Legal Affairs Working Group

Transcription

1 Ref: Liability towards Customers with Regard to Electricity Supply... Legal Affairs Working Group...

2 The Union of the Electricity Industry EURELECTRIC is the sector association representing the common interests of the electricity industry at pan-european level, plus its affiliates and associates on several other continents. In line with its mission, EURELECTRIC seeks to contribute to the competitiveness of the electricity industry, to provide effective representation for the industry in public affairs, and to promote the role of electricity both in the advancement of society and in helping provide solutions to the challenges of sustainable development. EURELECTRIC s formal opinions, policy positions and reports are formulated in Working Groups, composed of experts from the electricity industry, supervised by five Committees. This structure of expertise ensures that EURELECTRIC s published documents are based on high-quality input with up-to-date input information. For further information on EURELECTRIC activities, visit our website, which provides general information on the association and on policy issues relevant to the electricity industry; latest news of our activities; EURELECTRIC positions and statements; a publications catalogue listing EURELECTRIC reports; and information on our events and conferences. Boulevard de l impératrice, 66 bte2 - B 1000 Brussels Tel. : Fax. : [email protected]

3 Liability towards Customers with regard to Electricity Supply... Legal Affairs Working Group... Paper prepared by: Chairman: Antonio Alfaia DE CARVALHO P. Baeten (BE); S. Bakker (NL); E. Borges (PT); S. Carletti (LU); L. Catenos (FR); P. Chiricozzi (IT); B. Coolens (LU), H. Essebaa (TN); K.l Ferrari (IT); J-L. Freilinger (LU); S. Garcia Delgado (ES); C. Germann (AT); F. Giorgianni (IT); A. Hughes (IE); A. Huszthy (HU); J. Ikla (EE); B. Jadranko (HR); K. Kounadi (GR); S. Krieger (DE); Ib G. Larsen (DK); C. Le Nestour (DE) ; M. Litpher (DE) ; K. Lukas (CZ) ; M. A. Marcon (SI) ; G. Milosevic (BA) ; S. Mraz (SK) ; F. Philipp ();J. Ponikelska (CZ); A. Rothenfluh (CH); P. Sala Atienza (ES); P. Schib (CH); M. Schmidt-Schlaeger (DE); R. Schorn (DE); D. Sierakowski (PL); R. Siilos (FI); O. Stiansen (NO); H. Sylven (SE); K. Syväranta (FI); A-M. Tatin (FR); J. Valovic (SK); S. Vasilyev (RU); P. Vulic (YU) EURELECTRIC: Eva Hoos, Anne-Malorie Géron Copyright Union of the Electricity Industry EURELECTRIC 2004 All rights reserved Printed in Brussels (Belgium)

4 TABLE OF CONTENTS EXECUTIVE SUMMARY... 2 FOREWORD... 4 PART I - COMPARATIVE ANALYSIS OF DIFFERENT LIABILITY SCHEMES IN NATIONAL LAW General Introduction Scope of the Report Geographical Scope of the Answers to the Questionnaire Introduction to the Comparative Study Resume of the Legal Content... 6 SECTION 1 - LIABILITY TOWARDS CUSTOMERS Obligation as an Electricity Supplier Regulation through Law Regulation in/by Concessions Private or Public Electricity Supply Companies which are not Publicly Regulated Liability Towards Customers The obligation to supply customers. How and where is this obligation laid down? Consequences of not fulfilling the Obligations Regulation of the Obligation to Uninterrupted Supply Quality of Supplied Electricity Regulation of Tariffs towards Customers Regulation of General Conditions for the Supply of Electricity Liability Limitations and Limitation Caps SECTION 2 - LIABILITY TOWARDS THIRD PARTIES Product Liability The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Liability limitations Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply PART II - DESCRIPTION OF NATIONAL LIABILITY SCHEMES Austria...24 Belgium...27 Czech Republik...30 Denmark...40 Finland...46 France...53 Germany...57 Hungary...63 Ireland...71 Italy...77 The Netherlands...81 Norway...85 Poland...89 Portugal...98 Slovak Republik Slovenia Spain Switzerland ANNEX - Questionnaire on liability towards customers with regard to electricity supply CONCLUSIONS

5 Executive Summary 1. The report is based on information collected via a questionnaire on liability towards customers with regard to electricity supply. The questionnaire was answered by electricity associations/companies within EURELECTRIC from eighteen countries. 2. The report focuses on liability for fault arising from contract (subjective liability); although a limited consideration was given to liability without fault arising outside of a contract for damages caused to third parties by a defective product (objective or product liability). 3. The legal basis for liability can be found in three main groups of sources: 1) formal law and regulation; 2) concessions, licenses and permits; and/or 3) in pure private law; or in a combination of these sources. 4. A number of countries have energy legislation collected in one act (Energy Act, Electricity Act, or similar). A series of further rules are found in regulations derived from the principal act (e.g. transmission or distribution operating rules, network use contracts) 5. In some countries the obligation to supply correct quality is stipulated by way of law, often with a reference to international standards. In a majority of cases this obligation stems from specific clauses stipulating the correct quality of supply in the contract between the company and the customer, and generally also invoking relevant regulations. 6. For certain customer groups the contract may be controlled by authorities as to the content. If there is no contract, the quality should live up to normal standards, and not be inconsistent with the requirement of continuous and un-interrupted supply. 7. General conditions govern part of the contractual relation between electricity undertaking and customers/consumers. In some cases, the primary contract can include special arrangements for the individual contract that make a departure from the general conditions. In a number of countries, the authorities must approve the general conditions. 8. The liberalised part of electricity supply is not normally regulated by other rules than private law. 9. One of the main tasks of the electricity company is to supply without interruption. In many countries the obligation is spelled out in energy legislation; in other countries it is to be found in legislation, other than that of energy. 10. The supplier can interrupt for valid and relevant reasons, typically relating to technical viability (e.g. works on the network, breakdown risk, etc.) or customer reasons (failure to pay for deliveries). Interruption occurring for such valid reasons does not entail negative legal consequences for the company as regards its liability towards the customer. 11. If supply is not in due time and there is no relevant reason, the customer can generally use remedies available in contract law (withholding of payment, reduction of payment, etc.) or make complaints to competent authorities. In some countries, customers can claim penalty or compensation payment in sanction for not supplying in due time. 12. Terms and conditions for the supply of electricity are generally controlled by a supervision body specific to the energy field, and fixed by energy or electricity supply legislation. It is however not uncommon to have a corresponding body, established as a general consumer protection body with a competence expanding to the field of energy law and supply law. 13. In some countries, the terms of contract are controlled or supervised by competent authorities with the aim to protect consumers rights. 14. The vast majority of countries reviewed have a system requiring a public concession, a licence or a permit to be issued before operation as an electricity undertaking may begin

6 15. Concrete requirements set out in concessions, licenses and permits vary widely. In general, conditions mirror a number of concerns made at the political level. These usually relate to obligations to connect and transmit, use reasonable pricing, develop and/or finance infrastructure, and provide consumers with recourse in case of complaints. Apart from strictly electricity-related considerations, conditions as to financing, environment, labour and other issues are also found in the various conditions set out in national energy law. 16. Failure to abide by the conditions has consequences in the laws of all countries. Authorities can oblige the concession/license/permit holder to act in full accordance with the conditions, and can also revoke or withhold the concession, license or permit. 17. The obligation to supply always rests with the electricity supplier that is de facto delivering physical electricity as well as with the network company. However, no matter whether the market in question is fully or only partly liberalised, or not yet liberalised at all, the electricity network company is always in charge of delivering physical electricity. 18. In all countries, obligations can be enforced through one or more of the following options: a) liability as a consequence of not fulfilling the obligations according to law or concession; b) sanctions in administrative and/or criminal law (fines, administrative sanctions, etc.); c) orders (discontinuation or commencement of certain practices, etc.); d) liability in contract; e) revocation of licenses. 19. The consequence of not meeting obligations towards final customers in terms of supply in due time and quality is, in most countries, found in contract under private law between the customer and the supply company. However, in some countries, delivery in due time is regulated by statute through compensation payment from the supply company to the individual customer for failures of energy delivery. 20. In a number of countries liability towards final customers for not supplying electricity in accordance with contract has been established by energy/electricity legislation. In other countries liability is established by general purchasing legislation that gives the customers a series of remedies when the supplier fails to deliver in due time and with due quality. 21. Some countries have established by legislation a compensation scheme for supply interruption cases laying down when and how compensation must be paid to the final customer. 22. In other countries, the obligation of continuity of supply is also regulated through private law. These countries work on a contractual basis (breach of contract) or or in combination with an extracontractual basis (whether requiring fault or not). 23. The remedies available can be of many kinds. Price reduction is normal although such reduction does not rule out subsequent compensation. In some countries, reductions and compensation are standardised. 24. The consequences of failure to supply quality include requiring the electricity supplier to pay compensation to the customer for damages to the customer s installations or other property. In this regard, all countries employ culpa standards. 25. Liability may be limited. This is the case for non-performance due to force majeure. Often liability is capped by statute. Caps may be absolute or relative. In some countries insurance is mandatory. Negligence or default by the consumer reduces or removes the supplier s liability. 26. Following the translation of the EU Product Liability Directive into national law, liability without fault, i.e. liability outside contract for damages caused to third parties by defective products, is also recognised in most countries. Product (objective) liability and liability within contract are sometimes confused by legislators and practitioners

7 Foreword This report is divided into two parts and an annex. The first part contains a comparative analysis of the different national liability schemes. The analysis was drawn up on the basis of information collected during 2003 and early 2004 via a questionnaire produced by the EURELECTRIC Legal Affairs Working Group. The second part contains the answers to the questionnaire on liability towards customers with regard to electricity supply, by electricity associations or companies from eighteen countries affiliated to EURELECTRIC. The annex contains the questionnaire. The report reflects the status of the liability schemes in 2003 and in the first half of It can be expected that as the process of implementation of the second Electricity Directive 54/2003/EC kicks off from 1 st July 2004, liability systems will change considerably following gradual market opening to all consumers over the next three years, until 1 st July In anticipation of these changes, the EURELECTRIC Legal Affairs Working Group, decided to update annually the Report on Liability towards Consumer with regards to Electricity Supply. The current report describes liability in a context where, in many countries, different regulatory and legal systems still existed for eligible and non-eligible consumers, and unbundling of supply from network activities was not yet fully implemented

8 Part I - Comparative Analysis of Different Liability Schemes in National Law 1. General Introduction Scope of the Report This report is based on information collected via a questionnaire on Liability towards Customers with regard to Electricity Supply. The word liability as used in the questionnaire mainly refers to liability within contracts, i.e. liability for default; however a limited consideration will be given to liability towards third parties (product liability). Regarding the above distinction the report is divided into two parts. The first section concerns liability within contracts (including a certain range of obligations by the seller), and also deals with how electricity supply is regulated, whether it is by law, by practice or by contract (standard contracts). Regardless of how obligations have been imposed (public authority, concession, private agreement), electricity companies have to meet a number of legal and/or contractual obligations, even with the risk of not being able to fulfil them. Within this meaning, suppliers are liable if they do not fulfil their obligations. The second section concerns liability towards third parties, since electricity supplier risks causing injuries, is responsible for construction and maintenance of the electricity network, and is a distributor of dangerous goods (product liability). The EU Product Liability Directive concerns any kind of use of a product that has been put into circulation, and is also regulating the situation between the supplier and the customer that is buying the product. It should be noted, that due to the implementation of the new Electricity Directive 2003/54/EC, changes to the national liability schemes should be expected. This study reflects the status at the time of the writing. 2. Geographical Scope of the Answers to the Questionnaire Answers received from No answer from Presently not represented in EURELECTRIC Legal Group - Austria - Belgium - Czech Republic - Denmark - Finland - France - Germany - Hungary - Ireland - Italy - The Netherlands - Norway - Poland - Portugal - Slovak Republic - Slovenia - Spain - Switzerland - Sweden - Luxembourg - Greece - United Kingdom

9 3. Introduction to the Comparative Study Introduction Method and Reviewed Countries The Questionnaire regarding the obligations and liability of electricity supply companies towards customers has been answered by the electricity associations/companies within EURELECTRIC from the following eighteen (18) countries: Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Ireland, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain and Switzerland. There has been no material contributed from Greece, Luxembourg, Sweden and the United Kingdom. The Questionnaire has been answered in varying detail. Some countries have given information about their legislation with great specification. The Comparative Analysis (see below) extracts the relevant information from the national answer without looking to the quantity of the given information. The Analysis has itself been analysed by the contributors. Thus, there is a high degree of certainty that information on every country has been dealt with correctly. The Analysis follows the structure of the Questionnaire, in order that it is possible to compare the analysis with the legal situation in the various countries with regard to a concrete matter. 4. Resume of the Legal Content The object of the preliminary report is to outline trends in the regulation of the countries under review. This is the reason that the comparative report may seem simplified. To make the analysis possible, not all details should be included. However, in order to enable a clear assessment of the regulatory scheme adopted in a given country, regard should be given to the broader picture made up by the schemes of neighbouring countries and other countries. The preliminary report includes details only if used as an illustrative example or in cases of marked derogations from the schemes adopted by the majority of countries. The fact that a country has been mentioned in the footnote, therefore, should not be taken as evidence that similar legal regimes do not exist in other countries. The list of countries, or the exclusion from such a listing of certain countries, should not be regarded as exhaustive, because the different focus of the different national answers did not allow a fully systematic comparison

10 SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier This section deals with the legal basis of the electricity supplier s obligations. The legal basis can be found in formal law and regulation (1.1.1.); concessions, license and permit (i.e. contract with the authorities) 1 (1.1.2.); and/or in pure private law (i.e. private contract with customers (1.1.3.). The section shows that most of the reviewed countries have energy law and regulation and a concession system at the same time Regulation through Law Most countries use a general civil law/civil regulation law system, or a blend of law/regulation and provisions of concession contracts between the electricity company and the competent authorities. A number of countries have energy legislation collected in one act (usually an Energy Act, Electricity Act or similar). These acts are generally new (most date from or later) 2, and they are generally updated on a regular basis by the national legislator. Further, a series of rules are found in regulation derived from the principal act, being, for instance, transmission or distribution operating rules, network use contracts etc 3. Obviously, such regulation carries more details than the principal act. The Law usually contains rules about the competent authorities (ministries, energy regulatory authorities, inspection authorities, complaints authorities etc). 1 In the report, the word concession also designates permit, permission, and license or any other official act, regardless of how it is called in a given national system, which authorizes companies to perform activities related to the supply of electricity. 2 United Kingdom electricity supply liberalization dates back to Norway and Sweden have statute acts adopted in 1991 and 1996 respectively. 3 See for instance the Dutch Net Code, Measurement Code and System Code that are issued by the regulatory authority

11 Countries with electricity or energy acts as such: TABLE A. Dates indicate year of adoption of the main act with amendments of subsequent years. Federal Energy Law of 1998, with amendments 2000 and 2002; Austria Executive law at federal state level. Above 70 kv: Federal Electricity Law (Statute on the Organization of the Electricity Market) of Belgium Royal Decree of concerning the authorisation to supply electricity by intermediate persons and a code of conduct obligation Below or equal to 70 kv: Regional Decrees for Brussels, Flanders and Wallonia Czech Rep Energy Act of with amendments of 2002 and Electricity Supply Act of with amendments of 1999, Denmark 2001, 2002, 2003 Electricity Market Act of , with amendments Finland Electricity Market Decree , with amendments France Law on Electricity of with amendments of 2003 Energy Act of 24th April 1998, last amended with act dated 20th May Regulation about general terms and conditions for the supply Germany with electricity to tariff-customers (Verordnung über Allgemeine Bedingungen für die Elektrizitätsversorgung von Tarifkunden) of 21st July 1979, amended with act dated 5th April 2002 Hungary Act CX of 2001 on Electric Energy Energy Market Regulation 79/99, regulatory act 155/02, regulatory Italy act 200/99 Electricity Regulation Act of with secondary legislation Ireland in years 1999, 2000, 2001 and 2003 The Netherlands Electricity Act of 2 July 1998, lastly amended in 2003 Energy Act of with amendments of 1992, 1993, and Norway Poland Energy Law Act of with amendment of Decree Laws 182/95 to 185/95, of on Organization of National Electrical System, with later amendments introduced in Portugal 1997, 1999, 2000 and 2002, complemented by Decree Laws 184/03 and 185/03 of Energy Act 70/98 and Act on Regulation of Network Industries Slovak Republic 276/2001 Slovenia Energy Act ( Official Gazette 79/99, 8/00 and 50/03) Royal Decree 1955/2000, whereby the following activities are regulated: transmission, distribution, commercialisation, and Spain authorisation procedures for electricity installations sites. Electricity Act 54/1997 Switzerland Federal Electricity Law of No specific Act on supply of Electricity

12 Specific remarks concerning the scope of law and regulation with regard to: - The obligation to build, maintain and run an electricity supply network Generally, national regulation concerning the obligation to build, expand, maintain and run electrical installations that are necessary in order to supply customers with electricity is not very specific but does include the obligation to act in accordance with the broad needs of customers. 4 In some countries, regulation can force suppliers to build new infrastructure (installations for combustion and other generation; and networks). 5 It seems, however, that regulation is very seldom used to force new capacity to be built. The following countries have clauses in their electricity legislation that regulate the obligation of electricity companies to build, maintain and run electricity installations: Austria, the Czech Republic, Denmark, Finland, Germany, Italy, Ireland, the Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia and Spain. In other countries this obligation is found in the concession. See under on concessions. In Switzerland there is a federal law governing the maintenance and running of electricity supply networks but no obligations to build such networks. The obligation of building an electricity supply network can be found either in cantonal (regional) laws or in concessions for use of public land. In a third group of countries, this obligation is implicit in the tasks of the electricity company, for instance by virtue of the existence and the subject matter of the company. - The obligation to supply correct quality Some countries have remarked that correct quality is stipulated by way of law: Finland, Germany, Portugal, Slovakia, Slovenia, The Czech Republic and Spain. Most often, this obligation stems from contract between the user and the supplier (which, concerning certain customer groups may or may not be controlled by authorities as to the content). Regulation and specific clauses concerning the quality of electrical supply is most often stipulated in the contract between the company and the customer. Quality regulation very often refers to international standards and norms. In Norway for example, the name of the international standard is cited in the contract. In France the EN norm is stipulated in the general conditions for electricity supplying and for the use of network. In Austria, Denmark and Poland, the quality is stipulated in the general conditions for the use of the network, and in Spain the name of the international standards is cited in the electricity legislation /RD 1955/2000, art 102. In Belgium, on the federal 6 as well as on the regional level, there exists a Technical Regulation (Réglement Technique) which requires the network operators to respect European Norms. These norms are sometimes repeated in the Access Contracts. Also in Belgium the quality is stipulated in the general conditions for the use of the network and sometimes in the contract. If there is no contract, the quality should live up to normal standards, and not be inconsistent with the requirement of continuous and un-interrupted supply. 7 Supply to medium and high voltage customers is normally governed by individual contracts. 8 4 For instance in Finland, Germany and Hungary. For very specific and detailed information, see the contribution on Poland. 5 For instance in Denmark and in Ireland (Irish Commission for Energy Regulation). 6 Arrêté Royal du 19 décembre 2002 établissant un règlement technique pour la gestion du réseau de transport de l électricité et l accès à celui-ci. 7 See, e.g., Finland 8 Germany, Switzerland

13 - The obligation to supply in due time In the following countries, the obligation to supply constantly has been regulated by energy legislation: Austria, the Czech Republic, Finland, Germany, Hungary, Ireland, Slovakia, Slovenia, Spain, Norway and France. Regulation is to be found in legislation outside of energy legislation in the following countries: Denmark, Italy, Poland, Portugal and Sweden. The main task of the electricity company is to supply without interruption. However, the supplier can interrupt for valid and relevant reasons, generally including technical reasons (security reasons, works on the network, breakdown risk etc) and customer reasons (usually failure to pay for deliveries). In Belgium such interruption is the responsibility of the network operator. When interruption with such a reason occurs, this does not entail negative legal consequences for the company s legal relationship with the customer. If possible, the supplier must inform the customer if it is evident that the supplier cannot supply in due time. If supply is not in due time and there is no relevant reason, the customer can generally use remedies in contract law (withholding of payment, reduction of payment, etc.) or make complaints to competent authorities. Some countries have established a penalty system by way of legislation. According to this system, a penalty or compensation payment is the sanction for not supplying in due time. - Control of terms and conditions for the supply of electricity In a number of countries, the controlling body is fixed by energy or electricity supply legislation (i.e., an energy supervision body specific for the energy field). This is the case in Austria, Belgium, Czech Republic, Denmark, Finland, Ireland, Italy 9 Norway 10, Germany 11, Poland, Slovakia, Slovenia, Spain and France. In other countries, a corresponding body is established as a general consumer protection body whose competence expands to the field of energy law and supply law: Ireland, Norway 12, Poland, Switzerland (only price control) and France (for some aspects). Yet, in other countries, there is no special authority controlling consumers terms and conditions: Germany 13. In some countries 14, the terms of contract are controlled or supervised by competent authorities. The aim is to protect the consumers rights. The authorities can check terms on - data to be supplied before the contract is valid - termination and expiry of the contract - changes in the terms - delay and interruption terms - methods of payment 9 In Italy the independent authority established by law 481/ Only price control and only with regard to networks tariffs. Terms and conditions are controlled through general consumer protection law. Energy tariffs are products of the free marked. 11 The situation is the same as in Norway. 12 Network tariffs are controlled by a specific energy control authority. 13 In Germany this is due to the fact that conditions stated in the General Conditions Regulation which is an execution order to the Energy Law are automatically part of the contracts with the tariff-customers and often also implemented into the contracts with other customers by the parties. 14 Hungary, Finland, Denmark. In Belgium the general terms and conditions of access contracts are supervised by the Regulators

14 In these countries it is a general feature that the authorities control and supervision are not carried out without a certain degree of co-operation with the Electricity Associations. In this way, the terms of contract are balanced. - Other legal rules All countries have legislation of a more general scope which also applies to the electricity sector; general contract legislation and general legislation on purchase of goods are only a few examples Regulation in/by Concessions The law of the following countries requires a concession 15 before activities as an electricity undertaking can commence: Austria, Belgium 16, Czech Republic, Denmark, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Slovakia, Germany and France. Thus, the vast majority of countries reviewed have a concession system requiring a public concession to be issued before operation as an electricity undertaking may begin. Slovenia and Spain have no concession systems (as the sector is fully governed by contract and regulation). Concessions are granted by local or state authorities, or by both. In the Netherlands only the grid managers and the suppliers to small-scale consumers require a concession or license; generating companies do not need a specific concession. In Portugal and Austria, distributors shall have a state administrative license as well as a standard concession contract with the local authorities in the area where the distributor is operating. In Switzerland the obligation as an electricity supplier can be found either in cantonal (regional) laws or in concessions for use of public land. The following remarks are not applicable for the business of selling or vending in countries where sale of electricity on the free market is not subject to a license. This is true in the case of Finland 17, as well as of Germany in part. In all countries, a number of conditions must be fulfilled in order for a concession (license, permit etc.) to be issued. The number and type of conditions vary, however. Also, the legal basis for conditions varies (statute act, government notice, practice, agreement). In general, conditions mirror a number of relevant concerns and considerations that are made at political level. Amongst them are usually found conditions on the obligations to: - connect and transmit; - use reasonable pricing; - develop and/or finance infrastructure; - submit to consumer complaints bodies. Apart from strictly electricity relevant considerations, conditions as to financing, environment, labour and other issues are also found in the variations of conditions in national energy law. Concessions in most countries include provisions on their geographical application. Conditions also include rules on expiry, revocation, etc. Generally, conditions allow for an acceptable degree of legal certainty because of the detailed amount of information that is asked for by the authority granting the concession and the response given by the undertaking applying for a concession. 15 License, permission etc. is used as synonym with concession. No specific meaning has been intended unless stated explicitly. See also footnote 1 16 Suppliers of electricity to eligible customers 17 Finland requires a concession for an electricity network company, but no license is required to sell electricity

