This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The Polish law has seen some recent developments which are relevant for the energy sector, including the introduction of the utility easement (already in force) and new regulations regarding the connection of power plants to the distribution network, which should soon be adopted.

The utility easement

In the second half of 2008, a small but significant amendment was made to the Polish Civil Code. It introduced a comprehensive regulation of the rights to utility devices located on third party estates. Land easements and personal easements are well known to the Polish law and provisions regulating them are comprehensively formulated in the Civil Code. However, the issue of utility easements was until recently only partially regulated and many aspects of its actual functioning had to be interpreted by the courts. Many matters were unclear, such as the separate ownership of utility devices located on an estate, the time and conditions of such devices being transferred to the entrepreneur and settlements between the landlord who paid for the installation of such devices and its new owner.

According to the new provisions, an estate can be encumbered in favour of an entrepreneur who is planning to build, or holds on such estate, devices used for a utility (such as power lines used for the transmission of electricity). The encumbrance would grant the right to use the encumbered estate in accordance with the purpose of such utility devices. The amendment introduced a rule for appropriate consideration for such an easement. The entrepreneur can request before a court of law that such easement be established, if necessary, against the will of the owner of the estate. On the other hand, the owner is entitled to appropriate consideration in exchange for establishment of the easement.

The new regulation also provides for the right to transfer the utility easement if the entire enterprise that owns the utility devices is sold, or if the utility devices are sold. In order to facilitate future interpretation in relation to utility easements, the rules regarding land easements should apply to utility easements by analogy.

As a consequence of the above utility easement being introduced, it should be easier to build e.g. a power line as both the rights of the energy companies and owners of the estate have been clearly formulated. It is now easier for energy companies to request that such a right be established, and for owners to request appropriate compensation.

Planned amendments to the Energy Law

Aside from the utility easement, a further development in relation to the energy sector is a planned amendment to the Energy Law, prepared by the Ministry of Economy. The amendment relates to a number of issues, including the security of the supply of energy, the procedure for designating the operators of energy and gas systems, the conditions for connecting to the energy distribution network and the obligation to sell energy in a manner which allows equal public access to such energy.

Among the most relevant changes are those relating to the conditions for connecting to the energy distribution network. Currently, an entity which is planning to connect its power station to the distribution network must conclude a pre-interconnection agreement containing the conditions for connecting to the distribution network (the Conditions). The Conditions can be obtained by any entity fulfilling a detailed requirements listed in the Energy Law. However, no money has to be paid at the moment of obtaining the Conditions, only when the final interconnection agreement is concluded. This has led to the situation in which distribution firms, when handling new applications, take into account Conditions which have already been issued, even when these are never fulfilled or are obtained by entities which are only planning to sell them for a profit. As a consequence, entities sometimes have to wait up to two years to obtain the Conditions.

Consequently, the Ministry of Economy is planning to introduce a fee for having the Conditions issued in the amount of PLN 30 for each kV of power to be connected, which is quite a significant amount (the average fee will be PLN 1-1.5 mln, or ca. EUR 250,000-375,000). The planned amendment to the Energy Law will also introduce a 150 day term for the Conditions to be issued (currently no term is defined in the law).

However, the amendment does not deal with the issue of transferring the Conditions to other entities, which is still not precisely regulated. It also does not regulate the rules for establishing the connection fees, which are currently calculated on the basis of the actual cost of connection and, in practice, can vary significantly.

The draft amendment is currently being debated in the Parliament. It has had its first reading.

Summary

Although the above changes in the law are of differing natures and relate to different aspects of the operations of companies active in the energy sector, they are all aimed at facilitating such operations and making the legal landscape more predictable. One year after its introduction it is still being hotly debated whether the institution of the transmission servitude to the Civil Code was properly effected. Opinions are also mixed on whether the proposed amendment to the Energy Law will achieve the intended goals.

Still, the fact that new legislation aimed at solving some of the existing problems of the energy sector has been introduced at all must be seen as something positive.

Until recently the issue of utility easements was only partially regulated and many aspects of its actual functioning had to be interpreted by the courts.

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.