The issue of back-up sales is often treated as a side issue with little relevance to securing electricity supply. However, it is worth remembering that the current regulations impose a number of obligations on energy market participants, and the already enacted amendments to the Energy Law will result in new rules for reserve sales from 1 July 2025.
Who is a reserve seller?
In a nutshell, a standby seller is obliged to ensure the sale of electricity in the event that the basic sales agreement or the comprehensive agreement has been terminated and the end customer has not concluded a new agreement (Article 3(6b) of the Energy Law). A standby seller can be any energy company licensed to trade in electricity (Article 3(29a) of the Energy Law), which has also concluded a general distribution agreement (GDA or GDA-K) with the relevant distribution system operator and agreed to act as a standby seller.
The reserve seller shall be indicated by the end customer in the distribution contract or the comprehensive contract (Article 5(2) and (3) of the Energy Law). Each distribution system operator is obliged to post on its website, and for inspection at its premises, a list of reserve sellers with a reference to their websites containing information on the commercial terms and conditions of reserve sales and a template.
Interestingly, it is possible for the distribution system operator to be both the lead seller and the reserve seller at the same time – this could occur in the case of a closed distribution system or in the case of operators operating in a small territory. Although the solution seems contradictory – in particular when the termination of the lead contract occurs due to reasons attributable to the seller – it is worth remembering that back-up sales apply to special cases. In the worst case, a sales contract is concluded with the seller of last resort (Article 5ab(2) of the Energy Law).
The process of introduction and execution of reserve sale
The standby sales contract is valid from the moment of cessation of sales under the main contract concluded by the end customer and is concluded for an indefinite period (Article 5aa(7) of the Energy Law). Nevertheless, the target nature of the standby sales contract is temporary. It is intended only to secure the sales process to the end-user until a new electricity supply contract is concluded.
If the prerequisites for triggering a standby sale are met, the distribution system operator shall conclude a standby sale agreement on behalf of the end-user with a seller selected by the end-user (Article 5aa(6) of the Energy Law). At the same time, the operator is obliged to inform the end customer of the conclusion of the contract on its behalf within 5 days of its conclusion (Article 5aa(8) of the Energy Law).
The standby sales contract lasts until it is terminated by mutual agreement of the parties, by termination by the final customer, or by the conclusion of a new sales contract by the final customer (Article 5aa, paragraph 7 of the Energy Law).
As already mentioned, the price conditions for reserve sales are far less attractive than standard sales. This is justified by the following arguments:
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- reserve sales should not be abused as they disrupt the ongoing operation of the market,
- the back-up seller has to secure the volume for the end-customer in ongoing transactions and not in advance,
- reserve sales should be short term.
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If the reserve sale contract is terminated by the end customer and no new contract is concluded, the distribution system operator shall cease the supply of electricity (Article 5aa(12) of the Energy Law).
Regulatory change – new rules for reserve sales
From 1 July 2025, new rules for reserve sales will come into force. First of all, the reserve seller will be the obliged seller appointed for the respective distribution system operator. This is closely linked to the introduction of the Central Energy Market Information System. If information about the end customer’s possession of an appropriate agreement for the supply of electricity is not entered into this system, then by operation of law the obligations of the seller and the party to the agreement with such customer will become the obliged seller (Article 5ac(1)-(3) of the Energy Law). Such a contract shall also be valid for an indefinite period of time (Article 5ac, paragraph 4 of the Energy Law). If the obliged seller cannot undertake reserve sales, then its obligations are taken over by the obliged seller appointed for the transmission system operator (Article 5ac, paragraph 5 of the Energy Law).
The amendment to the legislation will also include the introduction of a new legal definition – standby sale of electricity (art. 3 item 6c of the Energy Law: sale of electricity to an end user connected to an electricity distribution network by a standby seller of electricity in the event of failure to notify the central energy market information system of the conclusion of an electricity sale agreement or a comprehensive agreement for a given energy point. )
The obliged seller shall be informed by the energy market information operator of the need to start standby sales (Article 5ac, paragraph 7 of the Energy Law). Interestingly, if the termination of the sales contract occurred for reasons relating to the seller, the end customer will then not incur any costs or charges and the contract is terminated by operation of law (Article 5ac, paragraph 8 of the Energy Law).
Standby sales will take place on a monthly billing basis and the seller will be obliged to inform the end customer of the possibility of concluding a new sales contract with the selected seller. The back-up sale will then expire by operation of law (Article 5ad(2) and (3) of the Energy Law).
As with the current legislation, the cessation of standby sales will occur as a result of termination by the end customer, the conclusion of a new sales contract or the termination of a distribution services contract (Article 5ae(1) of the Energy Law).