15 Failure to abide by the conditions of the concession has consequences in the laws of all countries. Mostly, authorities can oblige the concession holder to act in full accordance with the conditions, and can also revoke or withhold the license. How concessions are regulated with regard to: - The obligation to build, maintain and run an electricity supply network In the following countries, the obligation to build, maintain and run an electricity supply network is laid down in license notifications: Denmark 18, Czech Republic, Ireland, Italy 19, Norway 20, France and Belgium. Confer Point ( Law ) - The obligation to supply correct quality In the Czech Republic and Italy 21 the obligation to supply correct quality is laid down in license notifications. In Denmark, Finland, Norway, France and Poland the same obligation is set out in contract: In Ireland the obligation to protect quality of supply rests with the Commission for Electricity Regulation (CER) under s.9 of the 1999 Act and under the 2000 Regulations. The Electricity Supply Board (ESB) was appointed as distribution system operator (DSO) with a duty, inter alia, to ensure that all reasonable demands for electricity are met. The ESB general conditions of supply (May 1998, i.e., prior to liberalisation of the market and being appointed DSO in 2000) provide that ESB will take all reasonable steps to minimise variations. Other suppliers in the Irish electricity market may or may not have similar provisions included in their contracts. In addition, there has been no judicial interpretation to date of the liability of ESB (or other suppliers for that matter) for the maintenance of quality of supply The obligation to supply in due time In Norway and Italy 23 the obligation to supply in due time is laid down in license notifications. In the following countries, this same obligation is set by contract: Denmark, Finland, Czech Republic, Ireland, France, Poland and Slovakia. - Control of terms and conditions for the supply of electricity In the following countries, the legal basis for authorities control of supply terms and conditions is laid down in license notifications: Czech Republic, Ireland, Italy 24, Norway and Slovakia. In France this is achieved by contract. - Other legal rules entailed in concessions: In Ireland, the license to supply also prohibits a supplier who has market dominance from offering to supply electricity to final customers in any market for the supply of electricity in which it is dominant on terms that are predatory. In addition, where a licensee is in a dominant position there is a prohibition on cross subsidies between affiliates or related undertakings. 18 The obligation is found twice; in the license as well as in legislation. The license normally paraphrases legislation. In this way the obligation is a single one, in order for interpretation problems to be avoided. 19 I.e. in the license itself 20 The licence makes a reference to the legislation. 21 I.e. in the license itself 22 See Irish Report under I.e. in the license itself 24 I.e. in the license itself

16 In Italy the concession disciplines the electricity supply, including distribution and sale of electricity to captive customer. The distribution operators are obliged to respect the general and specific quality targets established by the authority. Whenever the concessionaire does not accomplish its tasks, seriously compromising the electricity supply, the Ministry can interrupt or retire the concession. The control of the fulfilment of terms and conditions for the electricity supply is done by the authority. In Switzerland, there exists a great variety of terms in concessions such as exclusivity of supply, correct quality of supply, maintaining and running a supply network; this is due to the differing applicable regional rules Private or Public Electricity Supply Companies which are not Publicly Regulated The review has exposed considerable variation among the European countries with regard to the degree to which electricity supply companies can act outside regulation under public law. In some countries there is very little room left for activities outside regulation. 25 Other countries allow the majority of activities to be governed by private law. As the main rule, the relation between supply companies and customers outside the scope of energy regulation is in the majority of countries governed by contract law and regulation and the general principles of private law. - The obligation to build, maintain and run an electricity supply network In Slovakia these obligations have been established by agreement between the supply company and the consumer. - The obligation to supply correct quality In Switzerland and Slovakia these obligations have been established by agreement between the supply company and the consumer. - The obligation to supply in due time In Slovakia the terms and conditions for supply of electricity is controlled by authority. - Control of terms and conditions for the supply of electricity In Switzerland and Slovakia these obligations have been established by agreement between the supply company and the consumer. In Denmark, these agreements are supervised by the Electricity Supervisory Body (OFGEM). In Switzerland there is only price control. - Other legal rules embodied in contracts General conditions of supply are the type of legal rules most often found as an integrated part of a contract. The general conditions can regulate, for instance, the supplier s right to disconnect in the case of - non-payment - unlawful interference with electrical networks, including dangerous installations - repair of the network (under qualified conditions) etc. Other types of law also apply to contracts, namely contract law, the law on purchase of goods, etc. 25 Legislation in Italy does not use contracts or other private instruments to regulate the supply of electricity. Also in Slovakia, all electricity companies are subject to regulation

17 1.2 Liability Towards Customers In contrast to the first section 1.1 describing national legislation or contracts establishing the obligations of electricity suppliers towards their customers, this section of the report describes the approach to liability in national regulation in relation to customers. The section sets out to describe the national legal regimes governing the consequences of the electricity supplier not fulfilling his obligations according to regulation or contract. Such consequences have various forms (invalidity, criminal proceedings, and civil proceedings). Further, the section explains the proceedings to obtain compensation The obligation to supply customers. How and where is this obligation laid down? The physical obligation to supply electricity rests with the electricity supply company and the (network company). 26 In countries with a not fully liberalised sector, the original supply company has the duty to purchase and to sell electricity. In countries with a liberalised sector, the purchasing and selling function is unbundled from the network function as regards categories of customers who can choose electricity supplier on their own. In a number of countries, liberalisation has fully taken place, and every customer can freely choose his or her supplier. This is the case in Austria, Belgium (Flemish Region), Denmark, Finland, Germany, Norway, Spain, Sweden, and the UK. Other countries have liberalised in part. This has typically taken place in a way allowing large customers to choose their electricity supplier, while smaller customers get similar access successively. Belgium (Brussels and Walloon Region), the Czech Republic, France, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal and the Slovak Republic represent those countries. A minor group of countries have not at all or have not yet started liberalising their electricity supply markets: Switzerland. The obligation to supply always rests with the electricity supplier that is de facto delivering physical electricity as well as with the network company. However, no matter whether the market in question is fully or only partly liberalised, or not yet liberalised at all, the electricity network company is always in charge of delivering physical electricity. This obligation entails: - building the electricity network - maintaining the network - running the network - connecting customers to the network - delivering in due time - delivering in due quality with regard to customers purchasing electricity. The network company can fail to fulfill these obligations, cf. obligations under law (see section ), and concession (1.1.2.) and private law governed companies (1.1.3.). In the following countries, the obligations of the network companies have been established by - energy legislation or electricity legislation: Germany, Spain - energy legislation or electricity legislation and concession 27 : Austria, the Czech Republic, Denmark, Finland, France, Ireland, Italy, the Netherlands, Norway, Poland, Slovakia and Switzerland - general legislation and contract law: Belgium - general legislation and concession: none 26 It is important to note that with regard to unbundling the grid operator is not the electricity supplier. 27 For instance, in Denmark, the concessions simply reiterate the relevant clauses of the law

18 - concession: none In some countries where liberalisation has been completed, the task of purchasing electricity and selling electricity to customers, who have abstained from choosing a supplier on their own, is regulated separately. In some of these countries, that task has been placed with the network company although this function of buying and selling electricity must be fully unbundled from other network activities. This is the case in the Czech Republic, Italy, Norway, Sweden, and the UK. In Denmark, the electricity companies have set up special companies (supply companies of last resort) tasked with supplying electricity to customers who do not wish to make use of the access to choose a market supplier. These companies must have a concession covering a geographical area, and their pricing schemes remain under the control of public regulation. They are generally seen as monopoly companies although they are not as every customer is free to choose an electricity supplier in the full competition market. The remarks made above cover obligations that may entail consequences if breached by the companies Consequences of not fulfilling the Obligations In all countries, the obligation can be enforced through one or more of the following options: a) liability as a consequence of not fulfilling the obligations according to law or concession: Belgium, the Czech Republic, Finland, France, Germany, Hungary, Ireland, Italy, Poland, Portugal, Slovakia and Switzerland. b) sanctions in administrative and/or criminal law (fines etc.) 28 Ireland, Spain 29, Switzerland, Norway, Germany (administrative), France, Slovakia, (administrative sanctions), Belgium, Poland and Portugal. c) orders (discontinuation or commencement of certain practices, etc.) Ireland, Switzerland, Norway and France. d) liability in contract 30 Belgium, Hungary, Ireland, the Netherlands, Switzerland, France, Slovakia Poland and Portugal. e) revocation of licenses Ireland, Switzerland, Germany, Slovakia, Poland and Portugal. As outlined in Section 1.1., the obligations depend on the legal basis and the different types of applied regulation. Sanctions and reactions vis-à-vis supply companies that do not respect their obligations are naturally connected with the used type of law and regulation. - Obligations according to law or concession: Thus, if the obligation to build, maintain and run supply networks is established by statute act, so are sanctions normally. The same reasoning goes for obligations by license. Notifications of license, however, can only contain rights (with derogations) and obligations, while sanctions must be found in formal law, which makes up the foundation of the license being issued. Sanctions for not respecting obligations are, in a number of countries, regulated by the possibility in law to revoke the company s license if the obligations laid down by law or by license are not followed correctly. This is the case of Austria, the Czech Republic, Denmark, Germany (hardly ever practiced), Hungary, Ireland, the Netherlands, Switzerland, Portugal Slovakia and Spain. In other countries, penalties can be imposed on a company failing to live up to its obligations: this is the situation in Spain, Norway, France and Slovakia. 28 An example is Spain. In Poland, fines can be given directly to employees who fail to fulfil the obligation to supply customers. 29 The Spanish electricity legislation establishes administrative sanctions and fines. 30 Slovakia, Spain, Germany, Denmark, France

19 In the Czech Republic, Denmark, France, Germany Ireland, and Spain obligations can be enforced by injunctions issued by authorities. Finally, in some countries, penalties can be given to individual persons charged with the duty of the company to respect its obligations, which is the case of Poland and Spain. In some countries, enforcement sanctions are the task of particular authorities Obligations and liability towards customers: The consequence of not respecting obligations towards final customers in terms of supply in due time and quality is, in most countries, found in contract under private law between customer and the supply company. Yet, in some countries, delivery in due time is regulated by statute act through compensation payment from the supply company to the individual customer for energy delivery failures. See section Liability of the network company towards final customers if obligations according to law or contract are breached: In a number of countries liability towards final customers for not supplying electricity in accordance with contract has been established by energy legislation or electricity legislation: the Czech Republic, Finland, Germany (for tariff-customers), Italy, Slovakia (in energy/electricity legislation and in commerce legislation), Spain, and Switzerland. In other countries liability is established by general purchasing legislation that gives the customers a series of remedies when the supplier fails to deliver in due time and due quality: France, Germany ( for non-tariff-customers), Poland and Slovakia (usually in general commerce conditions of network company which are approved by Regulation authority). See Sections and for further information Regulation of the Obligation to Uninterrupted Supply From a legal point of view, interruption of supply is a delay in the delivery of electricity. - Compensation through public law schemes Some countries have established by legislation a compensation scheme for supply interruption cases laying down when and how compensation must be paid to the final customer. The idea of such schemes is usually to encourage the sector to avoid under-investment and low-quality maintenance. This is the case in France, Ireland, Italy, the Netherlands, Norway, Spain, and Portugal. - Compensation through private law In other countries, the obligation of continuity of supply is (also) regulated through private law. These countries employ a contractual basis (breach of contract) 32 or or in combination with an extra-contractual basis (whether requiring fault or not). 33 This is the case in Belgium, Czech Republic, Denmark, Finland, Hungary, Ireland, the Netherlands, Poland and Switzerland. The remedies available can be of many kinds. Price reduction is normal even though reduction does not rule out compensation on top of that. In some countries reductions and compensation are standardised. 31 See the detailed information about the Czech Republic s State Energy Inspection Board, and the Irish Customer Complaints Arbitrator (section ). In Italy, complaints must be brought before the Courts. 32 Germany, Ireland and the Netherlands (see contribution on that country). 33 The compensation for non-supplied electricity is a standard compensation if the fault is found at the net operator; but the compensation is also considered a breach of contract and can therefore be larger than the above standard compensation scheme if the retailer has made the fault concerned. This is the case, for instance, if electricity is not delivered due to administrative reasons

20 1.2.4 Quality of Supplied Electricity In the majority of countries, the normal voltage is defined at 230 V or 230/400 V. The EN Norm is usually in force. The voltage is either set by regulation or by contract. In the following number of countries, quality of supply is established by legislation: Belgium, the Czech Republic, Germany (for tariff-customers by indirectly referring to EN 50160), Italy, Poland, Slovakia and Spain 34. In Portugal quality of supply is established in regulation and the concession. In other countries quality standards are laid down in private law contracts between the company and the final customer. Often, such a contract refers to the EN Norm. This is the case in Denmark, Finland, France, Germany (for non-tariff-customers), Ireland, Norway, Slovakia and Switzerland. In Hungary the quality criteria of electricity in technical aspect is determined in conformity with the following standards: MSZ 35 1 standard; MSZ EN standards (Operational Code). Some countries use a de minimis limit, practically ruling out compensation for very small variations in the quality of electrical supply. 36 The consequences resulting from lack of quality of supply include that the electricity supplier must pay compensation to the customer for damages to the customer s installations and other property. In this regard all countries employ culpa standards Regulation of Tariffs towards Customers Tariffs are regulated for non-eligible customers and for eligible customers that have not chosen a supplier on the market. See Section For eligible customers, the tariff level is set by market forces. However, in some countries (Norway, Sweden and Denmark), all customers are eligible, and are thus subject to market prices. It is a general feature that there is difference in tariff structure and levels between large customers and smaller ones, including in particular house-hold consumers. The smaller the consumption of the customer, the closer the tariff regulation is. It should also be noted, however, that large customers have far more detailed contracts than smaller ones (a matter of private law). Tariffs are usually established by the authorities (regulatory or other), or for customers who can choose their own supplier by contract. 37 Such contract is usually approved by the authorities, with respect to the freedom of contract between equal partners in contract A. Network Tariffs Because of network companies still being companies within the monopoly sphere, their tariffs for usage of the network remain largely under the control of energy authorities B. Energy Tariffs (Consumption Prices) As stated above, there is in general no tariff regulation for eligible customers. However, in most countries tariff regulation exists for the group of eligible customers that have not made use of their right to choose a supplier on the market 38. Tariffs must be reasonable and publicly available in order for effective competition to take place. 34 The Royal Decree 1955/2000, in article 102 referred to quality of product make bindings the EN Norm. 35 MSZ refers to Hungarian standards. 36 This is the case of Ireland. 37 Finland, Germany, Denmark, the Netherlands, Norway, Hungary 38 This not the case in Norway and Sweden

21 As regards changes of tariffs, in a number of countries changes can happen only on grounds relating to the contract or changes in legislation or for other extraordinary reasons. 39 Thus, it is in the point of departure that the tariffs are binding. It should also be mentioned that in some countries, undertakings raising their tariffs are prevented from binding the customer to accept; the customer is always able to switch supplier (applies only to non-monopoly products and services) Regulation of General Conditions for the Supply of Electricity General conditions govern part of the contractual relation between electricity undertaking and customers/consumers. Generally, electricity undertakings are drawing up the general conditions, and customers/consumers have only a few possibilities to influence the rules of the general conditions. In some cases, the primary contract between the electricity company and the customer/consumer can include special arrangements for the individual contract that makes departure from the general conditions. 40 In such instances, the consumer has better opportunities for taking an initiative to create special rules for his contractual relationship, departing from the clauses of the general conditions A. Electricity Supply Companies: The Liberalized Market Sphere The liberalised part of electricity supply is normally not regulated by other rules than private law. The idea of free competition prevails and runs counter to in-depth regulation B. Electricity Network Companies: The Monopoly Sphere The network company s obligations differ from those of market supply companies as these companies have kept their monopoly position. General conditions are part and parcel of the contract relationship between the network company and its consumers and other customers. The network general conditions for connection to and usage of the network are under authority control in the following countries: Austria, Belgium, the Czech Republic, Denmark, Finland, France Germany (cartel authorities), Hungary, Ireland, Italy, Norway, Poland, Portugal, Slovakia, Slovenia and Spain C. Questions of Authority Approval: Both Spheres In a number of countries, the authorities must approve the general conditions. Thus, regulation concerning approval finds itself in between the market and the monopoly regulation sphere. The authorities act either within the ambit of energy regulation or consumer regulation. The approval takes place after notification of the conditions to the competent authorities. The notification must, in general, include information as to: - price, charges, tariffs - terms of services - quality and quantity - interruption of delivery - payment and methods of payment 39 An example is Finland. In Spain, the tariffs are uniform for the whole of the national territory, and are approved by government. 40 This is the case of larger customers in Germany and Denmark

22 Mention should be made that in Ireland a Customers Charter has been produced by ESB (also known as the Distribution Systems Operator ), outlining standard services Liability Limitations and Limitation Caps Caps are limitations that effectively curtail the pecuniary sum that the company will have to pay to the customer in case of responsibility. Caps may be established by legislation, by contract or by court practice A. Limitations due to Force Majeure Force Majeure is accepted as a general limitation of liability towards customers. The conditions for this limitation to apply are strict, and include inter alia the force majeure to be fully beyond the supplier s control B. Limitations due to Statutory Caps, Negligence, Insurance etc B. 1 Absolute Caps: Absolute caps are caps that cut off a part of the compensation measured as a settled sum of money, for example 800. The various countries have adopted different models. On the one hand, in some countries liability is not capped at all: the Czech Republic, France, Italy and Slovenia. 43 Some countries, on the other hand, have rather detailed liability caps according to the type of damage, degree of negligence and character of the liability-holding person 44. Most countries have found a balance in between. Absolute caps are in use in Belgium, Finland ( 700) and Germany B. 2 Relative Caps: Also, in all countries, deductions have a function as a relative cap in cases of negligence on the part of the person suffering damage (and, in some countries, injury to person as well). Relative caps cut off a certain part or percentage of the actual compensation. In some countries, the authorities most often the courts use established percentages, such as in Denmark (⅓, ½, ⅔). In other countries, compensation is cut entirely according to the estimation of the courts C. Insurance Issues By making insurance mandatory, national legislation often tries to make firmer the risk that companies are running. Also, the financial burdens of compensations are shifted to insurance companies, although, obviously, the electricity company must pay for the insurance premium. Some countries have laid down the obligation of the supplier of electricity to be insured against claims for liability in damages towards customers: an example is Portugal. 41 See section on Ireland. The legal status of the Irish Charter and its potential applicability before the Courts is not clear in Irish law. 42 Only a few questionnaires have detailed response on force majeure. See e.g. section on Austria. Force majeure is also mentioned in the answer from Portugal (section ) (Contractual relations) 43 In Slovenia, no caps exist unless stipulated by contract. France has prohibited clauses limiting the liability of professionals in relations between professionals and non-professionals or between professionals and consumers (eligible customers); however, in French Law, the scope of the limitation is not clear. 44 In particular, Germany s regulation on general conditions for normal tariff customer supply of electricity contains an example of such detailed liability cap scheme. See section on Germany for details. Finland has a standard compensation that is capped at a 700 threshold

23 SECTION 2 - LIABILITY TOWARDS THIRD PARTIES 2.1. Product Liability The status of the EC Directive regarding Defective Product Liability All countries reviewed that currently or in the near future are within the scope of Community Law (i.e. including the new Member States 45 ) have implemented the EC Council Directive 85/374/EEC (EU Product Liability Directive) in national legislation, by law or regulation. 46 Most countries have a specific Defective Product Act. In addition, some countries use general law such as Civil Codes or court jurisprudence to cover issues of product liability that is not covered by the implementation of the EC Directive. In a small number of countries, the Energy Act or similar contains specific rules on product liability in the sphere of electricity law Other Product Liability Regulations A few countries have legal rules on product liability in other statute acts than the Defective Product Act, examples being the Third Party Liability Act that is in force in Germany, the High Voltage Installations Act in force in Denmark or the Civil Codes found in a series of European countries. Such acts often condition liability to the existence of fault (which is not required by national legislation implementing the above mentioned Council Directive). 47 In a number of countries, additional product liability provisions in the law of the Member States can most often be found in concession contracts that are agreed between relevant authorities and electricity companies. Also, the national general laws of tort apply to the relation between tort feasor and damaged or injured third parties Liability limitations Some countries have limitations neither as a top cap nor as a bottom cap. 49 Some countries have caps that have the effect of sorting out small claims that are regarded as an unproportionate administrative burden on electricity companies (and in consequence, on customer complaints organs and civil courts). In some countries, such caps do not apply to injury to person. 50 The top caps are usually very high Except for Slovakia, where statutory amendment implementing the Directive is under preparation.. 46 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products as amended by Directive 1999/34/EC of the European Parliament and of the Council of 10 May 1999 (EU Product Liability Directive) 47 The Danish Act, however, establishes liability for damage without fault unless the damage could not have been foreseen by due and reasonable care (section 17 of the Act). 48 In Norway, the statutory act includes a clause underlining this explicitly. 49 Finland, Slovakia, the Netherlands. In Spain, the electricity legislation establishes for material damage, discounts in the electricity billing as a consequence of the failure to provide the quality of supply, with the maximum limit of 10% of the annual billing of the client concerned. For the personal damage the Civil Code do not establish any limit on liability.). 50 See Ireland s limitation of 44, Switzerland s limitation of 600 (- in both countries no limitation to injury to person), and Portugal and Poland s 500 limitations. Spain s electricity regulation has a limitation regarding defective product liability. 51 Germany: 300,000 (material damage), (bodily injury)

24 2.2. Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply Only a few responses have been received with regard to the issue of confusion. 52 These responses are very different, and may illustrate the need for a strict distinction between liability in contract and outside of contract. This very last question dealing with the issue of confusion simply seeks to drawn attention to the fact that legislators and legal colleagues once in a while tend to confuse the rules about contractual and extracontractual liability. An illustration of this point is the Danish rules about the electricity supplier s liability for damage and injury in the supply, where a distinction must be made between damage and injury inflicted by the supplier towards the customer according to the agreed contract, and damage and injury inflicted by the supplier towards the customer in his role as a third party- refer to the relevant part of the report (section 2.2). It goes for all countries that contractual relations between parties cannot prejudice the legal position of third parties in cases where such prejudice has not been accepted by the third party in question. In some countries, this distinction is made between consumers (basing their claims on statute act) and other customers than consumers (basing their claims on agreements in private law). Other countries have no distinction on those lines, but even though they acknowledge that different product liability acts can be applied concurrently allow for regulation on the general supply conditions to influence the question of compensation for product liability, in as well as outside of contract. 53 Another type of confusion regards the respective roles of the main supplier of electricity in its function as a public electricity supplier and as a license holder. Such confusion is not helped by keeping in force less clear rules about the role of customer complaints bodies. 54 Finally, a number of questionnaires provide clear information that no clauses governing the relationship between supplier and customer regulates the liability towards third parties Finland 53 Compare the contribution on Finland with the one on Germany. 54 This is the case of Ireland. 55 This goes for Austria and Italy

