Switching vendors is a normal market practice, thanks to which the end customer can reduce the burden of using electricity. In the perspective of the coming two years, tools will be available to make such a process much easier – first of all, it is about reducing the duration of the “technical” side to 24 hours, a comparison of offers, contracts with dynamic pricing or the Central Energy Market Information System, which is a national information hub about market participants.
What issues are worth considering today when terminating a contract with an existing electricity supplier?
1. Compensation for early termination of the contract
Termination of a contract concluded for an indefinite period does not entail negative financial consequences for the customer – according to Article 4j (3) of the Energy Law, the seller cannot demand any compensation from the end customer.
However, in the case of fixed-term contracts, the situation is different:
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- households, micro-entrepreneurs and small entrepreneurs may be charged with the obligation to pay compensation, which, however, may not exceed the seller’s actual economic losses, provided such compensation and the method of determining it are included in the contract – Article 4j (3a) of the Energy Law,
- other customers may be charged with the obligation to pay compensation, provided such compensation and the method of determining it are included in the contract, but in this case the regulations do not specify an upper limit for such an amount. It is usually a % of the value of the volume remaining to be delivered for the period remaining until the end date of the contract – Article 4j (3a) of the Energy Law
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The key in this aspect is to verify that the amount of compensation was firstly stipulated in the contract, secondly – whether in the correct amount (the recipients of point 1), and thirdly – whether the method of determining the compensation makes it possible to realistically determine its amount, as it cannot be an abstract amount or arbitrarily indicated by the power company.
2. Power of attorney – general requirements
Most often, the end customer is represented by the new seller, who, based on the power of attorney granted, informs about the termination of the existing sale and notifies the new contract to the distribution system operator for execution. Failure by the new seller to comply with its information obligations constitutes an administrative tort and is punishable by a fine (Article 56(1)(16a) in conjunction with Article 4j(4a) of the Energy Law).
A power of attorney, in order to be valid, should first of all comply with the provisions of civil and corporate law. It is therefore a matter of fulfilling such obligations as proper representation of the principal or a complete scope of authorization, allowing the entire process of seller switching to be carried out. Potential shortcomings in this regard can have significant negative consequences, as they delay or even prevent the launch of the new contract.
3. Form of termination notice – recent changes
As of October 24, 2023, the Energy Law does not require that the statement of termination of an electricity supply contract be in writing. This change is due to the implementation into the national legal order of the provisions of Directive 2019/944 on common rules for the internal market in electricity, specifically Article 12(4), according to which national legislation may not establish barriers and restrictions that cause customers to incur excessive costs or undue involvement in the process of changing electricity suppliers.
According to the explanatory memorandum of the draft law amending the Energy Law (Druk 3237), the amendment to Article 4j (3) and (3a) of the Energy Law, in addition to limiting the rules of financial liability for early termination of the contract by end customers in households and micro and small entrepreneurs, makes precisely the technical simplification in the form of abandoning the written form of the termination statement.
This has momentous consequences, because:
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- Article 77 § 2 of the Civil Code, according to which termination of a contract may be in written, electronic or documentary form, will apply accordingly, and.
- the relevant provisions of contracts for the sale of electricity may not regulate the terms of termination in a manner less favorable to the customer, for example, by requiring a declaration in writing under pain of nullity. This is because such an action would mean shaping the position of the customer contrary to the directive, making it difficult to freely change supplier.
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It is worth noting that the legal environment of the electricity system is undergoing intensive electronification, which will take its final shape after the launch of CSIRE. All the more reason why it will be justified and even necessary to move away from the requirement of writtenness for certain statements made in the context of electricity sales.
