The Polish government, when implementing the "Principles of Operation of the Energy Market in Poland in 2000 and Subsequent Years", which determes the agenda of actions to be taken towards liberalizing and privatizing Poland's energy sector, organized the creation of the Polish Power Exchange. Its founding act was signed in November 1999 and the first market transactions were concluded in June 2000.
The establishment of the Power Exchange aims to improve the effectiveness of Poland's energy and related sectors. Further, the intention is also to ensure its adaptation to EU regulations, the assurance of equal conditions of access to the energy market for all of its participants, the creation of clear rules for the energy market, the minimization of transaction costs, and the achievement of objective and credible energy prices.
In general, wholesale trade in energy is intended to be conducted in three segments:
- on the contract market, through the conclusion of bilateral contracts;
- on the exchange market, through the conclusion of contracts on the Power Exchange; and
- on the balance market, through the balancing of differences between transactions concluded on the contract market and the exchange market and the real needs for power supply.
The advantage of the exchange market is that it allows for the elimination of trade risks, since participants purchasing energy must provide guarantees, reduce negotiations costs because of the possibility of automatic research of the best offer, assurance of flexibility in the conclusion of transactions, and objective market prices for energy.