25 Part II - Description of National Liability Schemes

26 Answers received from: Page Austria...24 Belgium...27 Czech Republik...30 Denmark...40 Finland...46 France...53 Germany...57 Hungary...63 Ireland...71 Italy...77 The Netherlands...81 Norway...85 Poland...89 Portugal...98 Slovak Republik Slovenia Spain Switzerland

27 Austria AUSTRIA SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1 Obligation as an Electricity Supplier The obligations and liability of electricity supply companies (more exact network companies) are based on several regulations: the so called Elektrizitäts- und Organisationsgesetz (in the following ElWOG) of 1998, with amendments 2000, 2002 at federal level; the so called Ausführungsgesetze (executive law) at federal state level, for example Tyrolean Law of Electricity ; the so called Allgemeine Verteilernetzbedingungen (General Conditions for Distribution Networks) for the respective supply area and the so called Netzzugangsvertrag (Network Access Contract) between the distributor and the customer. Thus, ElWOG is the principle act and the other provisions derive from it and comprehend more details. Due to the liberalisation of the energy market, the regulations mentioned above as a whole distinguish between the generating, purchasing and selling function of an electricity supply company on the one hand and the network function on the other hand. The customers can choose the electricity supplier (producer and/or trader) on their own. Nevertheless, in view of its monopoly position the network company or rather the distributor is always in charge of delivering physical electricity. Pursuant to the respective Ausführungsgesetz the distributor needs to have a concession for the supply area, where the distributor is operating, before the commencement of business. After having examined the requirements, the concession is granted by the authorities at federal state level. According to the different Ausführungsgesetze at federal state level, in general, the following requirements must be fulfilled: - no existing concession for the respective supply area - basic suitability of the existing or planned network - economic capability of the applicant to establish, maintain and develop the network - reliability of the applicant to fulfill the obligations of an electricity supplier. The concession has to be revoked in case of failure to abide by the requirements of the concession. The specific reasons for revocation of the concession are expressly stated in each Ausführungsgesetz. The General Conditions for Distribution Networks are agreed between the regulator for the energy field and the respective distributors. The regulator for the energy filed controls the terms and conditions for the supply of electricity, especially delivery conditions for network services and tariffs towards customers, in accordance with article 31 ElWOG. The legal basis of the electricity supplier s obligation is regularly updated by the respective legislative bodies

28 Austria 1.2 Liability Towards Customers The obligation to supply customers Distributor s obligation to connect customers within his supply area is based on the federal law, which contains principles, the law of the federal state, which concretises the principles, and the general conditions for distribution networks, which are included into the network access contract. According to article 15 ElWOG the distributor has to be committed by the law of the federal state to ensure access in accordance with the general conditions for distribution networks and the tariffs towards customers. The general conditions for distribution networks contain the relevant obligations of the distribution network companies as follows: connection of the customers (suppliers and purchasers of electricity) to the network (distribution grid); maintenance, capability and interoperability of the network; maintenance of the technical quality in the network; performance of electric measurements; installation of counter of demand set or allotment of standardised demand set; calculation and transmission of relevant data to the customers; possible expansion of the distribution network Consequences of not Fulfilling the Obligations According to the general conditions for distribution networks the eelectricity suppliers shall not be entitled to interrupt supply to customers on an arbitrary basis. In general, electricity supply should be continuous unless indispensable maintenance work is to be done by the network operator. In case of not fulfilling his obligations, the electricity supplier has to indemnify his customer according to national civil law Regulation of the Obligation to Uninterrupted Supply The quality regulation refers to international standards and norms. According to the general conditions for distribution networks the main task of the network operator is to supply without interruption. The network operator and the customer shall operate and maintain their equipment and systems according to the related technical standards and rules. In particular, each contracting partner shall care for his equipment or system not being disturbing equipment / systems for the network of the other partner. The network operator has the right to examine the intended application of equipment / systems which may cause network disturbances and, following to that, to set technical measures according to the related technical rules. Nominal frequency of the voltage is 50 Hz. The nominal voltage is 230/400 V; in specific cases (e.g. 690 V, 950 V) the nominal voltage is to be agreed upon within the network access contract. The basis of power quality related requirements is EN This standard is valid only for normal operating conditions. In case of specific customer s requirements to the power quality, e.g. for the operation of specifically sensitive electrical equipment (e.g. computers), the customer shall be responsible for taking any action which will ensure the un-degraded operation of his equipment Quality of the Supplied Electricity The quality of the electrical energy delivered, to be defined in terms of voltage and frequency, shall be maintained at a level which is technically and economically feasible and which will allow the intentional operation of the customer s equipment / systems

29 Austria Regulation of Tariffs Towards Customers The network tariffs towards customers are regulated in the so called Systemnutzungstarif- Verordnung. This regulation was enacted in 2002 and has been revised in The regulation has been established by the regulator according to article 25 ElWOG. In view of its monopoly position the tariffs of the network companies for the usage of the network is largely under the control of the regulator. The regulation includes detailed networks tariffs towards customers for the provision of the network, for the network access, for the compensation of balance energy and load variation and for measurements Regulation of General Conditions for the Supply of Electricity Distributor s liability, mainly relating to the quality of supply, is based on the general conditions for distribution networks as mentioned above Liability Limitations or Limitation Caps In case of abnormal operating conditions, the reasons of it beyond the distributor s control, he is free of responsibility for the duration of supply interruption and / or the degradation of power quality. No compensation is to be paid related to supply degradation events of that type. However, he shall endeavour to restore the degraded supply as soon as possible. The customer shall ensure that his equipment is properly maintained in a good condition and that the connected equipment satisfy the given standards. The distributor may cut the supply of any connected equipment or system in case of defects, leading to disturbing influences to the network and / or other customers or if the connected equipment and / or system does not or does no longer meet the requirements of the according standards. SECTION 2 - LIABILITY TOWARDS THIRD PARTIES 2.1 Product Liability The status of the implementation of the Product Liability Directive in Austria Austria has implemented the EC Directive regarding Product Liability by law, by name the so called Produkthaftungsgesetz (PHG), enacted in 1988 with amendments 1993, 1994, 1999 and The product liability act applies to injury of person and to damages of property if the damaged good is used non-commercially. Damages of the defect product itself are not covered by the liability of the producer. According to article 4 of this act, electric power is a product in the sense of this act and therefore the rules on products are applicable Other Product Liability Regulations Other product liability regulations, referring to electricity power, are embodied in the so called Reichshaftpflichtgesetz of 1871, lastly revised in This liability act applies to injury of person, dead of person and to damages of property, caused by an accident due to the effects of electricity or gas, resulting from power supply lines, transformers, gas pipes and gas meters Liability limitations or cap According to article 2 of the product liability act damages to property in excess of 500 EURO have to be paid out Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply In Austria there are no clauses in the general conditions for distribution networks that regulate the liability towards the customers as a third party (product liability)

30 Belgium BELGIUM SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Regulation Through Law 1. In Belgium the organisation of the electricity market is a competence of both the federal and regional legislators: the federal legislature has power to enact legislation for electricity transmission above 70 kv and for the production of electricity the three regional legislatures (the Flemish, the Walloon and the Brussels) have the power to regulate the distribution and local transmission of electricity through grids with a normal tension below or equal to 70 kv. 2. The activities of the grid operators and thus their obligations to build, maintain, and operate their transmission or distribution network are regulated on the federal and regional level. Concerning the relation supplier customer and the obligations of the supplier towards consumers there is only a minor (and thus limitative) regulatory interference: Under the 1999 Federal Electricity Act a license and a code of conduct is imposed to deliver electricity through an intermediary, this is a person - who is neither a producer nor a distributor - who buys electricity with the aim to sell it. The criteria to obtain such a license are related to the applicant s technical and financial capacity, its professional liability, its capacity to fulfill its customers demand and the performance of public service duties. The code of conduct rules are designed to avoid conduct which may destabilize the market, and to guarantee transparency of the conditions for supply. (Statute on the organization of the electricity market of 29 th April 1999, hereafter the Federal Electricity Law ; - Arrêté royal of April concerning the authorization to supply electricity by intermediate persons and a code of conduct obligation). According to Article 17 of the Flemish Decree, concerning the Electricity market a supplier of electricity to eligible customers within the distribution grid must hold a license from one regulator. The criteria are very similar as described in 1.1. An extra criterion is foreseen about the applicant s managerial and legal independence from the distribution system operator s (Flemish decree of 17 th April Similar provisions are foreseen in the Walloon and Brussels legislation. Under the Federal Electricity Law Public service duties can be imposed to suppliers related to the regularity and quality of the supplied electricity (Arrêté royal of October 11 th 2003). According to Article 19 of the Flemish Decree, public service duties can be imposed to the holder of the in 1.2 mentioned license. These public service duties relate to: - social measures - programs to improve rational use of energy - information about the electricity consumption - investments in combined heat-power installations or green certificate

31 Belgium Two decisions of the Flemish Government have implemented these public service duties: one of 29 th March 2003 concerning the rational use of energy and another of 31th January 2003 concerning social measures towards domestic consumers: payment procedure and conditions; contract termination procedure; billing aspects, pre-payment of metering equipment. Similar provisions are foreseen in the Walloon and Brussels legislation Regulation in/by Concessions Not relevant Private of Public Electricity Supply Companies which are not Publicly Regulated With the exception of the above mentioned regulated items, and the possibility for the regulator to impose maximum tariffs the terms and conditions for the supply of electricity are the subject of bilateral negotiations between the supplier and the electricity consumers. The obligations of the supplier depend on the kind of supply A. to transmission clients : clients connected to the transmission grid B. to distribution clients : clients connected to the distribution grid A. The supplier undertakes to supply a defined maximum power and to inject this power into the network. Also the supplier assumes the obligations of the Access Responsible Party (ARP) in charge of off takes for the agreed off take points (assuring quarter-hourly balance between the active power injected into the network and the active power drawn from it). If the customer is not concluding himself the access contract with the grid operator, the supplier can contract the access for off take by the customer. In this case the supplier makes the necessary access contracts and subscribes the power for the defined off take points after consultation with the customer. In both cases the Parties will agree that the continuity and the quality of supply is the responsibility of the network operator since he builds, maintains and operates the network. B.1 The obligations of the supplier towards distribution clients connected to a network above 30 kv to 70 kv are similar as what is described in A with the exception of consultation about the subscription strategy (extra obligation for the supplier). B.2 The obligations of the supplier towards other distribution clients are similar as mentioned in B1 with the exception of the possibility for the client to conclude an access contract (for these clients not possible). Also the supplier can work with a designated ARP or can be himself ARP Liability Towards Customers - In case the supplier is supplying without license he can be penalized. In case of non-compliance with the public service duties administrative fines can be imposed. - As said in the terms and conditions for the supply of electricity and thus are the subject of free negotiations between parties. This means that parties can discuss the liability clauses. In general the basic approach will be the following: a) in case the client concludes the access contract : the liability of both parties is limited to compensation for direct material damage resulting from intentional fault or gross negligence and excluding indirect or subsequent damage (loss of production, loss of income or loss of profit). The liability will be limited to an annual amount of 5 % of the year invoice. Since the continuity and the quality of supply fall under the responsibility of the network operator and is included in the access or connection contract, in the event of any damage resulting from an interruption, a limitation or an irregularity in supply, the customer may address himself directly to this network operator

32 Belgium b) in case the supplier concludes the access contract what is said under A.1 first paragraph applies also without prejudice of the following : - If the access contract specifies that the loss or damage resulting from an interruption, a limitation or an irregularity of supply will be settled directly between the network operator and the consumer, then the supplier cannot be held liable for such loss or damage. - If on the other hand the access contract specifies that such loss or damage is not settled directly between the network operator and the consumer, then the latter can claim from the supplier only to the extent that the supplier has received as a compensation from the network operator. 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES The Product Liability Directive is implemented in Belgian legislation by the law of February 25 th concerning product liability The status of the EC Directive regarding Defective Product Liability P.M Other Product Liability Regulations None Liability limitations Relation supplier consumer: liability limitation is a contract issue (cfr. Questionnaire 1) 2.2. Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply Questions not clear (a customer is towards the supplier not a third party)

33 The Czech Republic THE CZECH REPUBLIC SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Act No. 458 of 28th November 2000 on Business Conditions and Public Administration in Energy Sector (the Energy Act ) This Act provides the conditions for business activities, performance of public administration and regulation in the energy sectors, including electricity, gas and heat, as well as the rights of and obligations of individuals and legal entities related thereto. To secure reliable and efficient supply of electricity while protecting the environment, electricity market in the territory of the Czech Republic is based on free access to the transmission system and the distribution systems ("regulated access") and on the possibility to build electricity generating plants and direct lines in accordance with the conditions specified in the Energy Act Regulation Through Law Act No. 458 of 28th November 2000 on Business Conditions and Public Administration in Energy Sector (the Energy Act ) - 24 (Transmission) (1) The transmission system operator: (a) provides reliable operation and development of the transmission system, (b) provides electricity transmission on the basis of contracts concluded, (c) controls the flows within the transmission system while respecting electricity transmissions between the interconnected grids of other countries and co-operating with the operators of the distribution systems within the Grid, (d) is responsible for the provision of system services for the Grid at the level of the transmission system. (10) Further obligations of the transmission system operator: a) connect to the transmission system any individual or legal entity that applies therefore and meets the conditions of connection and transport and the business conditions specified in the Transmission System Operating Rules, except the cases of evidenced lack of capacity of the transmission equipment or cases of danger to the reliable operation of the transmission system, b) provide equal conditions for all electricity market participants to connect their equipment to the electricity transmission system, c) provide equal conditions for all electricity market participants to transmit electricity along the transmission system, except in the case of electricity generated from renewable sources and electricity that can be proved to be associated with heat generation in the electricity and heat cogeneration process, as the electricity from the renewable sources and co-generation units enjoys priority right of transmission, d) establish and operate the technical dispatching centre, e) arrange for metering and measurements to be performed within the transmission system, including the processing and interpretation of the readings, and submit the results and other key information to the market operator; details shall be specified in the implementing regulations, f) prepare and issue and publish, upon approval by the Energy Regulatory Office, the Transmission System Operating Rules including, but not limited to: 1. basic conditions of use of the transmission system,

34 The Czech Republic 2. operating rules, including maintenance, 3. rules for planning the operation and development of the transmission system, 4. contingency plans and emergency inventories, 5. rules for communication of the data and information needed for reliable operation and development of the transmission system, g) provide any information as may be needed for effective co-operation to the operators of any other transmission systems or any distribution systems with which the operator s system is interconnected, h) restrict electricity import on the basis of the Ministry s decision according to Section 44, i) prepare and publish, in compliance with the Grid Code and in co-operation with the distribution systems operators, an annual document on preparations for the operation of the transmission system, including, but not limited to, the extent and dates of the transmission system down time and the expected transmission limitations, j) prepare and publish every year a rolling projection of the development of the transmission system for at least 5 years ahead, including interconnection with the Grids of the neighbouring countries, k) regularly publish information on the possibilities of electricity transmission via the transmission system, doing so in the manner specified in the Transmission System Operating Rules, l) perform, in co-operation with the distribution systems operators, technical evaluation of the operation of the transmission system, m) maintain separate accounts for electricity transmission and system services, n) prepare the data needed for the Energy Regulatory Office s decision on the prices for transmission and prices for system services, o) provide protection to any proprietary information having the nature of trade secret which the transmission system operator may have learned during its activities, including the protection of the data submitted to the market operator, p) develop contingency plans within six months of the granting of the licence and update them on an annual basis thereafter, q) maintain the quality parameters of electricity supply and services as laid down in the implementing legal regulation, r) prepare a list of eligible customers connected to the transmission system and submit it to the market operator (Distribution) (1) The distribution system operator: a) provides reliable operation and development of the distribution system in the territory delineated by the licence, b) enables electricity distribution on the basis of contracts concluded, c) controls the electricity flows within the distribution system while respecting electricity transmissions between other distribution systems and the transmission system, doing so in cooperation with the transmission system operator

35 The Czech Republic (11) Further obligations of the distribution system operator: a) connect to the distribution system any individual or legal entity that applies therefore and meets the conditions of connection and transport and the business conditions specified in the Distribution System Operating Rules, except the cases of evidenced lack of capacity of the distribution equipment or cases of danger to the reliable operation of the distribution system, b) upon the basis of a request of a protected customer or distribution system operator not enjoying the right to select electricity supplier according to Subsection 4 Clause b), conclude with them an electricity supply contract and supply them with electricity at regulated prices on that basis, c) provide equal conditions for all electricity market participants to connect their equipment to the electricity distribution system, d) provide equal conditions for all electricity market participants to distribute electricity along the distribution system, except in the case of electricity generated from renewable sources and electricity that can be proved to be associated with heat generation in the electricity and heat cogeneration process, as the electricity from the renewable sources and co-generation units enjoys priority right of distribution, e) establish and operate the technical dispatching centre, if operating equipment at a voltage of 110 kv, f) arrange for metering and measurements to be performed within the distribution system, including the processing and interpretation of the readings, and submit the results and other key information to the market operator; details shall be specified in the implementing regulations, g) prepare and issue, and publish, upon approval by the Energy Regulatory Office, the Distribution System Operating Rules including, but not limited to: 1. basic conditions of use of the distribution system, 2. operating rules, including maintenance, 3. rules for planning the operation and development of the distribution system, 4. contingency plans and emergency inventories, 5. rules for communication of the data and information needed for reliable operation and development of the distribution system, h) provide any information as may be needed for effective co-operation to the operators of the transmission system or any other distribution systems with which the operator s system is interconnected, i) restrict electricity import on the basis of the Ministry s decision, j) prepare and publish, in compliance with the Grid Code and in co-operation with other distribution systems operators, an annual document on preparations for the operation of the distribution system, including, but not limited to, the extent and dates of the distribution system down time and the expected distribution limitations, k) prepare and publish every year a rolling projection of the development of the distribution system for at least 5 years ahead, l) regularly publish information on the possibilities of electricity distribution via the distribution system, doing so in the manner specified in the Distribution System Operating Rules, m) perform technical evaluation of the operation of the distribution system, n) maintain separate accounts for electricity distribution and for electricity supply to protected customers, o) prepare the data needed for the Energy Regulatory Office s decision on the prices for electricity distribution, p) prepare background data and information for decisions to be made by the Energy Regulatory Office on the prices of electricity for protected customers,

36 The Czech Republic r) provide protection to any proprietary information having the nature of trade secret which the transmission system operator may have learned during its activities, including the protection of the data submitted to the market operator, s) develop contingency plans within six months of the granting of the licence and update them on an annual basis thereafter, t) buy electricity from electricity generation Licence Holders not enjoying the right of regulated access to the distribution system as referred to in Section 21 Subsection 2 Clause a), u) maintain the quality parameters of electricity supply and services as laid down in the implementing legal regulation, v) prepare a list of eligible customers connected to the distribution system and submit it to the market operator, x) at its own expenses, provide connection of its equipment to another distribution system and contribute to the covering of the respective distribution system operator s justified costs relating to the connection of its equipment to such a distribution system; details of the calculation of the contribution to the covering of the justified costs shall be specified in the connection and transport conditions, y) pay the transmission system operator or the respective distribution system operator for system services according to the electricity market rules. (12) The distribution system operator shall, as far as technically possible, buy electricity from renewable sources and from sources of combined generation of electricity and heat, doing so in quantities specified according to Section 32 Subsection 2 of the Act in the manner specified in the implementing legal regulation Regulation in/by Concessions Business activities in the energy sectors in the territory of the Czech Republic may only be pursued by individuals or legal entities upon the basis of government authorisation in the form of license granted by the Energy Regulatory Office. Also, license under this Act shall not be granted for electricity distribution if the electricity buyer provides the purchases electricity or to another individual or legal entity through its own supply facility and the activity concerned is not business activity based on the Commercial Code. - 4 (Licenses) (1) Licenses shall be granted for a fixed period of time which shall not be shorter than 25 years, and shall relate to: a) electricity generation, c) electricity transmission, e) electricity distribution, (2) Licences for electricity trading shall be granted for a fixed period of time, which shall not be shorter than 5 years. (3) Licences for electricity transmission and gas transmission shall be issued as exclusive licences for the whole territory of the Czech Republic. Conditions under which a Licence may be granted (1) Any individual to whom the licence is to be granted shall meet the following conditions: a) age of 21 years or more, b) full legal capacity, c) probity, d) professional competence or appointment of responsible representative in compliance with 6-8 (The Granting of a License) (1) The Energy Regulatory Office shall make its decision on the granting of the license on the basis of evaluation of how the conditions underlying the granting of the licence are met

37 The Czech Republic (2) The decision on the granting of the licence shall contain the following information: a) trade name of the individual or legal entity to whom/which the licence is being granted, the business identification number, registered office or permanent residence, the birth certificate code number, if any, otherwise the date of birth, b) the objectives and extent of the business; in the case of licences for electricity distribution, also the delineated territory, c) technical conditions to be maintained by the Licence Holder while performing the licensed activities, d) date of commencement of the licensed activities, e) duration of the licence, f) registration of the responsible representative, g) a list of plants for which the licence is being granted or a list of delineated territories or specification of the distribution facilities for which the licence is being granted (Expiry of the Licence) (1) The licence shall lapse: a) if the Licence Holder is an individual: if such an individual dies or is declared dead, b) if the Licence Holder is a legal entity: if the legal entity is dissolved, c) when the time for which the licence was issued elapses, d) upon the Energy Regulatory Office s decision to revoke the licence. (2) The Energy Regulatory Office shall revoke a licence if the Licence Holder: a) no longer meets the licence granting conditions according to the Energy Act, b) fails to adequately discharge the obligations hereby imposed, thus threatening the lives, health or property of persons, c) while performing the licensed activities, seriously violates the legal regulations applicable to such activities, d) has submitted a written application for licence termination. (3) The Energy Regulatory Office may revoke a licence, having established that the Licence Holder: a) failed to start the licensed activities within the term specified in the licence-granting decision, b) has been declared bankrupt or a petition to declare the holder bankrupt was suspended owing to insufficient assets. c) failed to pay the contribution to the Fund (Licence Holders Rights and Obligation) (1) The Licence Holder shall: a) supply energy in a reliable and continuous manner as far as such an obligation is imposed upon the Licence Holder by the provisions of the special part of the Energy Act, b) supply energy exclusively on the basis of a contract with the buyer, such a contract containing all the requisites as specified in the special part of the Energy Act, c) ensure that technical facilities meeting the security and reliability requirements laid down in pertinent legal regulations and technical standards are used for the licensed activities, d) ensure that the work relating to the performance of the licensed activities is done by professionally competent personnel,

