year?

Freeze on energy prices until the end of 2024

What will electricity prices be in 2024? We already know that. According to announcements, the government has extended the freeze on energy prices until the end of this year. However, the key point here is that the rate - despite the freeze – is higher than before. For the last two years, electricity prices have been frozen at 41 gr per kilowatt-hour (plus distribution fees and taxes).

From July 1, 2024, we will pay 50 gr per kilowatt-hour, but without any limits (previously the "promotional" rate applied only to 3000 kWh of energy consumption per year for a typical consumer). This last fact should be particularly noted by users of electric cars, electric heating, and heat pumps.

Increase in distribution fees

This is not the end of changes in energy prices. An important component of our electricity bills is the distribution fee. Its amount will increase from 28.9 gr to 43 gr per kilowatt-hour. Additionally, to somewhat compensate for the price increases, the government has suspended the collection of the so-called capacity fee, which was around 11 PLN per month (it depends on energy consumption but is expressed as a fixed amount within certain thresholds).

What will energy prices be from July 2024?

From July 2024, we will pay 50 gr per kilowatt-hour, which means no consumption limits for the frozen price. All of this together means that in the second half of 2024, the bills for an average household consuming 2000 kWh of energy per year will increase by about 25-35 PLN per month (after adding VAT). In percentage terms, we are talking about an increase of about 20%.

Who will benefit from the Energy Voucher?

About 15% of households will not feel the increase at all if they take advantage of the energy voucher. The possibility of using it and the amount that will be credited to the account depend on the income per person in the family, the number of children, and the method of heating the house. All details regarding the operation of the voucher and the deadlines for submitting applications for reimbursement of energy price increases are available at the relevant offices. We also encourage you to read our post about the Energy Voucher 2024 program.

These rules apply only until the end of this year. What will happen next year is unknown, but it is very likely that there will be no extension of the freeze on energy prices. And then the tariffs approved by the president of the Energy Regulatory Office will come into play.

What will electricity prices be in 2025?

From the beginning of 2025, tariffs will likely return. So how much will we pay for electricity in 2025? URE has just announced this by publishing tariffs applicable to energy companies not only until the end of 2024 but also throughout 2025. If you are a customer of PGE, Tauron, Enea, or Energa – you will pay 62-63 gr for each kilowatt-hour consumed (plus distribution fee, capacity fee, and taxes – VAT and excise duty).

The new tariffs mean an increase in bills of 12 gr net for each kilowatt-hour. If you consume 2000 kWh per year, your bills will increase by another 20 PLN per month. The suspended capacity fee (4-14 PLN per month, depending on consumption) will likely return this year, which could ultimately result in increases of another 30 PLN per month – an additional 20% increase.

Changes in G11 and G12 Tariffs

For example, today PGE customers have a G11 tariff price of 74.4 gr net for each kilowatt-hour consumed (although they pay less because prices are frozen by the government). Tauron customers pay 74.2 gr net. In both cases, in the new tariff, the price will drop to the mentioned 62 gr net per kilowatt-hour. In the case of the G12 tariff (where electricity has a different price during the day and a different one at night), the price will be 71-72 gr during the day and 43-45 gr at night (depending on the company).

Benefits for High Energy Consumers

Not everyone will pay significantly more for electricity next year. Previously, the price freeze covered only the first 3000 kWh consumed per year. Owners of electric heating paid 69 gr net for each additional kilowatt-hour after exceeding the limit. Now they will pay 62 gr net per kilowatt-hour in 2025.

Compensations for Energy Companies

It is worth knowing that despite the freeze on energy prices, energy companies will receive compensations from the state for not being able to bill according to the "real" prices agreed with URE. If we pay 50 gr for each kilowatt-hour, and the URE tariff indicates that we should pay 62 gr, energy companies will receive compensation equal to that difference. This difference will be covered collectively by all taxpayers.

Impact of Taxes on Energy Prices

The electricity prices approved by URE are higher than the energy prices in effect on global exchanges for two reasons: part of the electricity was ordered in futures contracts at higher prices, and energy produced in Poland is expensive because 70% comes from coal. The production and transportation of one kilowatt-hour of energy costs 62 gr (production) plus 43 gr (distribution) plus about 30 gr in taxes (VAT, excise duty, capacity fee). Ultimately, we will pay exactly that, 1.35 PLN gross.

Increase in Gas and Coal Prices

Not only electricity will become more expensive. Forecasts indicate that gas and coal prices will also rise. According to reports, coal prices may significantly increase by 2025 due to increased production and transportation costs, as well as the European Union's climate policy aimed at reducing CO2 emissions. Currently, coal prices on the European market are already high, and they are expected to continue rising, which will affect increased costs of heating homes with coal.

Similarly, gas prices may also rise significantly. At the same time as the freeze on electricity prices is lifted, the maximum price for gas for households set at 200.17 PLN per MWh will cease to apply. From July, the gas price in the new PGNiG OD tariff will be 239 PLN per MWh. Experts estimate that the lifting of the gas price freeze will result in about a 20% increase in bills, although it should be noted that these are averaged estimates. For those heating their homes with natural gas, estimates indicate an increase in costs of about 1000 PLN. The new tariff will be in effect for a year.

Further increases after this period are not excluded, especially since a global increase in the price of blue fuel is forecasted. This increase will primarily result from rising global demand as well as supply constraints. European markets are already feeling the effects of rising gas prices, and this trend is expected to continue until 2025.

Increases in Energy Carrier Prices in 2025

The new tariffs for 2025 approved by URE mean an increase in electricity prices for the average household. However, it is worth noting the possibility of utilizing the energy voucher and the fact that those consuming more energy may ultimately pay less than before. It is also important to remember that some of the costs we bear are not directly on the electricity bill, but through taxes financing compensations for energy companies.

Ultimately, both the increase in gas and coal prices means that electric heating may become more cost-competitive. It is important to make informed decisions regarding energy consumption and to take advantage of available discounts and compensations to minimize the impact of price increases on the household budget. In the case of electric heating, investing in a photovoltaic installation still seems to be a very good solution. The government offers a number of funding programs for such installations, which may prove profitable in the long run.