Poland’s Prime Minister Donald Tusk has called on state-owned power utilities to prioritize cheap electricity as part of a broader campaign to make the country competitive amid shifting global trade patterns. During a meeting with the country’s top utility officials on Monday, Tusk delivered a frank and bold message, calling on such firms to put national economic interests above profit maximization. “The era of naivete in globalization is over,” Tusk said in a business forum in Warsaw the following day.
Tensions and executive reactions
Tusk’s words, though blunt-tongued, were welcome among utility heads. Dariusz Marzec, executive chief of Poland’s largest utility, PGE SA, remarked that cheap power prices are critical to the country’s economic presence on the globe. He noted also that the meeting was productive in aligning the government’s agenda with those of the electricity industry. PGE, waiting for a dip in regulated electricity prices next year, claims to have no aim to incur loss from domestic tariffs.
However, the stock market had a jittery reaction. Shares of Poland’s biggest utilities fell up to 11% on Tuesday with investors worried about potential political interference in company management and the impact on earnings.
Though the market suffered losses, utility leaders appeared resolute about staying true to Tusk’s agenda. Grzegorz Lot, the CEO of Tauron Polska Energia SA, PGE’s biggest competitor, seconded Marzec’s view that cheap electricity is the secret to Poland’s competitiveness in the global arena. Lot emphasized, however, that Tauron would never sacrifice its profit margins to answer the prime minister’s appeal for lower energy prices. “I see no risks in the wake of the prime minister’s meeting,” Lot said, showing that the country’s major utilities are poised to heed Tusk’s invitation without jeopardizing financial stability.
The bigger picture
Tusk’s appeal for low-cost electricity represents a shift in Poland’s economic strategy, with a focus on developing home industries as the world grows more unstable. While the government’s request for less expensive energy may boost the economy in the short term, its long-term impact on utility profits is uncertain. As Poland makes these changes, the question is whether the country’s biggest utilities can balance political pressure with the need to placate investors and stay profitable.