38 The Czech Republic e) provide the Ministry of Industry and Trade ("Ministry"), Energy Regulatory Office and the State Energy Inspection Board with information they need to exercise their authorities laid down by law and give them access to the equipment serving for the performance of the licensed activities, f) maintain separate accounts for each licensed activity; if two or more licences are granted to one individual or legal entity, maintain separate accounts for each licensed activity in the manner specified in the implementing regulation; this shall be without the prejudice to maintaining accounts according to a special legal regulation, g) avoid disclosing any commercial, technical and financial information the Licence Holder may have learned from the customers, h) maintain the prescribed quality parameters of the supplies and services; provide compensation specified by a decree in event of failure to maintain such parameters (Obligation to Provide Supply beyond the Scope of the Licence) (1) The obligation to supply energy beyond the scope of the licence shall mean an obligation by which another Licence Holder shall assume the obligations of a Licence Holder that has ceased to perform the licensed activities. (2) In the case of urgent need and in public interest the Licence Holder shall supply energy beyond the scope of the licence upon the basis of the Energy Regulatory Office s decision. (3) The Energy Regulatory Office s decision shall be issued for a definite period of time which, however, shall not be longer than 12 months. No legal remedy against such a decision shall have a suspensory effect Private of Public Electricity Supply Companies which are not Publicly Regulated - 50 (Electricity Supply Contract) (1) An electricity supply contract shall be concluded with respect to each electricity supply point. (2) An electricity supply contract shall contain information including, but not limited to: a) the capacity, quantity and time schedule of electricity consumption and the electricity supply point ("load curve"), including also such information for the emergency state; details shall be specified in the electricity market rules, b) the prices, or the method of the pricing of, and terms of payment for, the electricity consumed, including any prepayments, c) method of electricity consumption metering, d) the manner in which the respective distribution system operator s access to the end customer s metering device is provided

39 The Czech Republic 1.2. Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? - 28 (Eligible customer) (1) The eligible customer shall be entitled: a) to have its electricity supply facility connected to the transmission system or a distribution system insofar as it meets the conditions of connection and transport and the Transmission System Operating Rules or Distribution System Operating Rules, b) to buy electricity at a quality specified by an implementing legal regulation from electricity generation Licence Holders and electricity trading Licence Holders, c) to buy electricity on the short-term electricity market organised by the market operator, d) to have an agreed electricity volume transported as far as the eligible customer has concluded an electricity transmission and distribution contract, or an electricity transmission contract, or an electricity distribution contract, and as far as the technical conditions of the transmission system or distribution system allow for that, - 29 (Protected Customer) (1) The protected customer shall be entitled to: a) to have its electricity consumption facility connected to a distribution system, b) to a smooth supply of electricity for regulated prices at a quality specified in the conditions for connection and supply to protected customers Consequences of not Fulfilling the Obligations - 94 (1) The State Energy Inspection Board shall be entitled to: a) request written proposals in respect of the actions and dates to remove the identified faults, b) decide on the obligation to take measures as proposed by energy audit, and on the dates thereof, c) inspect whether subsidy recipients under the National Programme of Efficient Energy Utilisation, including renewable and secondary energy sources, enter true information in their applications and assessments. (2) The State Energy Inspection Board shall be party to the planning proceedings and shall also be the public administration body involved in the protection of interests protected on the basis of special legal regulations. (3) The State Energy Inspection Board shall initiate inspection proceedings upon proposal submitted by the Energy Regulatory Office. (4) The State Energy Inspection shall submit the results of its inspection activities to the Energy Regulatory Office (Imposition of Fines) (1) When the amount of a fine is determined, the seriousness of the breach of obligations shall be taken into account including, but not limited to, the manner of the breach and the consequences thereof, and the circumstances in which the breach occurred. (2) The Rules of Administrative Procedure shall apply to the proceedings relating to the imposition of fees. Appeals against a fee imposed by a Regional Inspectorate shall be resolved by the Central Inspectorate

40 The Czech Republic (3) The proceedings relating to the imposition of fees may be initiated within one year of the date on which the Regional Inspectorate first learned of the breach but not later than within two years of the date on which the breach occurred. No fine may be imposed if three years have elapsed from the breach Regulation of the Obligation to Uninterrupted Supply - 26 (Technical Dispatching Centres) (1) Dispatching centres shall be responsible for maintaining equilibrium between the sources of and need for electricity and the secure and reliable operation of the Grid. (2) The transmission system operator s dispatching centre shall be responsible for the central control of electricity generation and transmission in the transmission system and for compliance with the rules of use of the interconnection with the grids of other countries. (3) The distribution system operator s dispatching centre shall be responsible for the central control of electricity generation and distribution in the distribution system. (4) The dispatching centres of the distribution systems operators shall co-operate with the dispatching centres of the transmission system operator. (5) In the central control of the transferred power in real time, the transmission system operator s dispatching centre shall be superior to the dispatching centres of the distribution systems operators. (6) If emergency state is imposed over the whole territory of the country and if activities directly preventing such situations are pursued, the instructions of the transmission system operator s dispatching centre shall be superior to the instructions of the dispatching centres of the distribution systems operators (Electricity Market Operator) (5) The market operator shall: a) prepare balances of the supply of and consumption for electricity for the specified periods on the basis of electricity supply contracts between the generators, the transmission system operator, distribution systems operators, eligible customers and traders and shall submit the balances to the transmission system operator and the distribution systems operators, b) organise the electricity market; if a short-term electricity market is involved, the market operator shall: 1. gather offers of and demands for electricity supply and intake 2. based on assessment of such offers and demands, publish the price for the short-term transactions 3. confirm for the participants in such short-term transactions the electricity price and volume as a basis for contractual relationships c) on the basis of the electricity supply contracts and the actual readings of measurements, prepare assessments of the actual and agreed electricity supplies and intakes and provide such assessments to the individual electricity generators, eligible customers, electricity traders, the transmission system operator and the distribution systems operators concerned, d) based on the assessment of the actual and agreed electricity supplies, provide settlement between the electricity market participants as to the differences between the actual and agreed supplies; the electricity market participants shall cover such differences; details shall be specified in the electricity market rules, e) inform the transmission system operator or the distribution system operators concerned about any case of market participants failure to pay to cover the differences resulting from the assessment of the actual and agreed electricity supplies and intakes,

41 The Czech Republic (6) The market operator may: a) require from all electricity market participants 1. the technical data from their electricity supply contracts, such as data on output and its change over time, the electricity intake volume, the supply point and the electricity supply delivery point 2. data for preparing the monthly and annual assessment of electricity supplies in the Grid; all the electricity market participants shall provide the market operator with such data b) require from the transmission system operator and the distribution systems operators the readings of measurements and the processed and interpreted data as the market operator may need to be able to discharge its obligations Quality of Supplied Electricity Regulation No. 306/2001 Col. of August 20, 2001 about quality of electricity supplies issued by the Energy Regulatory Office Regulation of Tariffs Towards Customers - 17 (Energy Regulatory Office and the Authority Thereof) The mission of the Energy Regulatory Office is to support economic competition and protect consumers interests in energy sector areas where competition is impossible, aiming to meet all reasonable requirements for energy supply. The Energy Regulatory Office shall decide on the following maters: a) the granting of a licence, amendment thereto or revocation thereof, b) the holding of more than one licence by an individual or legal entity in compliance with the implementing regulation, c) imposition of the supply obligation beyond the scope of the licence, d) imposition of the obligation to let another Licence Holder use the energy facilities in cases of emergency to exercise the supply obligation beyond the scope of the licence, including any related decisions on servitude based on the provisions of special regulations, e) price regulation based on special legal regulations. The Energy Regulatory Office shall lay down: a) the required quality of the supplies and services, b) method of selection of the Licence Holder to exercise the supply obligation beyond the scope of the licence, c) the rules of maintenance of separate records of sales, costs and revenue for regulation purposes, d) conditions of connection and supplies for protected customers, e) the rules to organise the electricity market ("electricity market rules"), the principles of pricing in respect of the market operator f) contents of the economic information and the price regulation procedures on the basis of special provisions, g) method of calculation of the provable loss suffered while fulfilling the obligation to supply energy beyond the scope of the license and documents to evidence and specify the calculation of the provable losses, h) the amounts of financial contributions of the License Holders to the Fund and the rules of drawing money from the Fund, i) rules for the allocation of costs, sales revenues and return on capital invested, j) details of the demonstration of available funds and technical facilities for the different types of licenses for regulated activities,

42 The Czech Republic k) method of determination of the delineated territory and details of the granting of the license and amendments thereto Regulation of General Conditions for the Supply of Electricity Commercial Code No. 513/1991 Col; EFET Terms Liability Limitations or Limitation Caps Neither national nor company liability limitation apply in general conditions for the supply of electricity. SECTION 2 - LIABILITY TOWARDS THIRD PARTIES 2.1 Product Liability Act No. 59/1998 of Liability for Defective Products This Act is in principle based on the EU Council Directive No. 85/374/EEC of , whereas the protection of the consumer requires compensation for death and personal injury as well as compensation for damage to property. The producer is liable for damage caused by a defect in his product whereas Producer means also a distributor and Product definition includes electricity. Unless it is expressly stipulated in this Act, the relevant articles of Civil Code are applied. Act No. 40/1964 of , resp. 367/2000 Civil Code The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Liability limitations The Civil Code defines in its 420a damage caused by operational activities whereas anybody who causes such a damage is liable for it. Act No. 458/2000 of Energy Act As mentioned above the Act in its Section 25 (Distribution System Operator), Article (8) stipulates the following In cases referred to in Subsection 4 Clauses d) and e), no title to damages and lost profit compensation may be claimed. This provision shall not apply if the distribution system operator fails to make announcement as referred to in Subsection 6 above, or if the quality of electricity supply defined in the implementing legal regulation fails to be maintained as referred to in Subsection 4 Clause d) Point 7 and Clause e) Point 7. Wording of Subsection 4 Clauses d) and e) defines cases when the distribution system operator may limit or interrupt, to the extant necessary, electricity supply to the buyers. Subsection 6 defines the provision of announcement, ie. the distribution system operator shall announce the start and end of the limitation or interruption of electricity supply in a manner commonly used in the given place, doing so no later than 15 days in advance. This provision not applies to routine operation handling when the limitation or interruption does not exceed 20 minutes Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply It follows from general rules that a contract cannot regulate the rights of third parties

43 Denmark DENMARK SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Electricity Supply Act, adopted by Danish Parliament (Folketinget) on 28 May 1999 with amendments 2001, 2002, and Now Act no. 151 of 10 March 2003 with amendments of 10 June Regulation Through Law - The obligation to build, maintain and run an electricity supply network The Electricity Supply Act, Section 20, para 1, contains the relevant rules on the obligations of network companies to build, maintain and run electricity supply networks. According to Section 20, network companies: are to ensure adequate and efficient transportation of electricity with accompanying services, including 1) maintenance, conversion and developing of the supply network in the supply area to the necessary degree, 2) connection of suppliers and purchasers of electricity to the collective electricity supply network, 3) placing the transportation capacity necessary at disposal and, 4) measuring supply and purchase of electricity in the network. - The obligation to supply correct quality The obligations of network companies to supply correct quality are laid down in the Electricity Supply Act, Section 22, para 1, subpara 1: A network company shall: 1) Maintain the technical quality in the network. - The obligation to supply in due time The obligations of network companies to supply in due time are laid down in the Electricity Supply Act, Section 20, para 1, first part: - Section 20. Holders of licences in accordance with section 19, para 1 are to ensure adequate and efficient transportation of electricity with accompanying services, including 1) maintenance, conversion and developing of the supply network in the supply area to the necessary degree, 2) connection of suppliers and purchasers of electricity to the collective electricity supply network, 3) placing the transportation capacity necessary at disposal and, 4) measuring supply and purchase of electricity in the network. On top of the Act, the obligation to supply in private law is mentioned in the contract of the use of the network. Se point

44 Denmark - Control of terms and conditions for the supply of electricity The Electricity Supply Act institutes an Energy Supervisory Board charged with the control of prices and delivery conditions for network services. See Section 78, para 1 and para 2; Section 76, para 1, subpara 1; Section 73; Section 69, para 1; Section 79, para 1 of the Electricity Supply Act. - Section The Minister for Environment and Energy shall appoint an Energy Supervisory Board to undertake an inspection and complaints function in the field of energy. 2. The Energy Supervisory Board is an autonomous committee which is not subject to the instructions of the Minister for Environment and Energy. - Section 76 (Supervision of prices, establishment of rules) 1. The collective electricity supply companies shall notify the Energy Supervisory Board with respect to the following: 1) Prices, charges and terms for services covered by the licences and the basis for the establishment of these, including delivery agreements as stipuated by the Energy Supervisory Board. - Section 73 When the collective electricity supply companies price their services pursuant to Sections 69 to 72, they shall do so on the basis of reasonable, objective and non-discriminatory criteria in relation to the costs that the individual categories of purchaser give rise to. Price differentiation due to geographical delimitation is allowed only under special circumstances. - Section The prices of services from the collective electricity supply companies shall be fixed with consideration for the costs to the companies of purchase of energy, wages, services, administration, maintenance, other operation expenses and depreciation and return on capital. When fixing the prices, consideration shall also be paid to expenses for liability incurred as a result of debts according to Section 46, para 3, or as a result of debts of other electricity supply companies incurred before the entry into force of this Act. The prices of services from collective electricity companies may not rise as a result of compensation paid for the transfer of an undertaking. - Section 79 The Energy Supervisory Board shall consist of a Chairman and 6 other members appointed by the Minister for Environment and Energy. The members are to be independent of the actors in the energy sector and shall represent legal, economic, technological, environmental, business and consumer expertise. The decisions rendered by the Energy Supervisory Board are attended by the Energy Supervisory Board whose decisions can be brought before the normal courts according to Section 89 of the Electricity Supply Act: - Section 89 (Complaints, the Energy Complaints Board etc.) 1. The Energy Complaints Board shall attend to complaints concerning decisions taken by the Minister for Environment and Energy or by the Energy Supervisory Board pursuant to this Act or rules issued pursuant to the Act. 2. The decisions taken by the Minister for Environment and Energy and the Energy Supervisory Board pursuant to the Act, or rules issued pursuant to the Act, can not be submitted to an administrative authority other than the Energy Complaints Board mentioned in para 1. The decisions may not be brought before the Courts before the final administrative decision has been made

45 Denmark - Other legal rules entail in contracts Regulation in/by Concessions Notwithstanding general regulation in Denmark, according to the law network companies shall be in possession of a license in order to function. Such license is given by the Danish Ministry of Economic and Business Affairs in accordance with the Electricity Supply Act. The license will only concern the obligations of the licensee to respect the obligations laid down in the Electricity Supply Act Private of Public Electricity Supply Companies which are not Publicly Regulated Danish electricity companies (in charge of the networks) act under the Electricity Supply Act. See Until 1977, the electricity sector was not regulated and electricity companies were either in private ownership (usually as co-operative electricity undertakings) or established by municipal authorities. The obligation to supply customers is regulated by Electricity Supply Act, Section 6, para 1. - Section 6 1. Everyone in Denmark has the right to be supplied with electricity upon payment. This right includes the right of delivery of electricity by means of a supply offer from a supply-committed enterprise, cf. Part 6 and, from the points of time mentioned in Section 7, the right to choose supplier. Denmark is experiencing incremental opening of the market, starting off with the major customers. From January, 1, 2003, everyone has the right to choose supplier Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? In Denmark, supply-committed enterprises are obliged to buy and upon payment to supply with electricity customers that refrain from choosing an electricity supplier. These enterprises must obtain a license for a certain geographical area in order to function. If an enterprise fails to have regard to its obligations, the license can be withheld Consequences of not Fulfilling the Obligations The consequences arising from the failure of meeting this task include the minister s access to oblige the system operator to carry out the necessary works etc., and the revocation of the network company s license, see Section 54 of the Electricity Supply Act: - Section A licence can be revoked if 1) provisions, terms or orders pursuant to this Act or rules issued pursuant to this Act are repeatedly breached, 2) incorrect or misleading information is provided in a licence application or permission connected with the licence, 3) the holder of the licence or permission goes to the Court for suspension of payments, applies to the Court for a liquidation order, or is declared bankrupt 2. If a violation as specified in para 1 can be redressed, the Minister for Environment and Energy can inform the holder that within a fixed time-limit he shall comply with his commitments or permission. 3. The decision pursuant to para 1 nos. 1 and 2 shall be taken by the Court, and pursuant to (1) no. 3 by the Minister for Environment and Energy

46 Denmark Regulation of the Obligation to Uninterrupted Supply Apart from the obligation to supply correctly, reliably and without interruptions laid down by the Electricity Supply Act, further rules are found in the contract between the network company and the customer in regard of connection to the net and use of it. According to this contract which is under the control of the authorities the obligation to supply is without prejudice to the general liability rules of contract law. Denmark has no rules on compensation for energy not delivered Quality of Supplied Electricity The quality of the supplied electricity is regulated by the general conditions for the use of the net. Para. 5.1 The network company maintains nominal voltage at 230 V between [en fase og nul] The voltage interval is the interval between maximum and minimum voltage in the supply works. The voltage interval is considered as satisfying if the voltage between [en fase og nul] is within the interval 10 % and + 6 % of nominal voltage 230 V, ie V (approximating ENEL 50160) The net company will do its best to maintain stable supply of a good quality. Should break-down of the net occur, the network company will reinstall supply as soon as possible. The network company is solely responsible for the electricity supply when its conditions are causing insufficient supply. Concerning the expression maintain stable supply of a good quality, stable supply covers the obligation to supply without interruptions, good quality covers the obligation to supply a quality of voltage which is described in closer detail in the recommendations of DEFU (Danish Electricity Industry Institute of Research and Development) Regulation of Tariffs Towards Customers The tariffs of the network companies are regulated by Electricity Supply Act, Sections 69 and 70. According to the law: - Section 69. The prices and terms of the electricity supply companies Para 1. The prices of services from the collective electricity supply companies shall be fixed with consideration to the costs to the companies of purchase of energy, wages, services, administration, maintenance, other operation expenses and depreciation and return on capital. - Section 70. Para 1. Prices for the services of network and transmission companies shall be fixed in accordance with the revenue framework specified in subpara 2. The framework is to be established with a view to covering the costs specified in section 69 when the company is run efficiently. The revenue framework is determined by the Energy Supervisory Board (see Point E) Regulation of General Conditions for the Supply of Electricity The General conditions for the supply of electricity are adopted by the network companies and approved by the Energy Supervisory Board. Most electricity companies follow Dansk Energi s guidelines on the drawing up of such general conditions. The Energy Supervisory Board can interfere with general conditions if they, according to the Board, are unfair. The Electricity Supply Act, Section 76, states: Section 76. (Supervision of prices, establishment of rules)

47 Denmark 1. The collective electricity supply companies shall notify the Energy Supervisory Board with respect to the following: 1) Prices, charges and terms for services covered by the licences and the basis for the establishment of these, including delivery agreements as stipulated by the Energy Supervisory Board. 2) Requests and agreements concerning transit, including negotiated prices and terms. 3) Documentation for the unbundling of commercial activities. 4) Statements of investment capital and capital on which they wish interest to be paid. 5) Statements of coverage of losses realised in co-ordinated activity pursuant to the provisions in section 9, para 6 of the hitherto valid Electricity Supply Act. 6) Accounts, budgets and other information upon the stipulation of the Board to be used in the establishment and inspection of the revenue framework mentioned in section The Energy Supervisory Board can, moreover, order owners of CHP production plants to notify the sales prices of district heating and the basis of the pricing. 3. The Energy Supervisory Board can lay down rules for notifications pursuant to Paragraphs. 1 and Liability Limitations or Limitation Caps Rules of responsibility for supply of electricity are found in the General Conditions, also known as the Network Use Contract. This is a general contract between the network company and its customers. It is general in the sense that it is not open for negotiation with the individual customer. It has the legal effect of an agreed document. Under the scope of private law, the authorities, however, have silently approved of the terms. Section 7 of Dansk Energi s guidelines on connection and access to the use of the collective electricity network ( Network Use Contract ) lays down the following: - Section 7.1. The network company is responsible for break-down, insufficient quality of voltage and similar occurrences in accordance with general rules on liability. In case of interruption of electricity and other cases of non-contractually correct supply in consumer contracts the rules of the Purchase Act apply. In relation to commercial actors, the net company is not responsible for losses to operation, not even loss of profit or other types of indirect loss, unless the net company has acted out of intent or gross negligence. Commercial actors should insure themselves against loss of profit. In case of the works causing damage or injury to any person or any good, Section 17 of the High Voltage Act applies. The rules on limitation to liability and force majeure also apply when the network company s network solely functions transmission between a supplier of electricity/network company and another network company - Section 7.2. The network company is liable for loss or damage having resulted from shortcomings in the network or in the supplied electricity that are caused by defects in the network. The network company is not liable if it is able to prove that the loss or damage was not caused by negligent behaviour on the part of the company. See also the rules contained in the Product Liability Act. In case of damage to goods including real property the liability of the network company shall be limited to DKR 5,000, Section 7.3 In all circumstances, the network company will not be liable when force majeure or situation similar to force majeure has happened

48 Denmark 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES In Denmark, the Product Liability Act, act. no. 371 of 7 June 1989 as amended by 1041 of 28 November 2000 is fully implementing the EC Product Liability Directive. Further, the ordinary courts have issued a wide range of judgements giving effect to the Act and the Directive. The Act applies to injury to person. It applies also to damage to property if the damaged good is normally used non-commercially and if it was mainly so used by the injured person or the person having suffered damage to his property. The Act, however, does not cover liability for damage to the defect product itself. Section 3 of the Act defines a product. This Section explicitly states that the rules on products also apply to electricity The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Liability limitations - the supply of electricity - the performance of the networks (construction) - the risk of being responsible for damages caused by the networks both as a producer (power plant owner) and seller (for the product which is transported through the network). There are Bottom and Upper caps In accordance with Section 8 of the Product Liability Act the first DKR 4,000 (approximately 500) of the compensation is to be paid out. This bottom cap does not apply to injury to person Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply It follows from general rules that a contract cannot regulate the rights of third parties

49 Finland FINLAND SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier The electricity markets are regulated by the Electricity Market Act (No 386/1995), and the Electricity Market Decree (No 518/1995). The decree is enacted by the Ministry of Trade and Industry and it is inferior to the Act. The provisions of the Consumer Protection Act are applied to the operations of a retailer and also to the acts of a net operator when contracting directly with the consumers. There also are numerous decisions of the Ministry of Trade and Industry regulating in detail the obligations of a net operator and a retailer. The decisions are inferior to the Act and the Decree. A distinction is made between the business of selling and transmitting the electricity. Finland divides into more than a hundred geographical areas (excluding Åland Islands), where a local net operator has a monopoly over its distribution network. These net operators have several obligations described in Electricity Market Act within their areas of responsibility. These obligations are among others an obligation to develop power network, to transmit, to connect, to deliver electricity, to use public terms and prices, to organize measurement of electricity, to unbundle the operations, to use reasonable prices, to publicize the key indexes relating to price level of the network services, to use spot pricing, etc. There are different provisions concerning a net operator and a retailer. For instance, no licence is required to sell electricity, so anyone can act as an electricity vendor in Finland, whereas the electricity network business remains as a natural monopoly and it requires a network licence granted by the Energy Market Authority. The provisions of the Electricity Market Act concerning the agreements made with the consumers are binding on the suppliers and no exceptions can be made to the detriment of the consumer. Please note that there is a difference between a user and a consumer. A consumer is defined a natural person who acquires consumer goods and services primarily for a use other than business or trade, whereas a user can be any legal or natural person. The Energy Market Authority is an expert body, subordinate to the Ministry of Trade and Industry, supervising the electricity market in accordance with the Electricity Market Act. The goal of the Authority is to promote efficient competition in the electricity market, and to secure reasonable and equitable service principles in electric network operations. The Consumer Agency & Ombudsman is also authorised to supervise the electricity market, the Consumer Agency supervises the fulfilment of the Consumer Protection Act and the general conditions used by the companies when contracting with consumers. The division of powers between these two authorities is somewhat ambiguous Regulation Through Law Electricity Market Act (No 386/1995) Electricity Market Decree (No 518/1995) Consumer Protection Act (No 38/1978) Act on Competition Restrictions (No 480/1992) - The obligation to build, maintain and run a electricity supply network Electricity Market Act, Chapter 3 Section 9: The net operator shall maintain, operate and develop his power network and the connections to other networks in accordance with his customers reasonable needs, and to secure, for his part, the supply of sufficiently high-standard electricity to his customers

50 Finland - The obligation to supply correct quality The Electricity Market Act, Chapter 6a, Section 27c: The supply of electricity is faulty if the quality of electricity or the manner of supply does not correspond to what can be considered to be agreed upon. Unless otherwise agreed, the supply of electricity is faulty if the quality of the electricity does not correspond to the standards adhered to in Finland or if there have been continuous or repeated interruptions in the supply of electricity, and these interruptions cannot be considered minor when taking into account their reason and circumstances. - The obligation to supply in due time The Electricity Market Act, Chapter 6a, Sections 27, 27a and 27b, includes provisions concerning the user s right to withhold payment, the user s right to a standard compensation and to a compensation for delay (see below section 1.2.3). - Control of terms and conditions for the supply of electricity The provisions concerning contracts are laid down in the Chapter 6a of the Electricity Market Act, including provisions concerning the data to be supplied before concluding contract, provisions on form when concluding a contract, provisions concerning confirmation, validity and expiration of contract, termination of contract, changing the terms of contract, consequences for delay and interruption of supply. The Finnish Electricity Association (SENER) has drafted in co-operation with the authorities a model contract for general terms and conditions for connecting, distributing, retailing and supplying electricity. These general terms and conditions made by SENER are commonly used by the electricity companies Regulation in/by Concessions A licence from the Energy Market Authority is required to operate as electricity network. The licence is granted on a temporary basis or, on special grounds, for a specified period and for a specific geographical area. The licence holder has a monopoly to the network in the area. The licence may be granted to a body or an establishment. No other licences are required. A licence contains all the obligations that are laid down in the Electricity Market Act, i.e. the obligation to connect, obligation to transmit, obligation to use reasonable prices, obligation to develop power network etc. From 1 September 2003 the Authority may attach separate conditions to the licence if necessary Private of Public Electricity Supply Companies which are not Publicly Regulated As a general rule the Electricity Market Act is applied to all the agreements made against payment between the supply company and the customer. There are some exceptions though; if a power plant is situated on the property of the electricity producer, the producer can also supply those users who are situated on the supplier s property without being covered by the Electricity Market Act nor supervised by the authorities. No cases where the supplier and customer had been in conflict in these specific situations have arisen so far. Moreover, all the network operators are obliged to seek an electricity network licence from the Energy Market Authority as set forth above in Section No licence is, however, needed for power network operation of minor significance. In individual cases, for example where the supplier produces electricity only for his own use and the power plant is on the same property, the Energy Market Authority can exempt a net operator from licence requirement for a specified period or on temporary basis if the network operator concerned is of minor significance within electricity transmission

51 Finland 1.2. Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? The power network licence granted to a distribution net operator specifies the licence holder s geographical area of responsibility. Within the area of responsibility the net operator is obligated to supply electricity to all customers. According to the Chapter 6, Section 21 of the Act an electricity retailer in a dominant market position within the area of responsibility of a distribution net operator has an obligation to deliver electricity at reasonable prices upon the request of a customer if the customer has no other economically competitive opportunities to buy electricity via the power network. This obligation to deliver covers all customers Consequences of not Fulfilling the Obligations If damage is caused to another party through an act or omission in contravention of the obligation to deliver, to connect, to transmit electricity or through the interruption of electricity supply, the damage must be compensated for thus created (Chapter 10, Section 44 of the Electricity Market Act). A breach of any of these obligations is not a criminal offence and thus no criminal proceedings follow. The party who has suffered damages must claim the damages in civil proceeding at a district court Regulation of the Obligation to Uninterrupted Supply The obligation to supply is regulated through a concept of fault (Electricity Market Act Chapter 6a, Section 27c). On the basis of a fault, the user of electricity is entitled to a price reduction proportionate to the fault. If the fault is based on interruption of electricity supply, the price is at least the sum that corresponds to two week s share of the annual network service fee. According to the preparatory works of the said point of law (HE 218/2002 vp 1 ) the user is entitled either to a standard compensation or to a price reduction depending of the source of the fault. If the fault is a consequence of the acts of the net operator, the user will be entitled to a standard compensation, but if the fault is followed by the acts of the retailer, the fault will be considered as a breach of contract and the user will be entitled to a price reduction. If the user is entitled both to a standard compensation and a price reduction on the basis of the same event, only one remedy, more favourable for the customer, will be applied. Besides the price reduction the user is always entitled to compensation for damage suffered because of a fault exceeding the price reduction or standard compensation. There are separate provisions concerning the interruption of supply. If the connection is delayed and the delay is attributable to the distribution net operator, the connecting party has a right to withhold payment until the connection has been completed. If the delay is attributable to the retailer, the user is required to pay the contract fees from the day when the electricity supply commenced. Furthermore if the connection is delayed, the connecting party is entitled to a standard compensation (Electricity Market Act, Chapter 6a, Section 27a). For each beginning week during the first two weeks of delay, the compensation is five per cent of the connection fee. Thereafter, the compensation is ten per cent of the connection fee for each beginning week of delay. The maximum sum of the standard compensation is thirty per cent of the connection fee; however at most FIM 10,000 (app. EUR 1,682). However, the connecting party is always entitled to receive compensation for delay exceeding the standard compensation for damage incurred. 1 Governmental proposal 218/2002, p

52 Finland The connecting party and the user of electricity are entitled to receive compensation for damage suffered because of delay, unless the distribution net operator or retailer who is party to the contract can show that the delay is caused by an obstacle that is beyond his control and that he cannot reasonably have expected to be taken into account when concluding the contract and that has had consequences which could not have reasonably been avoided or overcome. If the delay is caused by a subcontractor, the distribution net operator or the retailer will be released from his/her obligation to pay compensation only if said person would also be released from liability by virtue of above said (see the previous chapter). The net operator s and retailer s liability covers both direct and indirect damages, however they are required to compensate for indirect damages only if the delay or damage is caused by negligence on his/her part. By indirect damages are referred to following: 1) loss of earnings incurred by the connecting party or the user of electricity because of the delay or the consequent actions; 2) damage that is caused by an obligation based on some other agreement; 3) major loss of utility at the place where electricity is used when this loss does not result in direct economic damage, and other comparable major inconvenience; and 4) other similar damage that is hard to foresee. In a case concerning the obligation of continuity the Consumer Complaint Board recommended an electricity company to grant the applicant a price reduction that corresponds to two week s share of the annual network service fee and a compensation for the damage. The applicant s electricity supply had been interrupted for nearly 60 hours due to a storm. The electricity company regarded the storm as an exceptional event beyond its control. The Board s decisions are recommendations but the companies in practice follow them. The Board has in one of its recommendations widened the electricity supplier s liability into strict liability on the basis of the Electricity Safety Act, when an interruption of supply has caused damage to electricity equipment, though there are clear provisions in the Electricity Market Act concerning the liability within interruptions (see above). At the moment the electricity company s liability towards consumers is unclear. There will be an amendment to the provisions concerning the obligation of continuity. The aim is to clarify the user s rights within the situations where the electricity supply is interrupted. The new section contains detailed provisions on the amount of standard compensation per hours of being without electricity supply. The minimum time to be without electricity in order to claim compensation will be twelve hours. The goal is to save the user from claiming the damages in a court proceeding. The amendment will be in force from 1, September Quality of Supplied Electricity There is a standard regulating the quality of supplied electricity (SFS EN 50160), the content of the standard is in accordance with the Pan-European standard on electricity supply Regulation of Tariffs Towards Customers According to the Chapter 1, Section 14 of the Act, the pricing of the network services must be reasonable. The pricing of the network services must not present any unfounded terms or restrictions obviously limiting competition within the electricity trade. However, the pricing shall take account of any terms needed for reliable operation and efficiency of the power system. The net operator has an obligation to have public prices for his/her network services, as well as the underlying criteria thereto. The net operator must also make publicly available the key indexes relating to the price level and the efficiency, quality and profitability of the business. The Ministry of Trade and Industry may also order the net operator to announce his/her prices and rates to the Energy Market Authority. Furthermore as concerns the retail business, the retailer must have public prices for consumers and the customers encompassed by the retailer s obligation to deliver. According to the Act the terms and prices cannot include any unreasonable conditions or limitations that would restrict competition within the electricity trade

53 Finland Within the invoicing the customers the electricity vendor must give a detailed account of the contents of the electricity price. Besides, the retailers must supply the public with information concerning the average applied electricity price level. The Ministry of Trade and Industry may order the retailers to announce their terms of retail sale and their pricing criteria to the Energy Market Authority. From 1, September 2003 the distribution net operator cannot invoice the customer for reading the measuring equipment if the customer changes the operator at most once a year Regulation of General Conditions for the Supply of Electricity The provisions concerning the general conditions are laid down in the Chapter 6a of the Electricity Market Act. Before concluding a contract the distribution net operator has to provide the connecting party or the user with data on the principal conditions to be applied to the contract and on the alternatives available with respect to the contents of the contract, such as various pricing alternatives. A retailer has a corresponding obligation before concluding an electricity sale contract. Connection contracts must be concluded in writing. The distribution net operator may not appeal to a condition that has not been entered in the connection contract. If the power network contract has not been concluded in writing, the distribution network operator must provide the user of electricity with data and on the prices and other terms applied to the contract. A retailer has a corresponding obligation. A user of electricity encompassed by the obligation to deliver must have the opportunity to agree with the retailer that the contract includes not only electricity sale but also network service required by power transmission. A connection contract, a power network contract and an electricity sale contract can be concluded for an indefinite period or for a fix term. If the connecting party or the user is a consumer, he/she may terminate a fixed-term contract in the middle of the contract term. This does not apply, however, to an electricity sale contract that is outside the obligation to deliver. A distribution net operator may not terminate a connection contract. A connecting party may not terminate the connection contract if a power network contract or an electricity sale contract concluded by another user with respect to the same place of electricity use is valid. The notice period for terminating a connection contract may not be longer than one month. No exceptions to the provisions of this chapter may be made by an agreement. A distribution net operator may not terminate a consumer's power network contract. The distribution net operator may terminate another power network contract only if a legislative amendment or an essential change in circumstances makes it unreasonable for him/her to keep the contract in force. The notice period for terminating a power network contract is two weeks for the user of electricity and three months for the distribution net operator. No exceptions to the provisions of this chapter may be made to the detriment of the electricity user. A retailer may not terminate an electricity sale contract when the user of electricity encompassed by the obligation to deliver is a consumer. A retailer may terminate another electricity sale contract encompassed by the obligation to deliver only if a legislative amendment or an essential change in circumstances makes it unreasonable for him/her to keep the contract in force. The notice period for terminating an electricity sale contract is two weeks for the user of electricity and three months for the retailer. The notice period for terminating a contract outside the obligation to deliver is two weeks for the retailer. No exceptions to the provisions in this chapter may be made to the detriment of a user of electricity encompassed by the obligation to deliver. If a fixed-term electricity sale contract has been concluded outside the obligation to deliver with a consumer for a period longer than two years, the consumer may terminate the contract after the period of two years in the same way as he may terminate a contract that is valid indefinitely

54 Finland The distribution net operator may change the prices and other terms of the connection contract and the power network contract, and a retailer may change the prices and other terms of the electricity sale contract only in the following cases: 1) on the grounds specified in the contact, provided that the content of the contract does not change materially; however, a retailer may not on these grounds change a fixed-term electricity sale contract concluded outside the obligation to deliver; 2) if the change is based on an amendment to legislation, or on a decision made by the authorities, which the distribution net operator or the retailed has not been able to take into account when concluding the contract; or 3) if there is a special reason for the change, owing to an essential change in circumstances, revision of outdated contractual or pricing arrangements, or implementation of measures necessary for energy conservation; however, a retailer may not on these grounds change a contract concluded outside the obligation to deliver. In addition, the distribution net operator and the retailer are entitled to make minor changes in contractual terms provided that these changes do not affect the principal content of the contract. The distribution net operator and the retailer must provide their contracting party with information on how the prices or other contractual terms will change, when the change will come into effect and what the grounds for the change are. The contracting party must be informed whether he has the right to terminate the contract. If the reason for the change is not a legislative amendment or a decision by the authorities, the change may come into effect at the earliest one month after notification of the change has been given Liability Limitations or Limitation Caps If the connection is delayed, the connecting party is entitled to a standard compensation. The maximum sum of the standard compensation is thirty per cent of the connection fee; however, at most FIM 10,000 (app. EUR 1,682). Besides the standard compensation there is also a compensation for delay; the connecting party is always entitled to receive compensation exceeding the standard compensation for damage. The new maximum for the standard compensation will be EUR 700 per user from 1 September

55 Finland SECTION 2 - LIABILITY TOWARDS THIRD PARTIES 2.1 Product Liability Product Liability Directive 85/374/EC has been implemented in Finland The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Electricity Market Act (No 386/1995) Electricity Safety Act (No 410/1990) Product Liability Act (No 694/1990) Tort Liability Act (No 412/1974) Liability limitations There are no liability limitations or cap at national legislation concerning the above issues Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply The provisions of the Electricity Market Act are prevailing when contracting with the consumers. According to the Chapter 6 a, Section 27 f of the Electricity Market Act the user of electricity is always entitled to present his claims based on fault to the distribution net operator. The distribution net operator is responsible for faults to consumers, unless the distribution net operator, within a reasonable period after having been informed of the claim, informs the consumer of a retailer who is responsible for the fault and who assumes liability for the compensation or price reduction derived from the fault. There will be an amendment from 1 September, 2003 to the responsible bodies concerning the internal network for a property or a group of properties. According to the amendment the distribution net operator and the retailer who deliver electricity through an internal network for a property, is liable towards the user for the interruption of network service. In addition, the distribution net operator is liable for the interruption of electricity delivery within its network towards a user, who acquires electricity through an internal network for a property that has been connected to the distribution net operator s network, unless the distribution net operator, within a reasonable period after having been informed of the claim, informs the user of a retailer who assumes liability for the standard compensation derived from the interruption of the network service. When contracting with other customers than consumers the parties can make agreements on liability. According to the general conditions for electricity sale (SME 99) the electricity vendor is not liable for the fault within network service (interruptions in delivery and quality faults). If the user s electricity delivery is interrupted or stopped against the conditions of sale contract due to a fault from the vendor s part, the vendor is liable for the damage thus created. The user has a right to have a compensation for an indirect damage only if the damage is caused by negligence on vendor s part. If the user is not a consumer and there is no agreement, the vendor s liability for indirect damages is at most the sum that corresponds to the amount of one year s electricity sales tariffs, however at most EUR 8, If the vendor has caused the damage on purpose or by gross negligence the cap will not be applied. By indirect damages are referred to following: 1) loss of earnings incurred by the connecting party or the user of electricity because of the delay or the consequent actions; 2) damage that is caused by an obligation based on some other agreement; 3) major loss of utility at the place where electricity is used when this loss does not result in direct economic damage, and other comparable major inconvenience; 4) property loss suffered by other user than a consumer, which has been caused to user s equipment or to his/her operations by an interruption in electricity delivery or other economic damage or loss caused by the same reason; and 5) other similar damage that is hard to foresee. A consumer is also entitled to receive compensation for damage caused to his/her family or a member of a family on the same grounds than for a damage caused to him/herself

56 France FRANCE Introduction Until the year 2000, the French electricity market was organised by the law of 8 April 1946 which has given to Electricity of France (EDF) the monopoly of supply, distribution and transport of electricity in France. Since the law of 10 February 2000 (which transposed into French law the Directive 96/92/CE of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity), which has been amended by the law of 3 January 2003, the activities of supply, transport and distribution have been separated essentially on an accountable point of view. RTE (Electricity Transport Network) is in charge of the transport of the electricity, whereas the GRDs (which are EDF distribution department and some local electrical utilities to which the task of distribution of electricity has been given as an exception to the national monopoly of distribution given by the law of 1946) deal with the distribution of electricity. RTE and the EDF distribution department are still integrated into EDF Company even if their accountancies are separated. The law of 10 February 2000 has also introduced the possibility for a customer to choose its electricity supplier. This choice is given to people who consume more than a certain amount of electricity a year 1. According to Directive 2003/54/CE,, adopted by the European Parliament on 26 June 2003, all the professional people will be able to choose their electricity supplier on 1 July 2004 and all the customers will have this possibility on 1 July If a customer is not eligible, he has only one contract, concluded with EDF which includes supply of electricity and access to electrical network. If a customer is eligible, he has two contracts : a contract for the supply of electricity concluded with the supplier of his choice, and a contract for the access to electrical network, concluded with RTE or EDF distribution department (depending on the voltage level). As a consequence, there are two kinds of obligations EDF has with regard to liability depending on the fact that its clients are eligible or not. It should be noted that customers have to respect technical conditions to access to electrical network (decree of 13 March 2003) The liability of EDF towards non eligible and eligible customers with regard to electricity supply and network access depends upon contractual conditions agreed between EDF and its customers, as interpreted by the courts. 1 This threshold is fixed by an Ordinance

57 France SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.2. Liability Towards Customers Liability towards non eligible customers The obligations of EDF with regard to quality of supply - In the case of low and medium voltage supplies, terms and conditions of supply allow tolerance margins of 5% in urban areas and 10% in rural areas for a voltage of 230/380 V. An inter-ministerial decree of 29 May 1986 has established new standard voltages of 230/400 V, with tolerance margins of V and V respectively. These new standard voltages are calculated on an average of 10 (ten) minutes as specified in the European Norm EN These tolerances have been in effect since In the case of high and extra high voltage supplies, government terms and conditions for the operation of the public electricity supply system by EDF (which have been in force since 1958), set a frequency value of 50 Hz, with a permissible margin of ± 2%. These terms and conditions draw a distinction between the rated voltage, the contractual voltage, and the voltage at the point of supply. The contractual voltage may vary by 5-7% in relation to the rated voltage. The voltage at the point of supply may deviate from the contractual voltage by 7, 8 or 10%, depending upon the individual case in question. Terms and conditions of supply and more specifically medium, high and extra high voltage electricity supplies include additional parameters regarding the definition of quality. Liability Where low voltage power is supplied to individuals, the customer invoice and Article 5 of the contract stipulate that EDF shall be liable for the maintenance of electricity supplies to customers, unless interruption results from the following: - scheduled interruptions; - force majeure; - third party action; - insurmo untable difficulties associated with climatic conditions or the perceived limits of technical capacity at the time when the incident occurs. Under the terms of Article 10 of contracts for the supply of electricity at medium voltage, EDF shall be liable for unscheduled interruptions in supply. Exceptions shall apply in cases of force majeure (defined on a broad basis) or third party action. This Article also defines the maximum limit for compensation payable in respect of damage (except in case of serious misconduct). New standard conditions For medium, high and extra high voltage electricity supplies to industrial operators new standard conditions are now applicable to the definition of liability and the payment of compensation in respect of electricity supplies. Although EDF is subject to obligations in terms of results obtained, these results are defined to take account of unforeseeable circumstances arising under normal and abnormal operating conditions. Obligation of supply is therefore defined on the basis of tolerance thresholds (not in the case of medium voltage)

58 France Within these thresholds, EDF shall not be liable for damage caused by faults or interruptions in supply. However, this assumption may be reconsidered at any time. On the other hand, EDF shall be deemed liable where these thresholds are exceeded. Under the terms of these new standard conditions, customers are nevertheless required to implement "economically feasible and technically effective measures to minimise the impact (as far as possible)" of random fluctuations in supply "upon plant". In case of failure to comply with this requirement for prudent operation, the liability of EDF is limited. Under this system (with the exception of the omission on the part of customers described above), limits on compensation payable no longer apply Case Law Case law relating to the liability of EDF towards customers may be summarised as follows: Legality of the limited liability clause In general, case law accepts the validity of the clause limiting the liability of EDF, included in Article 12 of medium and high voltage supply contracts, in terms of the general principles of civil law. This legality is a more controversial point under the terms of the consumer law (of 10 January 1978), which prohibits clauses limiting the liability of professionals in relations between professionals and non-professionals or between professionals and consumers. Since the definition of a non-professional or consumer is ambiguous, it is not clear whether e.g. a craftsman or small business supplied with medium voltage can be excluded from the category of "consumers". Causal link The courts have generally subjected the plaintiff in liability actions to stringent requirements regarding the attribution of responsibility for damage to the defendant. Proof of responsibility must be irrefutable, or must at least be established beyond reasonable doubt. Scope of contractual obligations Case law has already established that EDF is bound in respect of its clients by an obligation for results obtained in terms of the safety of plant used for the completion of supply operations. However, the courts are divided on the obligation of supply itself. Although rulings in favour of the application of an obligation for results obtained are in the majority, there appears to have been some reversal in this trend in the case of low voltage customers. On the other hand, the appeal court appears to have found in favour of the obligation for results obtained in the case of medium voltage customers. Elsewhere, the question of micro-outages in supplies to low voltage customers appears to be governed by principle of requirements for action to be undertaken. The Supreme Court (22 May 1991, Pepin v. EDF) absolved EDF of liability for damage caused by a micro-outage on the grounds that EDF had "done its utmost" to meet obligations for the maintenance of continuous electricity supplies to customers, in that all reasonable measures which were consistent with the technical and financial capacities of EDF had been taken. Liability of the victim The victim shall be fully liable for the consequences of damage, where this damage results solely from the victim's own negligence

59 France Case law is still extremely divided on the question of whether failure to fit equipment which will off-set interruptions in supply constitutes a fault which may lead to the exemption of EDF from liability Liability towards eligible customers This liability depends upon contractual conditions agreed between EDF and its eligible customers, as interpreted by the courts. The liability of EDF towards non eligible customers can concern supply of electricity if the customer has chosen to conclude this contract with EDF, and concerns in any case network access. This part of the study deals with liability with regard to network access. Conditions for liability In the network access contract EDF undertakes not to exceed a threshold in three different matters: - power cut for work on the electrical network - any power cut - quality of electricity In the case of low and medium voltage supplies, the threshold is fixed by the inter-ministerial decree of 29 May 1986 and by the European Norm EN (see paragraph I above). However, in the case of high and extra high voltage supplies, the standard thresholds are different from the ones described above in paragraph I. Furthermore, these thresholds can be personalized if the customer asks for it. If EDF exceeds the threshold, it is responsible automatically, that is to say the client has not to prove the fault of EDF. Nevertheless, EDF can reduce or exonerate its responsibility if it can prove that the client has made a fault. On the other hand, if the threshold has not been exceeded by EDF, the latter will not be liable unless the client can prove a fault or carelessness of EDF. Exclusion of liability EDF is not liable among other things in case of: - force majeure - third party action - insurmountable difficulties associated with climatic conditions or the perceived limits of technical capacity at the time the incident occurs Case law concerning liability with regard to supply of electricity is applicable to liability with regard to network access. INCORPORATION OF DIRECTIVE No /EEC Directive no. 85/374/EEC on defective products liability has been incorporated into French national law (law , 19 May 1998). With few exceptions, French law faithfully transposes the terms of the Directive, which introduces a non fault system of liability for damage caused by a product "which does not meet levels of safety which might reasonably be anticipated" and provides that electricity is classified as a product

60 Germany GERMANY SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Where all customers are to be taken into account, liability for quality of supplies will be based upon a combination of legal and contractual provisions. Especially the legal provisions distinguish between the supply of the customers according to normal tariffs and the supply according to special terms and conditions. For the supply of customers according to normal tariffs, generally domestic and small business customers (receiving low voltage supplies), the regulation governing general conditions for the supply of electricity to normal tariff customers (Verordnung ueber Allgemeine Bedingungen fuer die Elektrizitaetsversorgung von Tarifkunden; hereinafter referred to by the German abbreviation AVBEltV) will apply. In the case of medium and high voltage consumers, liability for quality of supplies will be based upon the supply contract concerned. For this reason, the categories of consumers are also referred to as special contract customers. If the terms and conditions of a contract used for the supply of a low voltage customer differ from the provisions of the AVBEltV, then this Customer is also a special contract customer. These special contracts normally include clauses granting the relevant supplier a limited liability. Most of these clauses refer to the relevant clauses of the AVBEltV Regulation Through Law As stated above, a significant share of the contracts between electricity suppliers and customers in Germany is regulated by the provisions of the AVBEltV. They refer to section 10 of the German Energy Law (Energiewirtschaftsgesetz, EnWG), where the general obligation of a local supplier to connect the low voltage customers with the electricity grid and supply them with low voltage electricity is regulated. - The obligation to build, maintain and run a electricity supply network This obligation in general is embedded in section 4, paragraph 1, EnWG, according to which an electricity grid operator is obliged to guarantee the security of the supply of electricity. This regulation is valid for every operator of electricity grids. - The obligation to supply correct quality Electricity suppliers have to fulfil this obligation with reference to tariff customers according to section 4 paragraph 1 of the AVBEltV. According to this provision the relevant suppliers are obliged to supply the customers with three-phase current at a voltage of approximately 380 or 220 Volts, with alternating current at a voltage of approximately 220 or 110 Volts and a frequency of approximately 50 Hertz. The term approximately is used here on the grounds that some fluctuations in voltage will be inevitable. Considerable technical and financial resources would need to be committed by the distributor if these fluctuations were to be eliminated. However, it is acknowledged that the tolerances may not exceed those stated in the EN There are no legal provisions governing the quality of supply to medium and high voltage customers, since values for voltage and frequency are established in special supply contracts

61 Germany It should also be noted that, according to the 4 th para. of Section 4 of the AVBEltV, the customer shall be responsible for the protection of his equipment against possible damage arising from variations in the quality of supply, if these variations do not exceed the tolerances stated in the EN In short, the distributor is not liable for damage arising in cases of micro-outages. - The obligation to supply in due time According to the 1 st para. of Section 5 of the AVBEltV electricity suppliers are obliged to render the electricity in the amount, stated in the relevant contract, at any time. The 2 nd and 3 rd para. of this section grant the supplier rights to interrupt the supply of electricity in case of works, necessary for the operation of the grid, and in case of an imminent grid break-down. However, the supplier or grid operator is obliged to inform the customer about the interruption of the electricity supply in due time, unless the information would not be possible in time, or would prevent the removal of already occurred interruptions, or the interruption time would only be short and the relevant customer is not himself dependent on an uninterrupted supply with electricity. The special customer contracts normally contain the relevant sections of the AVBEltV. - Control of terms and conditions for the supply of electricity As the conditions stated in the AVBEltV have to be followed where applicable on the supply of low voltage customers these conditions are not under a special control of an authority. For the supply of a medium or a high voltage customer the provisions of the AVBEltV can be incorporated into the supply contract. In these cases the Sections 308 and 309 of the German Civil Law Code (Buergerliches Gesetzbuch, BGB) are not applicable to these conditions. However, as for every contract with standardised terms and conditions, Section 307 of the BGB is still applicable on the contractual provisions. This regulation states that contractual provisions are null and void, if they place the customer at an unsuitable disadvantage, e. g. by differing from a substantial fundamental idea of a legal provision or by limiting substantial contractual rights or duties, so that the contractual purpose is endangered. So far all provision of the AVBEltV were granted compliance with Section 307 of the BGB, if they were incorporated into a special customer contract. If a low voltage customer is supplied according to a contract, slightly differing from the provisions of the AVBEltV (e. g. in terms of the duration of the contract), the aforesaid is also valid for the contractual provisions taken from the AVBEltV. Other contractual provisions have to be in compliance with Sections 307 to 309 of the BGB. This can only be controlled by the relevant court. - Other legal rules entail in contracts Beside the relevant provisions of the BGB and the AVBEltV there are not any regulations in other law codes that contracts for the supply of electricity have to comply with in terms of the quality of supply of electricity Regulation in/by Concessions According to Section 13 of the EnWG the local communities can grant concessions to grid operators for using the community owned streets for the laying of electricity cables. However, the relevant contracts do not have to include provisions refering to the building, maintenance or the running of the electricity grids and the supply of correct electricity quality in due time. These concessions do not have any impact on the contracts between the grid operator or the supplier and the customer Private of Public Electricity Supply Companies which are not Publicly Regulated The obligations for the supply company or the grid operator have to comply with the regulations stated in 1.1.1, as these regulations govern the supply of electricity to tariff-customers and special contract customers. With regard to the obligations of the supplier there are not any distinctions made between private or public established electricity supply-companies

62 Germany 1.2. Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? This obligation is laid down in 1 st para. of Section 10 of the EnWG and Sections 4 and 5 of the AVBEltV for tariff-customers and in the relevant contract for special contract customers (see above) Consequences of not Fulfilling the Obligations For both tariff-customers and special contract customers interruptions in the supply with electricity are a breach of contract. In these cases the general civil law grants the customer a right to claim for the damage occurred according to these interruptions, unless there are special circumstances under which the supplier was entitled to interrupt the supply with electricity (e. g. imminent gridbreakdown, debt of the customer) Regulation of the Obligation to Uninterrupted Supply In the cases stated in and suppliers are entitled to interrupt the supply of electricity. In these cases the customer has no right to claim compensation for any damage occurred due to these interruptions. If the supplier interrupts the supply of electricity without having the right to do so, the relevant customer is entitled to claim compensation for the damage occurred from this breach of contract. The customer can base the claim on the contract itself, i.e. the 1 st para. of Sections 5 and 6, respectively, of the AVBEltV or the relevant provision in the contract with special contract customers. This covers bodily injury, material damage and financial loss. Beside a claim based on the contract the customer is also entitled to claim damage according to civil criminal law (Section 823 of the BGB). However, this claim is limited to bodily injury and material damage Quality of Supplied Electricity For this we refer to Regulation of Tariffs Towards Customers With regard to tariff customers the relevant terms and conditions for the supply of electricity are stated in the AVBEltV. Further details are explained in The prices in tariffs of electricity suppliers are calculated according to their cost and proceeds situation. These tariff-prices have to be approved by the relevant authority Regulation of General Conditions for the Supply of Electricity The terms and conditions for the contracts of special contract customers may follow the provisions of the AVBEltV. In this case the terms and conditions only have to comply with Section 307 of the BGB. Further details are explained in The prices for special contract customers are market-based. Under special circumstances they can be checked by the relevant courts with regard to their reason Liability Limitations or Limitation Caps Section 6 of the AVBEltV, applicable for contracts with tariff-customers, limits the liability of suppliers according to the following conditions: If liability is to be applied under Section 6 of the AVBEltV, the disturbance in the electricity supply must have been unlawful. An irregularity or an interruption in the supply of electricity being within the tolerances of EN is still a supply according to the contract and therefore not unlawful

63 Germany Paragraph 1 of Section 6 provides for the limitation of liability in accordance with the type of damage sustained, the position of the person who caused the damage, and the severity of the offence: - in case of bodily injury, the company will be liable for the injury or death of clients, if the damage is caused by the company or its agents or contractors voluntarily or negligently, thus even in cases of minor negligence; - in case of material damage, the company will be liable for the damage in case of premediation or gross negligence, if the damage is caused by the company, its agents or subcontractors; - in case of financial loss, the company will be liable, if the losses in question have been caused by premediation or gross negligence on the part of the owner of the company, a body representing that company or a partner within that company. Where material damage or financial loss arises as a result of gross negligence, liability will be limited to the following sums, in accordance with Section 6, para. 2 of the AVBEltV: - Euro 2, per injured party; - the total liability is limited to - Euro 2,500,000.00, where power is supplied to up to 100,000 customers; - Euro 5,000,000.00, where power is supplied to up to 200,000 customers; - Euro 7,000,000.00, where power is supplied to up to 1 million customers; - Euro 10,000,000.00, where power is supplied to over 1 million customers. In principle, Section 6 of the AVBEltV will only apply to customers who are supplied under normal tariffs and conditions ( tariff-customers, see above No ). However, in the case of customers who are supplied under special customer contracts, limited liability clauses will generally be honoured in all cases. According to the latest jurisdiction the reference to Section 6 of the AVBEltV in special customer contracts is lawful, the customer being a household customer or a business customer. Summary of the Section 6 of the AVBEltV: DAMAGE Bodily injured Material damage Financial loss SOURCE OF LIABILITY Premeditation/ negligence Premeditation/ gross negligence Premeditation/ gross negligence PERSONS HAVING CAUSED THE DAMAGE The company, its agents or subcontractors As above Owner of the company, any body or partner with powers of representation LIABILITY Unlimited liability in case of gross negligence, liability will be limited to certain sums; unlimited liability in case of premeditation on the part of the legal representative, agent or subcontractor. As above Due to present tendencies to amend Section 6 of the AVBEltV we reckon that the aforementioned liability caps will be raised by the end of the year 2003, latest. The future caps of liability are not yet known

64 Germany 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES EC Directive No. 85/374 on defective product liability has been incorporated in Germany under the Defective Product Liability Act (Produkthaftungsgesetz), which came into force on 1 st January As producers of electricity and the relevant distributors will be liable for defects in their product if these defects cause bodily injury or material damage. This liability shall apply regardless of any fault The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Under Section 2 of the Third Party Liability Act (Haftpflichtgesetz), the operator of an electric plant or an electric grid or cable shall be liable for damage (material damage or bodily injury) caused by the existence of that facility or by the effects of electricity produced or transmitted by that facility. This liability shall apply regardless of any fault. However, the operator of this facility is exempted from liability, if the damage is caused to energy consuming devices or if it is caused by force majeure, or if proof can be done that the facility concerned was consistent with recognised technical standards. Section 823 of the German Civil Law Code (Buergerliches Gesetzbuch) covers bodily injury and material damage arising of the use or the effects of electricity, if the relevant grid operator or the supplier has acted negligently or voluntarily. The damage may arise from any faulty behaviour of an operator of an electricity plant, grid, and cable and so on Liability limitations Beside the limitations mentioned in No with regard to supply contracts with tariff customers, the above mentioned Defective Product Liability Act has the following liability limitations: In case of material damage, liability will be limited to damages of goods in private use. The following conditions will apply to normal tariff customers: - In case of material damage, liability will be limited to personal damage sustained by the client. - In case of material damage, the client has to bear a damage of Euro by himself (Section 11 of the act). The following will apply to special contract customers, who are not household customers: - The Defective Product Liability Act will only apply to bodily injury. - With regard to the Third Party Liability Act (Haftpflichtgesetz), the liability for bodily injury is limited to an amount of Euro 600, or an annual pension of Euro 36, The liability for material damages is limited to an amount of Euro 300,000.00; if more than one good is damaged by the same reason and the total damage exceeds the aforementioned sum, the payment obligations of the operator of the plant are reduced equally with respect to the relevant damages and to this sum. The liability according to the German Civil Law Code (BGB, -Buergerliches Gesetzbuch) is not limited

65 Germany 2.2. Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply As the Third Party Liability Act and the Defective Product Liability Act are applicable to a damage regardless of any fault of the supplier, the liability limitations stated in Section 6 of the AVBEltV do not influence the liability according to these acts. However, it is acknowledged in the jurisdiction that the contractual liability according to special customer contracts may be limited by Section 6 of the AVBEltV, if incorporated into the contract accordingly, as the supplier or the grid operator has a reasonable interest to limit the liability because of the grid structure and the permanent risks in the supply of electricity especially due to sensitive electricity consuming products used by the customers. Therefore, a conflict between the tasks of the supplier and the clauses in the terms of supply, if any, is justified by the supply of electricity as such

66 Hungary HUNGARY SECTION 1 - LIABILITY TOWARDS CUSTOMERS The answers concentrate on the public utility consumers Obligation as an Electricity Supplier Act CX of 2001 on Electric Energy - Section 82. (1) Authorized public utility suppliers may supply public utility customers with electricity only and exclusively on a contractual basis. In order to provide public utility customers with access to the public power grid, authorized public utility suppliers shall conclude contracts with authorized network operators. A public utility contract shall be concluded a) on the basis of a public utility contract with customized content, if consumer demand or supply conditions differ from the average requirements specified in the standard service agreements, b) in the absence of a customized contract, under the general conditions specified in the standard service agreements. (2) In connection with a customized contract, the authorized public utility supplier shall inform the public utility customer of the general conditions specified in the standard service agreements. (3) Public utility contracts shall be concluded for an unlimited duration. - Section 83 (1) Public utility customers may terminate public utility contracts with 30 days notice. However, the parties to a public utility contract may stipulate notice conditions that are more favorable for the consumer. (2) Authorized public utility suppliers may terminate public utility contracts in the following cases: a) in the event of a breach of contract as specified in Section 92, or b) if the contracting consumer ceases to draw electricity at the service location specified in the contract. Section 84 (Conveyance of Electricity) (1) Public utility customers may transmit the received electricity to a territory outside the service location or pass it on to a user located in an area outside the service location only and exclusively with the consent of the authorized public utility supplier. (2) A person who conveys electricity may terminate the legal relationship between himself and the user who receives electricity from him only and exclusively if the latter breaches its commitments stipulated in the relevant agreement, or the public utility supply relationship between the person conveying the electricity and the authorized public utility supplier is terminated. Metering, Settlement of Accounts and Fee Payment

67 Hungary - Section 85. Unless otherwise provided for by law, authorized public utility suppliers shall establish and settle accounts in respect of the amount of electricity used under the public utility contract in the period specified therein on the basis of the data supplied by a calibrated meter owned by the distributor. - Section 86. (1) Public utility customers shall be responsible for the payment obligations stipulated in the public utility contract. (2) Public utility customers shall pay charges as invoiced, when the invoice is presented or as specified in the relevant contract. Governmental Decree No.: 180/2002. (VIII. 23.) on the execution of Act CX of 2001 on Electric Energy The detailed rules on the relationship between authorized public utility suppliers and public utility customers, and the mandatory content requirements of public utility contracts concluded between public utility customers and authorized public utility suppliers is determined by the Governmental decree attachment No. 1/a. - Section 10. The authorised public utility supplier in cooperation with authorised network operator shall provide the consumer demand, including the eligible quality of the service. Act X of 1993 on Product Liability For the purposes of this Act: product shall mean any movable property, even if it subsequently becomes a component or part of another movable or real property, as well as electrical energy. Operational Code approved by Hungarian Energy Commission The standard service code of electricity supplier (The standard service code specifies the general technical, commercial, billing, and payment terms of contracts for the services provided by authorized operators. The standard service code is subject to approval by the Commission. Authorized operators shall make the approved standard service code available to all parties concerned.) Act IV of 1959 on the Civil Code of the Republic of Hungary - Section 277 (1) Contracts shall be performed as stipulated, at the place and time set forth and in accordance with the quantity, quality, and range specified therein. - Section 305 (1) (Deficient performance): On the basis of a contract in which the parties owe mutual services to one another, lack of conformity occurs on the part of the obligor if the goods provided do not, at the time of performance, correspond to the requirements stipulated by law or by the contract. - Section 387 (Public utility contracts) By concluding public utility contracts, service providers shall be obliged to provide users with public utility services (particularly gas, electricity, and water) on a safe and regular basis as of a specific date and in a volume determined according to the user's needs, and users shall be obliged to make periodic payments for such services. Private contracts between electricity supplier and public utility customers based on the abovementioned governmental decree

68 Hungary Regulation Through Law - The obligation to build, maintain and run a electricity supply network Electricity Act Network Operation - Section 22. (1) In order to ensure system cooperation and access to the public power grid, authorized network operators shall a) operate and maintain the public power grid under their control in a safe and effective way and with a view to environmental protection requirements, b) perform the maintenance, repair and renovation works and improvements in due time, and shall maintain the required stocks and reserves, c) provide the technical conditions required for operating the public power grid. (2) The independent system operator shall be subject to confidentiality concerning any and all information regarded as a business secret. (3) In cooperation with the independent system operator, the distributor shall operate those distribution networks or network sections specified in Electricity Supply Codes that do not affect the operation of the transmission network. Network Development - Section 27. (1) With due regard to the development plans and proposals of authorized network operators, the independent system operator shall prepare a development plan for the grid no less than once every second year. The installation of lines specified in the Electricity Supply Codes but not included in the development plan or in proposals must be reported to the independent system operator. (2) Based on the independent system operator's proposal, the Commission shall decide on the reclassification of lines as transmission, distribution or public lines. - The obligation to supply correct quality (See above) - The obligation to supply in due time (See above) - Control of terms and conditions for the supply of electricity - Section 11. With a view to the provisions of the Act on Consumer Protection and in order to enforce consumers' interests, the Commission shall act in concert with the Consumer Protection Agency and its regional branches (hereinafter referred to as 'consumer protection agencies') in performing the following consumer protection duties in the field of electricity supply: a) investigation of consumer claims related to the settlement of accounts, billing, payment of bills, metering, and complaints about electricity supply failures, b) review of the use of connection fees paid by consumers for connection to the public power grid, c) cooperation with nongovernmental organizations representing consumer interests, d) organization and conduct of consultations between nongovernmental organizations representing consumer interests and service providers; decision-making in disputes unresolved after such consultation, e) providing nongovernmental organizations representing consumer interests and consumer protection agencies with all of the public data and information, as specified in a separate regulation, that are related to those activities of an authorized operator that are subject to authorization and the enforcement of consumer interests,

69 Hungary f) reviewing the quality of supply and monitoring the satisfaction of consumer demand in order to ensure security of supply to consumers. - Section 106 (1) The independent system operator shall carefully monitor changes in the system balance, generating capacity, the public network and consumption. - Section 107. (1) Any system failure that does not constitute an emergency situation in the electricity supply system as specified in Section 108 shall be treated as a significant malfunction of the electricity grid when an event, as specified in the Electricity Supply Codes, occurs in the power plants of the electricity grid or in its public networks that curtails or stops electricity generation, generating capacity, distribution, supply or utilization or seriously endangers the operational safety and cooperative capacity of the energy system. (2) Irrespective of the rights and obligations stipulated in contracts concluded by the system users, in the event of a significant malfunction of the electricity grid, they shall carry out the instructions of the independent system operator and suffer the relevant expenditures in a manner specified by specific other legislation Regulation in/by Concessions Private of Public Electricity Supply Companies which are not Publicly Regulated Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? Consequences of not Fulfilling the Obligations Act on Electricity Breach of Public Utility Contracts - Section 87. An authorized public utility supplier shall be deemed to have breached the public utility contract, if a) it fails to commence the supply of electricity at the date and time specified in the contract, b) the manner of supplying electricity does not comply with the provisions of the public utility contract, c) it fails to meet the quality requirements of supply, d) it fails to resume electricity supply following suspension on the day immediately following receipt of the consumer's written notice of the termination of the reason for suspending service, e) it fails to notify the public utility customer at the time and in the manner specified in the standard service agreements or in the contract of the date and projected duration of suspension of service due to scheduled maintenance or renovation performed by authorized network operators. - Section 88. A public utility customer shall be deemed to have breached the contract, if he a) exceeds the electrical capacity specified in the contract, b) receives electricity in a manner that causes load or voltage conditions or a disturbance as a consequence of which the supply of electricity is interrupted,

70 Hungary c) impedes or interferes with the continuous and safe supply of electricity or that of another consumer in its contractual drawing of electricity, d) fails to observe the specifications relevant to the establishment and operation of consumer equipment, and the connection of such to electrical installations, e) willfully or negligently damages the connection or metering equipment, removes the lead meter seal, or fails to report any damage thereunto to the supplier, f) receives electricity by tampering with or circumventing the use of an electricity meter, g) draws electricity without the authorized public utility supplier's consent after the electricity supply has been suspended, h) fails to pay electricity charges when due, by the payment date specified in the contract, i) transmits electricity - without the consent of the authorized public utility supplier - to a place other than the service location, or conveys it to another user located at a place different from the service location, j) violates the terms of consumption without a meter, k) fails to comply with the provisions on the restriction of consumption. Consequences of Breach of Public Utility Contracts - Section 89. (1) Breach of a public utility contract shall entail: a) repayment of charges or payment of a surcharge, b) a contractual penalty, c) indemnity, d) suspension of electricity supply, e) terminating the supply of electricity. (2) The consequences specified in Subsection (1) above may be applied jointly and in the cases defined under Sections (3) The amount of the surcharge shall be specified in specific other legislation. (4) The contractual penalty shall be due and payable on the fee for the supply affected by the breach of the contract. The amount of penalty shall be specified in the standard service agreements. (5) Repayment of the fee or payment of a surcharge or penalty shall not exonerate liability for damages. - Section 90. (1) An authorized public utility supplier shall pay the public utility customer a) a penalty for any violation of the contract under Paragraphs a) and c)-e) of Section 87, b) repay the proportionate fee in the event of any violation of the contract under Paragraph b) of Section 87. (2) A public utility customer shall pay the authorized public utility supplier: a) a surcharge for any violation of the contract under Paragraph a) of Section 88, b) a penalty for any violation of the contract under Paragraphs b)-g) of Section Section 91. (1) An authorized public utility supplier may suspend the supply of electricity in the event of the breach of contract specified in Paragraphs b)-f) and i)-k) of Section 88. (2) A public utility customer shall notify the authorized public utility supplier in writing of the termination of the reason for suspension. The authorized public utility supplier shall resume supply on the next business day following receipt of such notice. - Section

71 Hungary In the case specified in Paragraph h) of Section 88, the authorized public utility supplier shall be entitled to disconnect a public utility customer from electricity supply and terminate the contract concluded with him, or shall continue to supply electricity on condition that a prepayment device is connected to the metering device if - despite a written request - the consumer fails to perform its payment obligation within sixty days of the due date, or if it receives electricity as specified in Paragraph g) of Section Section 93. The authorized public utility supplier and the public utility customer shall indemnify the other party for any and all proven damages caused by violation of the contract and not covered by the penalty Regulation of the Obligation to Uninterrupted Supply Act on Electricity Limitation and Suspension of Electricity Transmission and Distribution - Section 33. (1) The independent system operator may deny access to the transmission network and/or limit, curtail or suspend contracted supplies in an objective, transparent and non-discriminatory manner, a) in the event of extraordinary network conditions, b) owing to a shortage of electricity in the public power grid, generating capacity or electricity transmitted across borders, c) in the event of any malfunction in the interconnected electricity grid or the electricity grid, d) if the contracts to supply eligible customers are suspended. (2) Denial of access to the public power grid shall be explained. (3) At the request of the system user, the Commission shall, within 8 days, investigate whether the conditions for denial prevail. The Commission may declare its resolution enforceable effective immediately. If the conditions for denial do not exist, the Commission may oblige the independent system operator to restore access to the public power grid. - Section 34. (1) Affecting the fewest customers and for the shortest possible period of time, authorized network operators may curtail or suspend transmission or distribution a) in the event of any endangerment of life or property, b) in the event of malfunctions at electrical installations, c) in order to carry out technical work that cannot be performed in any other way. (2) Authorized network operators shall be entitled to curtail or suspend transmission and distribution specified in the Electricity Supply Codes that affects the operation of the transmission system upon the instruction or prior consent of the independent system operator. (3) Where any suspension of service is scheduled due maintenance works or improvements, the authorized network operator in question shall, in the manner specified in the Electricity Supply Codes, inform in advance the eligible customers and authorized operators affected regarding the starting time and planned duration of the suspension. (4) Detailed regulation of denial of access to public power grids or the curtailment or suspension of transmission and distribution shall be specified in the Electricity Supply Codes

72 Hungary - Section 35. Authorized network operators shall pay indemnity to the authorized operators and eligible customers affected to the extent of the evidenced damages, if a) they fail to notify the authorized operators and eligible customers affected in due time concerning the suspension of electricity distribution due to scheduled technical work, b) electricity distribution is interrupted due to reasons within their control, or they curtail or suspend it to an extent exceeding the limits specified in Subsection (1) of Section Quality of Supplied Electricity The quality criteria of electricity in technical aspect can be determined in conformity with the following standards: MSZ 1 standard; MSZ EN standard 1 1. Frequency The nominal value of frequency is 50 Hz 1% during 95% of the period of observation and 50 Hz +4/-6% during 100% of the period of observation. The period of observation relates to one week, while taking the mean value of 10-second measuring periods into account. 2. Slow changes in voltage Connection Reserved voltage range U n (kv) Minimum (%) Maximum (%) Under normal operating conditions, the voltage shall be maintained within the voltage range during 100% of the one-week period of observation, while taking the 10-minute average effective values into consideration. 3. Voltage supply failures 4. Supply voltage collapse Regulation of Tariffs Towards Customers The transmission and distribution of electricity, grid control by the independent system operator, the sale of electricity by producers reserved for the public utility system trade between public utility wholesalers and authorized public utility suppliers and the electricity sold to public utility customers shall be subject to the provisions of the Price Regulation Act. The official price regulation shall not apply to trade between producers and electricity traders and between electricity traders inter se; nor shall it apply to electricity sold to eligible customers. The detailed rules pertaining to pricing and the price regime shall be drawn up by the Commission based on the principle of minimum cost. The prices shall be determined and decreed by the Minister. The Commission shall review the price levels and the prices at the request of any interested party and shall make public the results of such review

73 Hungary Regulation of General Conditions for the Supply of Electricity Liability Limitations or Limitation Caps Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES The EC Directive has been incorporated in Hungary under the Act X of 1993 on Product Liability. - Section 15 Within the framework of Section 3 of Act I of 1994 promulgating the Europe Agreement establishing an association between the Republic of Hungary and the European Communities and their Member States, signed in Brussels on 16 December 1991, this Act contains regulations that may be approximated with Council Directive 85/374/EEC on the approximation of the laws, regulations and administrative provisions concerning liability for defective products as amended by Directive 1999/34/EC of the European Parliament and of the Council The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations See in Point Liability limitations Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply Nothing is to comment

74 Ireland IRELAND SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Liability is based upon a combination of legal provisions and contractual conditions between suppliers and customers. The principal enabling legislation is the Electricity Regulation Act 1999 enacted on 14th July 1999 with subsequent Statutory Instruments in 1999, 2000, 2001, and 2003 and the Sustainable Energy Act 2002 (enacted 27/2/02). The Electricity Regulation (Amendment) Bill 2003 is currently passing through the various enabling processes of the Irish Government Regulation Through Law - Obligations to build, maintain and run an electricity supply network On 14 th July 1999, the Electricity Regulation Act 1999 ( the 1999 Act ) was enacted to provide the regulatory framework for the introduction of competition in the generation and supply of electricity in Ireland. The 1999 Act enabled effect to be given to Directive 96/92/EC. It provided for the establishment of the Commission for Energy Regulation ( CER ) and gave it the necessary powers to licence and regulate the generation, distribution, transmission and supply of electricity. Prior to the 1999 Act ESB 1 had a monopoly in Ireland. Directive 96/92/EC was given further effect by the introduction of the EC (Internal Market in Electricity) Regulations 2000 ( the 2000 Regulations ), which appointed ESB as the Distribution Systems Operator ( DSO ). The Sustainable Energy Act 2002 provides for the establishment of the Sustainable Energy Authority whose functions include the promotion of environmentally and economically sustainable production supply and use of energy. - Obligation to supply correct quality S.9 of the 1999 Act obliges the CER to protect the interests of the final customer and have regard to the need to promote the continuity, security and quality of supply. While the Irish Courts are active in the implementation and interpretation of laws affecting consumers there has been no judicial interpretation to date of the liability of ESB or other licensed suppliers for the maintenance of quality of supply. - Obligation to supply in due time As above. - Control of terms and conditions for supply of electricity General statutes dealing with consumers rights: (a) The Sale of Goods and Supply of Services Act 1980 stipulates that goods supplied shall be of merchantable quality and should be reasonably fit for the purpose for which they are intended. 1 Electricty Supply Board is abbreviated as ESB

75 Ireland (b) ESB and other licensed suppliers are subject to the terms of EC Directive No.85/374 (as amended by EC Directive No.99/34) on defective product liability and also EC Directive No.92/5 in relation to general product safety. (c) EC (Unfair Terms in Consumer Contracts) Regulations 1995 (implementing EC Directive No.93/13) is also applicable. The 1995 Regulations invalidates terms in consumer contracts for the supply of goods and services where the terms have not been individually negotiated and are unfair according to prescribed criteria. (d) Energy (Miscellaneous Provisions) Act 1995 provides that ESB may take summary proceedings in the District Court against the registered customer for unauthorised interference with the consumption of electricity. (e) Licences and authorisations granted by the CER under s.14 & s.16 of the 1999 Act are subject to terms and conditions specified in the licence or authorisation. (f) The Electricity Regulation (Amendment) Bill 2003 formally extends the functions of the CER to ensure that the electrical contracting industry operates to the highest possible standards of public safety. Section 6 of the Bill formally prohibits ESB from connecting premises for supply of electricity without proper evidence that the electrical installation on the premises have been completed by an electrician, electrical contractor or registered employer who has complied with the technical and public safety codes and is a member of an Electrical Contracting Supervisory Body. - Other legal rules entail in contracts Generally licensed suppliers draw up the general conditions of supply between the undertaking and the customer. In the case of ESB s General Conditions of Supply (May 1998, i.e., prior to enactment of the 1999 Act), ESB may disconnect supply where: (a) The customer fails to pay sums due for supply of electricity, (b) The customer s installation or use of electricity is such as to interfere with the satisfactory distribution of electricity or with the quality of supply to other customers, (c) The customer s installation is in a dangerous condition, (d) Alterations, repairs, renewal or maintenance of ESB property or means of supply require the withdrawal of the customer s supply, (e) A customer extends supply for use by another party whom ESB consider to be a separate customer (f) In any other circumstances in which the law requires disconnection Regulation in/by Concessions A licence and/or authorisation granted by the CER is required in order to operate in the electricity market in Ireland. Part III of the 1999 Act provides that the CER can grant a person a licence to generate electricity [s.14(a) licence], a licence to supply electricity [s.14(b), (c) or (d) licence] or an authorisation to construct or reconstruct a generating station [s.16 authorisation]. These licences and authorisations are subject to such terms and conditions as may be specified in the licence or authorisation. A condition of the licence or authorisation is that the licensee/grantee must comply with the Grid Code, Metering Code and where applicable, the Distribution Code. S.33 of the 1999 Act provides that ESB shall make regulations setting out a Grid Code in relation to the transmission system and a Distribution Code in relation to the distribution system. ESB shall comply with the directions given by the CER in respect of the matters to be specified in the Grid Code and Distribution Code. The Metering Code is prepared by the Distribution System Operator (currently ESB) and approved by the CER, as from time to time revised, amended, supplemented or replaced with the approval of or at the instance of the CER

76 Ireland Private of Public Electricity Supply Companies which are not Publicly Regulated The CER is responsible for the licensing of electricity supply pursuant to Section 14 of the 1999 Act. Licensed suppliers are entitled to supply electricity to eligible customers (from 19 th February 2000). In addition to the eligible market, there is 100% opening of the green and Combined Heat and Power ( CHP ) markets, where such licensed suppliers may supply any customer in the country irrespective of consumption Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? The 2000 Regulations provide that until 19 th February 2005, the CER has a duty to facilitate arrangements, which have the effect of securing that ESB is able to satisfy demand for electricity from final customers, who are not supplied by other licence holders under Section 14 of the 1999 Act (as amended). ESB was appointed Distribution Systems Operator under the 2000 Regulations. As DSO, ESB has a duty to operate and ensure the maintenance of and develop, as necessary, a safe, secure, reliable, economical and efficient electricity distribution system, with a view to ensuring that all reasonable demands for electricity are met and having due regard for the environment Consequences of not Fulfilling the Obligations Summary proceedings for offences and/or breaches under the 1999 Act may be brought and prosecuted by the CER. The High Court may make such order as it thinks fit and may confirm, revoke or vary a direction given by the CER [ss.23-26). A person or body corporate found guilty of offences under the 1999 Act shall be liable on conviction to fines ranging from 1, ,974. Section 23 of the 1999 Act provides that the CER may direct ESB and the holders of licences or authorisations to discontinue or refrain from practices, where it is necessary to protect the public health or safety or the environment or the continuity of supplies of electricity. The conditions of the licence and authorisation granted under s.14 & s.16 also provide for the right of the CER to revoke the licence or authorisation in certain circumstances Regulation of the Obligation to Uninterrupted Supply There are no statutory or regulatory provisions governing frequency and voltage tolerances. ESB attempts to maintain a self-appointed standard. However, Section 38 of the 1999 Act provides that the CER may direct ESB to prepare confidential statements on estimates of capacity, forecast flows and loading. Under the ESB General Conditions of Supply, electricity may be supplied at low, medium or high voltages. The terms within these General conditions provide that variations in quality and/or occasional interruptions will arise from time to time. ESB will take all reasonable steps to minimise interruptions and/or variations in the quality of supply. Customers are required to take appropriate steps to protect their installations from the consequences of interruptions in supply or variations in quality. In the interests of safety and good practice, the customer s electrical installation must comply with the relevant standards approved by the Electro-Technical Council of Ireland (ETCI) Quality of Supplied Electricity The 1999 Act gave the CER power to licence and regulate the generation, distribution and supply of electricity. Pursuant to s.9 of the 1999 Act, the CER has a duty to protect the interests of the final customer and have regard to the need to promote the continuity, security and quality of supply. Under the ESB General Conditions of Supply, ESB will take all reasonable steps to minimise interruptions and/or variations in the quality of supply

77 Ireland While the Irish Courts are active in the implementation and interpretation of laws affecting consumers there has been no judicial interpretation to date of the liability of ESB for the maintenance of quality of supply. In practice, ESB never compensates for micro-outages. Negligence would have to be proven in order to succeed in a claim for interruptions in supply Regulation of Tariffs Towards Customers Pursuant to Section 39 of the 1999 Act, the Minister may order the CER to impose on ESB and holders of licences, authorisations or permits, public service obligations ( PSO ), which may include obligations in relation to (a) security of supply, (b) regularity, quality and price of supplies, (c) environmental protections, and (d) use of indigenous energy sources. The cost of these obligations can be recovered from all electricity users. Under the 1999 Act the CER is charged with approving the form and basis of charges to be applied for the use of transmission and distribution system. Where necessary the CER may direct ESB National Grid, ESB Networks and ESB Public Electricity Supply to amend such charges to final customers who are not being supplied in accordance with a licence issued under paragraphs (b), (c) or (d) of Section 14(1) of the 1999 Act. In the present market the tariffs applied to consumers of electricity can be divided into five components Generation, Transmission Use of System charges (TuoS), Distribution Use of System charges (DuoS), Supply margin and Public Service Obligations (PSO) Regulation of General Conditions for the Supply of Electricity See above. In addition, the contract between ESB and the customer is set out in a document entitled General Conditions of Supply (May 1998). Larger customers will be supplied under the terms of separate and far more detailed contracts, which still include the aforementioned general conditions. ESB Networks (the Distribution Systems Operator pursuant to the 2000 Regulations) has also produced Customers Charters for the benefit of customers. These Charters constitute a detailed report on standard services that must be provided to customers and also provide for certain automatic payments where ESB fails to meet its service guarantees. ELCOM was set up in April 1998 (prior to the 1999 Act) as the ESB Customer Complaints Arbitrator. The office of the Arbitrator deals with unresolved complaints relating to the service provided by ESB in the areas of billing and payments queries, supply connections, metering, network repairs, supply, quality of supply and continuity of supply, communications with customers, service levels and Customer Charter guarantee disputes. The Arbitrator has the power to issue binding recommendations to ESB Networks and Marketing and ESB Customer Supply and may recommend that ESB follow a particular course of action or pay an ex gratia sum. The service is free to customers and is in no way prejudicial of a customer s legal rights. ESB and other licensed suppliers is subject to the terms of EC Directive No.85/374 (as amended by EC Directive No.99/34) on defective product liability and also EC Directive No.92/59 in relation to general product safety. EC (Unfair Terms in Consumer Contracts) Regulations 1995 (implementing EC Directive No.93/13) is also applicable. The 1995 Regulations invalidates terms in consumer contracts for the supply of goods and services where the terms have not been individually negotiated and are unfair according to prescribed criteria

78 Ireland Liability Limitations or Limitation Caps Other than what is provided for under the statutes by way of fines and penalties, there is no compensation ceiling. In the case of ESB s General Conditions of Supply liability is confined to damages that are directly attributable to negligence and exclude consequential damages and economic loss. A deduction may be made for contributory negligence at common law. 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES The status of the EC Directive regarding Defective Product Liability The EC Defective Products Directive has been implemented in Ireland by the Liability for Defective Products Act 1991 ( the 1991 Act ). Section 1(1) of the 1991 Act defines product as including electricity where damage is caused as a result of failure in the process of generation of electricity Other Product Liability Regulations The Sale of Goods and Supply of Services Act 1980 stipulates that goods supplied shall be of merchantable quality and that they should be reasonably fit for the purpose for which they are intended. The EC General Product Safety Directive has been implemented in Ireland by EC (General Product Safety) Regulations 1997 ( the 1997 Regulations ), making it an offence to place unsafe products on the market. A product is deemed to be safe if it complies with the national rules on health and safety requirements Liability limitations Section 3 of the 1991 Act excludes liability for damage to property worth less than 444 and provides for a deduction of 444 from damage to property valued at more than this figure. Under the 1997 Regulations, a distributor has a duty to ensure that any product he supplies is a safe product. The offences created by the 1997 Regulations carry penalties on summary conviction of a fine up to 1,904 or 3 months imprisonment or both. Where after conviction the 1997 Regulations continue to be contravened, a fine of up to 317 for every day contravention continues may be imposed. Other than what is provided for under the statutes by way of fines and penalties, there is no compensation ceiling. As stated above at para.1.2.7, ESB s General Conditions of Supply confine liability to damages that are directly attributable to negligence and exclude consequential damages and economic loss. Larger customers are usually supplied under the terms of separate and far more detailed contract, which still include the aforementioned general conditions Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply ELCOM is currently the Customer Complaints Arbitrator for ESB. It deals with unresolved complaints, including complaints relating to supply connections, supply, and quality of supply and continuity of supply. Until such time as the role of ELCOM is reviewed, confusion may arise between the respective roles and responsibilities of ESB as public electric supplier and the roles and responsibilities of ESB and other independent companies as licence holders under Section 14 of the 1999 Act

79 Ireland On 18 th September 2002, the CER published a consultation paper on the proposed role for ELCOM in the liberalised electricity market. The CER had proposed that from early 2003, ELCOM would, on its behalf, arbitrate on all unresolved customer complaints (networks and supply) from the electricity industry including those from customers in both the competitive and franchise markets. Unresolved complaints from transmission connected customers and some larger distribution customers would not come under the proposed new remit for ELCOM. Following the consultation process the CER decided not to proceed for the moment. In the CER s view it was preferable that statutory backing be given to a new duty of the CER to arbitrate on unresolved customer complaints. The CER therefore proposed amendments to the Electricity Bill (still to be enacted)

80 Italy ITALY SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier The liability of electricity supply is regulated by several sources both legislative and regulatory. While the national laws discipline the responsibility stemming from general contractual conditions and implement the EC directive n 85/374 on defective product liability, the national regulatory authority for the electricity (Aeeg) has designed a specific regulation concerning the continuity and quality of supply Regulation Through Law The national law discipline general aspects of the electricity supply, the obligation about the network, the quality, the continuity and the control of terms and conditions, are regulated by the concession granted to each distributor operator. Here under are mentioned the main national laws that affect the electricity supply service. Law no. 79 of 16 th March 1999 which implements EC Directive no. 96/92 on energy market regulation: the distributor operators are obliged to connect all the customers interested in the electricity supply, guaranteeing the continuity of the service and respecting the regulatory framework. The electricity supply is regulated by the concessions issued by the Ministry of Productive activities. Article 1218 of the Italian Civil Code: which stipulates that any party who fails to provide the exact service requested shall be required to pay compensation, unless that party is able to prove that any failure or delay in the provision of the service concerned was caused by circumstances beyond his control. Law no. 224 of 24th May 1988: this implements EC Directive no. 85/374 on defective product liability Regulation in/by Concessions The concession disciplines the electricity supply, including distribution and sale of electricity to captive customer. The tasks of the concessionaire are: - to guarantee the safety, reliability, and continuity of the distribution service; - to preserve the infrastructure in a perfect state of working, arranging for the necessary maintenance; - to promote the development, the efficiency and the quality of each distribution framework and service; - to guarantee the fulfilment of each duty aimed to ensure regulatory, safety and security, reliability, efficiency and low costs; - to guarantee the metering services; - to arrange for a "Distribution Code", which discipline the relationship with the customer, with the parties involved in the management of the network, the maintenance of the network. The distribution operators are obliged to respect the general and specific quality targets established by the authority

81 Italy Whenever the concessionaire do not accomplish their tasks, seriously compromising the electricity supply, the Ministry can interrupt o retire the concession. The control of the fulfilment of terms and conditions for the electricity supply is acted by the authority Private of Public Electricity Supply Companies which are not Publicly Regulated Our legislation doesn't use contracts or other private instruments to regulate the supply of electricity service 1.2. Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? As established in the law 79/99, in Italy the customer must be shared in two classes: - the captive clients, which are obliged to draw up a supply contract only with the distribution operator working in the area where the service is required; - the eligible clients, which are free to draw up a supply contract with any producer, wholesaler or distribution operator. Furthermore, the distribution operators are obliged to connect to the network any petitioner Consequences of not Fulfilling the Obligations The refusal of connection requests can be appealed in the civil court Regulation of the Obligation to Uninterrupted Supply The Aeeg has established, with the regulatory act 155/02, a discipline with the aim of guaranteeing a national level of continuity of electricity supply. The system designed is based on two mechanism of refund: - The Aeeg has separated about 300 zones and has established a local initial level of interruptions of the supply service. Afterwards, the Authority has fixed a rate of improvement that must be respected by the local distribution network operator. The costs arising from this duty are already included in the national tariffs and this imply that wherever the rate of improvement is not respected, the local distribution network operator have to pay a penalty. On the other hand, wherever the local distribution network operator exceeds the rate, he will receive a refund. - When the local distribution network operators achieve the national base level of quality, they can ask the Aeeg to refund for the amount of costs that they have to sustain for keeping on the level achieved. If the Aeeg accepts their requirements, the local distribution network operator is obliged to guarantee the level established, otherwise they will refund directly the customers. The national level of disconnections established by the Authority is based on the yearly average time of interruption per customer Quality of Supplied Electricity With reference to power quality, the reference standard for Enel Distribuzione mv and lv networks is en Regulation of Tariffs Towards Customers The new tariff regulation for captive market was introduced by the Authority for electricity and gas from January 2000, for a four years period

82 Italy The tariff system is based on price cap model. Every year the tariffs are reviewed according to an efficiency aim, in terms of reduction of fixed costs, of 4%. If companies make more efficiency than 4 per cent they can benefit of this reduction keeping the margins. The initial level of the tariffs is fixed according to the rate of return mechanism. The tariffs guarantee the recovering of operational costs, technical and economical depreciations, on the remuneration of the invested capital. The remuneration is equal to 5,6 per cent for the transmission and 7,4 per cent for the distribution. The average household tariff has different components: - Fuel cost (39%) this component is reviewed by the Authority every three months, according to the variations of an index that reflects the Italian thermoelectric generation assets (coal 17%, gas 23%, oil 60%) - Generation fixed costs (15%) - Transport fixed costs (23%) includes transmission, distribution and sale costs - System charges (12%) to cover renewable sources incentives, nuclear decommissioning costs, research and development costs, stranded cost. - Taxes (11%) The tariffs for household customers are defined directly from the Authority for electricity and gas. The tariffs for other non household customers, which are still in the captive market, are fixed by the distribution companies in accordance with the revenues constrains established by the Authority Regulation of General Conditions for the Supply of Electricity The general conditions for supply of electricity are established in the contract, as discipline by the Aeeg with the regulatory act 200/99, and can be sum up as follow: - -Meter reading and invoicing. It must be carried out at least once a year or once a month for load up to 30 kw. The customer can also proceed to a self-metering reading. - -Recurrence of invoicing. It can be two-monthly, or monthly, basing on the load. - -Interruptions. It can be carry out only on specific cases and after the mailing of the advice. - -Claims. The distributor operators must inform the customer about claim conditions supplying the right form, but accepting any kind of communication Liability Limitations or Limitation Caps The distributor operators are not responsible for the damages affected the market after the metering. If there is a failure in the meter the distributor operator is not responsible if the customer has declined to change the failure meter

83 Italy 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES Italy has implemented the Product Liability Directive in the 1988, with the Dpr n. 224/ The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Enel Distribuzione installations, being designed, erected operated and maintained according to Italian electrical commission (cei) standards, are properly done (well done jobs) as foreseen by a generic law on this matter. By the way any specific law prevails on cei standards. Liability toward third parties may arise only in case of jobs not made according to laws or standards Liability limitations There is not Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply There is not

84 The Netherlands THE NETHERLANDS SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Elektriciteitswet 1998 of 2 July 1998 (Electricity Act), adopted by Dutch Parliament in 1998, lastly amended in 2003, Staatsblad (Bulletin of Acts and Decrees) 2003, 316. The Electricity Act sets out rules for transmission and supply of electricity. Generating and trading is not regulated. The Electricity Act provides for fully opening of the market on 1 July Till 1 July 2004 supply to captive customers is prohibited without a licence. Afterwards a licence for supply of small-scale consumers (transmission value of no more than 3*80 A) stays imperatively prescribed by law Regulation Through Law On the basis of the Electricity Act separate legal entities have been prescribed to manage the grids. The Minister of Economic Affairs has to assent to the appointment of a grid manager (Section 12.2 Electricity Act). The grid managers have a limitative list of duties and obligations to manage the grids (Section Electricity Act). In the fully opened market (from 1 July 2004) a licence holder for the supply to small-scale consumers is required to provide for the supply to these customers, on request, in a reliable manner, for reasonable rates and subject to reasonable conditions (Section 95b.1 Electricity Act). The Minister of Economic Affairs shall issue a licence if (i.a.) the applicant provides satisfactory evidence that it has the required organisational, financial and technical qualities for the effective performance of its duties (Section 95c.1 Electricity Act) - The obligation to build, maintain and run a electricity supply network The grid managers have the duty to ensure the operation and maintenance of the grids and of the transmission of electricity across the grids, to construct, repair, replace or extend the grids and to maintain sufficient reserve capacity for the transmission of electricity (Section 16.1.a, c and d Electricity Act). - The obligation to supply correct quality The Dutch Office for Energy Regulation (Dienst Uitvoering en Toezicht Energie: DTe) has the task to adopt Codes regarding (i.a) the relationship between grid managers, and between grid managers and customers, in relation to the operation of the grids, the provision of a connection to the grid and the transmission of electricity across the grid (NetCode) (Section 31.1.a Electricity Act), the relationship between grid managers, and between grid managers and customers, in relation to the measurement of data with regard to the transmission of electricity and the exchange of measurement data (MeasurementCode) (Section 31.1.b Electricity Act), the relationship between the grid manager of the national high-voltage grid, on the one hand, and customers and other grid managers, on the other hand, with regard to system services (SystemCode) (Section 31.1.c Electricity Act) and the quality criteria to be met by grid managers in respect of their services, which shall include, in any event, compliance with the technical specifications, eliminating disruptions to the transmission of electricity, customer service and providing compensation in the case of serious disruptions (Section 31.1.f Electricity Act). The DTe shall determine the Codes, taking into consideration (i.a) the importance of the reliable, sustainable, efficient and environmentally responsible supply of electricity (Section 36.1.b Electricity Act) and the importance of good quality service provision by grid managers (Section 36.1.e Electricity Act). The Codes are determined by the DTe and are applicable for an indefinite period (Section 38.1 Electricity Act)

85 The Netherlands After the Codes have been determined, these shall apply as the minimum requirements for the technical design and operation of installations and grids, as referred to in section 7(2) of Directive No. 96/92/EC concerning community rules for the internal market in electricity (Section 38.4 Electricity Act). - The obligation to supply in due time The grid manager has the duty to ensure, in the most effective manner, the safety and reliability of the grids and of the transmission of electricity across the grids (Section 16.1.b Electricity Act). - Control of terms and conditions for the supply of electricity Outside the competence of DTe to determine the Codes, there is no control of special conditions for the supply of electricity under public law. - Other legal rules entail in contracts The Civil Code (private law) has general application to agreements and general conditions on energy supply Regulation in/by Concessions No other concessions than pursuant to the Electricity Act (described above). The provincial councils and municipal councils are explicitly not authorised to issue regulations in respect of the transmission and generation of electricity in the interests of electricity supply (Section 83 Electricity Act) Private of Public Electricity Supply Companies which are not Publicly Regulated The Dutch grid managers and the suppliers of small-scale consumers are publicly regulated (see ) Liability Towards Customers In the Netherlands the electricity companies have been legally unbundled (see ). So there are separate agreements and general conditions under private law between transport companies (grid managers) and their customers and between supply companies and their customers. Furthermore there is a distinction between households and business consumers in contractual conditions in terms of liability The Obligation to Supply Customers. How and where is this obligation laid down? Transport: The grid manager shall be required to make an offer to any person who requests such in relation to the transmission of electricity if there is enough capacity (Section 24.1 and 2 Electricity Act). Supply: A licence holder is required to provide for the supply of electricity to all small-scale customers, on request, in a reliable manner, for reasonable rates and subject to reasonable conditions (Section 95b.1 Electricity Act). Both the general conditions under private law (transport and supply) on behalf of households and the general conditions under private law (transport and supply) on behalf of business consumers stipulate that the delivery of electricity in principal will be uninterrupted but that the grid manager or the supplier is not able to guarantee the continuity of the transport respectively the supply Consequences of not Fulfilling the Obligations Transport: If the Minister of Economic Affairs determines that the grid manager is not or will not be able to adequately perform a duty and the grid manager fails to comply with an instruction in that respect, the Minister may substitute the appointment of the grid manager by the appointment of another company (Section 13.2 and 3 Electricity Act)

86 The Netherlands Supply: The Minister of Economic Affairs may withdraw a licence (i.a.) if the licence holder fails to comply with the obligation to provide for the supply of electricity to all small-scale customers (Section 95e.1b Electricity Act) Regulation of the Obligation to Uninterrupted Supply Households: Pursuant to the general conditions in electricity transport and electricity supply for households the transport company and the supply company accept limited liability in case of a responsible shortcoming for damage to persons or properties not used for business or professional purposes if the damage is the result of an interruption of supply. A threshold of 55 applies in case of damage to properties, not used for business or professional purposes, of a single consumer. The total of the claim for damages at one occurrence (persons and private properties together) amounts to a maximum of for all consumers together and per consumer. In case of defective transport or connection / incorrect action or negligence in transport or connection the transport company will be liable for damage to persons or property in case of a responsible shortcoming if this damage is the result of a defective transport or connection or incorrect action or negligence in the provision of transport or connection. The total of the claim for damages at one occurrence (persons and private properties together) also amounts to a maximum of for all consumers together and per consumer. There is no threshold. Business consumers: The general conditions in electricity transport for business consumers settle that the transport company will only be liable for damage caused by wilful misconduct and/or gross negligence. The company will not be liable for damage which is the result of an interruption in supply nor if this damage is the result of a defective transport or connection or incorrect action or negligence in the provision of transport or connection. In the past the supply companies used the same general conditions for electricity supply to business consumers. The supply company was not liable for damage to captive customers resulting from an interruption of supply. The general conditions of the supply companies in the liberalised market can be different. Compensation in the case of serious disruptions: Apart from these regulations of liability under private law there is the regulation of compensation in the case of serious disruption in the Codes under public law (pursuant Section 31.1.f Electricity Act). In case the transport has been interrupted more than 4 hours in consequence of a disruption in his grid the grid manager pays a sum dependent of the voltage of the grid ( 35 to small-scale consumers). See Section 6.3 NetCode Quality of Supplied Electricity Most of these items have been settled in Codes under public law (see ). In addition the general conditions on transport (households and business consumers) determine the nature of the service of transport referring to NEN-EN standards Regulation of Tariffs Towards Customers The network tariffs are set by the DTe. Till the moment of fully opening of the market (1 July 2004) the captive customers have regulated tariffs for supply. After 1 July 2004 the DTe will have the possibility to fix maximum tariffs (only) for the small-scale users if DTe is of the opinion that the tariffs are unreasonable (Section 95b.3 Electricity Act). See Regulation of General Conditions for the Supply of Electricity Besides the Civil Code there is no regulation based on public law of the general conditions. For households the general conditions are concluded in accordance with the Consumer Association

87 The Netherlands Liability Limitations or Limitation Caps See Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES The status of the EC Directive regarding Defective Product Liability Product liability is not affected by contractual conditions but is regulated by law. EC Directive no. 85/374 on defective product liability was implemented in law of Other Product Liability Regulations Liability limitations No Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply

88 Norway NORWAY SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Regulation Through Law The energy act of June 29 th The obligation to build, maintain and run a electricity supply network The energy act of June 29 th The obligation to supply correct quality Under the terms of the Energy Act, a regulation on the production, transformation, transmission, sale and distribution of electricity was adopted on 7th December This regulation, as amended, states that the Norwegian Water Resources and Energy Administration (NVE) may define quality standards for what is to be regarded as a satisfactory quality of delivery. The Norwegian Water Resources and Energy Administration has not exercised this power to date. The administration has undertaken preliminary work for the collection of data on this subject, and it is expected the new regulation with definition of standards for quality of supply will be adopted in The obligation to supply in due time The owner of a local distribution network has an obligation as an area licensee. The area licence gives the licensee a right to build and operate a distribution grid within a specified area. The main licence term regarding the electricity market is an obligation, but not a right, to supply end users, cf. the energy act section Control of terms and conditions for the supply of electricity The Norwegian Energy Act of 1991 sets out the legal framework for the monopoly control of the Norwegian network companies. The Energy Act turned the production and sale of electricity into a market-based activity. The transmission of electricity is a natural monopoly, and therefore subject to regulation. Every network company that offers transmission of electricity to consumers or others is required to hold a concession issued by the NVE. The concession holders are all obliged to offer tariffs of transmission which comply with specified rules. The price of electricity is thus decided by the market, while it is the NVE s main task as monopoly regulator to ensure that transmission tariffs of reflect the cost of the efficient operation and maintenance of the networks and their investments. With effect from 1 January 1997, the NVE has introduced the regulation of network activities based on income frameworks and financial incentives. The income frameworks are adapted to the actual level of costs of each utility, and are based on audited accounting figures for 1994 and 1995 reported to the NVE. From 1998, individual efficiency requirements based on the efficiency measurements of the NVE have been included in the framework

89 Norway Under the new system, the network owners are no longer guaranteed full cost recovery. The profit will in principle be the difference between the networkowners permitted income and the actual costs. Only by reducing their costs will the network owners be able to increase profit above a certain level. To avoid excessive profits, there is an absolute restriction on return on capital. Likewise there is also a minimum rate of return, so that no network company can run into an actual deficit. This regulatory system treats each network owner individually Regulation in/by Concessions The distributor has an obligation as an area licensee. The area licence gives the licensee a right to build and operate a distribution grid within a specified area. The main licence term regarding the electricity market is an obligation, but not a right, to supply end users, cf. the energy act section 3-3. In practice it means that end users always have a right to enter into a supply contract with the local distributor on normal commercial terms. For the rest of the questions see answers to Private of Public Electricity Supply Companies which are not Publicly Regulated All owners of an electricity supply network are regulated by the energy act of June 29th For the rest of the questions see answers to Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? Distribution companies have an the area licensee. This licence gives the licensee a right to build and operate a distribution grid within a specified area. The main licence term regarding the electricity market is an obligation, but not a right, to supply end users, cf. the energy act section 3-3. In practice it means that end users always have a right to enter into a supply contract with the local distributor on normal commercial terms Consequences of not Fulfilling the Obligations Deliberate or negligent violation of the energy act or provisions issued pursuant to the act is punishable by fines or imprisonment Regulation of the Obligation to Uninterrupted Supply The new model for quality dependent revenue caps was introduced by the Norwegian regulator from The arrangement takes into account all incidents in networks with voltage levels above 1 kv that results in interruptions of duration above 3 minutes. Based on estimates of energy not supplied (ENS) and average specific interruption costs for each customer category, interruption costs (IC) are calculated for each company annually. The expected level of ENS is calculated for each company and hence the expected level of IC. At the end of the year the regulator calculates the difference between expected and actual IC. If the difference is positive, i.e. the quality of supply has been better than expected, the difference will be added to the company's revenue cap. The difference will be subtracted from the revenue caps if the quality has been worse than expected Quality of Supplied Electricity As mentioned above, there are (as yet) no statutory provisions governing quality of supply. However, under the terms of standard low voltage supply contracts, the normal voltage is defined as 230 or 230/400 V, ±10%. The terms also make a reference to EN Regulation of Tariffs Towards Customers Every end user of electricity in Norway has two contractual relationships, one with a supplier of electricity, and one with the owner of the network to which he is connected. The supplier of electricity and the owner of the network may be the same company, but often this is not the case

90 Norway Sale of electricity is a competitive part of the electricity market, and as such regulated by the Norwegian Competition Act. The network is a natural monopoly and the tariffs for the connection to and use of it is regulated by NVE, Norwegian Water Resources and Energy Directorate. The price of electricity is thus decided by the market, while it is the NVE s main task as monopoly regulator to ensure that transmission tariffs of reflect the cost of the efficient operation and maintenance of the networks and their investments. This is achieved by setting a limit for each network owner permitted income. All network owners are then responsible for the preparation of connection point based tariffs in accordance with the following principles: a) the tariffs shall refer to specific connection points. b) agreements with the network owner at the point of connection shall provide access to the entire network system and the electricity market. c) the network owner is obliged to offer any party requesting network services nondiscriminatory and objective connection point tariffs and conditions. d) the tariffs shall be formulated so as to give the greatest possible signals of effective utilisation and effective development of the network. e) the tariffs may differentiate in accordance with objective and verifiable criteria based on relevant network conditions. f) the tariffs shall be determined independently of agreements on electricity purchases/electricity sales. g) the tariffs shall provide the network owner with income to cover costs within his permitted income allocation, costs in superjacent networks, property tax paid and statutory payments to the national energy fund. The Norwegian Water Resources and Energy Directorate may issue such orders as are necessary for the implementation of these regulations and terms and conditions set in licences issued by the Norwegian Water Resources and Energy Directorate in pursuance of the Energy Act Regulation of General Conditions for the Supply of Electricity The usual provisions of the price policy act will apply. According to this act, terms of business that have an unreasonable effect on the other party, or that obviously conflict with the general interest, may not be demanded, agreed on or maintained. In cooperation with the Consumers' Ombudsman and the Consumer Council, the Federation of Norwegian Energy Utilities has defined standard contracts for access to the network, as well as the supply of electricity supply Liability Limitations or Limitation Caps In cooperation with the Consumers' Ombudsman and the Consumer Council, the Federation of Norwegian Energy Utilities has recently defined standard contracts for access to the network, as well as the supply of electricity supply. These standard contracts are used by most companies. In the contracts regarding access to the network, there is a tendency for greater liability to be assumed by the owner of the distribution network. These contracts inter alia states that: -The grid company is responsible for all loss and damages which is caused by the electricity, in addition to loss and damages due to outage, closedown and reduction in production. This will, however, not apply if the grid company can prove that the damage or the loss is due to circumstances above its control, and that the company could not be expected to avoid or overcome the consequences. -The grid company shall make good all damages and defects of the electrical installation as soon as possible

91 Norway -The grid company is only responsible for consequential damages when the damage or loss is caused by negligence by the grid company. -The grid company is not responsible for consequential loss and damages which is inflicted on a plant owner/user unless the damage is caused by wilful misconduct. The following is thought of as consequential loss and damages: - Loss as a consequence of reduced or lapse of production or turnover (disruption of production) - Loss of profit due to the fact that a contract with third party is lost or not being fulfilled. - Loss endured by the plant owner/user. - Loss due to damages on other than owner/users plans, equipment, or objects, closely related to the plans or the equipment or the use thereof. 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES Implemented by means of the Act relating to product liability of December 23 rd amendments. Section 1-2 of the law states that electricity is also a product. 1988, with later The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Section 1-1 subsection 2 of the Act relating to product liability states that the Act does not limit the right to claim damages on other grounds. Thus, the general principles of the law of torts will apply Liability limitations No laws or regulations, but the standard contracts for access to the network, as well as the supply of electricity supply, which are used by most companies have such limitations, see the answer to Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply The standard contracts for access to the network states that the Act relating to product liability will apply

92 Poland POLAND SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier The bases of liability are: - the Law on Electricity of 1997; the Ordinance of the Minister of Economy of September 25, 2000 concerning detailed conditions for connecting entities to electrical power networks, trade of electric energy, rendering transmission services, electrical power network operation and maintenance and consumer servicing quality standards; - the Civil Code of Regulation Through Law According to the Energy Law Act of April 10th, 1997 supply of electric energy takes place on the basis of sales contract or transmission contract. These contracts should consider the principles determined in the Act and licenses and should contain at least: 1. sales contract clauses on the quality of electric energy to be sold, broken down by contractual periods of time, way of setting prices of terms for their modification, way of settlement, liability of parties for the breach of contracts terms, period of their duration and conditions for their termination, 2. transmission contract clauses on quality of electric energy to be transmitted, their destination, quality standards, conditions of ensuring reliability and continuity of supply, way of setting free rates and terms of changing them for a group customers specified in the tariff, way of settlement, liability of parties for the breach of contracts term, period of their duration and conditions of their termination. An energy enterprise may, at its own discretion, conclude with costumer for whom it delivers electric energy using prices and fee rates set in the tariff, only one contract that includes clauses of the sale and transmission contract. Energy enterprises that transmit and distribute electric energy may, within a scope of their business activity, set general terms of sale or transmission contracts, as understood by Art of the Civil Code. As it was mentioned, supply of electric energy is realized on the base of a contact. In connection with a contractual nature of relations between distributors and customers, a liability of distributors of electricity towards customers is based on civil law, particularly on regulations of freedom of contracts (Art of the Civil Code) and regulations concerned with liability for not execution or improperly execution of obligations (Art. 471 of the Civil Code). Polish Civil Code in its substance contains regulations in which causing damage is treated as a source of obligation (ex delicto liability) (art. 415 of the Civil Code) and regulations in which causing damage is treated as a consequence of non-performance or improper performance of the obligation (ex contractu liability)(art. 471 of the Civil Code). Art. 415 contains the general rule of ex delicto liability. According to art 415 anyone who cause a damage because of his fault is obliged to redress the damage

93 Poland The Civil Code enforces sharpen liability if the damage was caused by the running enterprise moved by the nature powers (steam, gas, electricity and liquid fuels). In this case anyone who is runninig such a business is liable for the injure to the person or damage to property caused to anyone by the motion of the enterprise, unless the damage was caused by the force majeure (vis major) or by the fault of the injured person or by the fault of a third person for who entrepreneur is not responsible. According to art. 471 of Civil code the debtor is obliged to redress the damage resulting from the nonperformance or improper performance of the obligation unless non-performance or improper performance were due to circumstances for which the debtor is not liable. The debtor is liable for the non-observance of due diligence unless nothing else follows from a special provision of statutory law or the act in law. Under the Civil code the debtor may assume by contract the liability for which he is not liable by virtue of a statutory law. It is impossible, however, to make a stipulation that he would not be liable for a damage which he might do to creditor intentionally. Such a stipulation would be null and void. The parties may stipulate in the contract the scope and the way of redressing of the damage in case of nonperformance or improper performance of the obligation by the debtor stating the contractual penalty. The contractual penalty may be stipulated only in the contract concerning the performance of a non-pecuniary obligation. The contractual penalty is performed by the payment of a specified sum. The debtor cannot release himself from the obligation by paying the contractual penalty. The redress of the damage shall cover the losses incurred by the injured person (damnum emergnes) as well as the benefits which that person could have obtained had he not suffered the damage (lucrum cesans) unless the amount of the redress is stated by the different provisions of statutory law or provision in the contract. According to the Ordinance of the Minister of Economy of September 25, 2000, electric enterprise carries on the trade of electric energy on terms specified in the concession, sale contracts for electric energy, taking into accounts of the operational instruction. The contract for sale of electric energy made between an electric enterprise whose business is transmission and distribution of electric energy and a customer who has not acquired the right to utilize the transmission services or has acquired such a right but does not exercise it should specify particularly: 1). contracted power and the conditions of changing it, 2). power characteristic, understood as a set of data specifying the changes of input of electric energy during 24-hour periods and the year, 3). consumer service quality standards, 4). the tariffs group according to which accounts will be made for the sales of electric energy and the rendered transmission services, the conditions for introducing changes of prices and rates, methods of making settlements of accounts and calculating charges and the dates of payment, 5). responsibility of the parties for breach of the contract including in particular the consumer service quality standards, 6). term of validity of the contract and provisions concerning the change of the contract and its termination. The electric enterprise whose business is the trade of electric energy is obliged to: 1). conclude the transmission contract with the electric energy transmission and distribution enterprise which will provide the energy, based o the sale contracts concluded by trading enterprise 2). purchase electric energy generated to assure the continuity, reliability and quality of the delivery of electric energy co-generated with heat to which the purchase obligation mentioned in regulations issued pursuant to Article 9, subparagraph 3, of the act is applied. According to Art. 9d the Energy Law Act, in order to ensure safe functioning of the electric energy grid, an energy enterprise dealing with production of electric energy and connected to the grid is obliged to produce electric energy or remain in readiness for such production, if it necessary for ensuring quality, continuity and reliability of supplies

94 Poland Within the scope of its business, an operator of electric energy transmission system is responsible particularly for: 1). ensuring safe functioning of the transmission system and performance of contracts by correct management of transmission grids, 2). operation and maintenance of transmission system including interconnections with other systems in a manner ensuring reliability and quality of supplied electric energy, 3). co-operation with other operators or energy enterprises in order to ensure consistent operation of interconnected grids, 4). management of flows of electric energy in electric energy grids in order to maintain specific parameters of electric energy at inter connection points with other grids, 5) rendering services necessary for the correct functioning of the electric energy system and for the maintenance of specific qualitative parameters of electric energy within the system. Within a scope of its business, an operator of the electric energy distribution system is responsible particularly for: 1). ensuring safe functioning of the distribution system and performance by correct management of distribution grids, 2). operation and maintenance of a distribution system including interconnections with other systems in a manner ensuring reliability and quality of supplied electric energy, 3). co-operation with other operators or energy enterprises in order to ensure consistent operation of interconnected grids. 4). based on arrangements with the operator of the transmission system, management of flows of electric energy in electric energy grids in order to maintain specific parameters of electric energy at interconnection points with other grids. Electric enterprises whose business is transmission and distribution of electric energy renders transmission services on terms determined in the concession, transmission contract and the operational instruction. Transmission services include: 1). transmission and distribution of electric energy 2). maintaining continuity and reliability of delivery of electric energy in the national power system, 3). running settlements of accounts for the entitles presenting concluded contracts for sale to be executed to transmission system operator or to the operators of distribution system. The transmission contract shall in particular specify: 1). contracted power 2). the starting date of rendering transmission services, 3). the tariff group according to which accounts will be made for the rendered transmission services, and the conditions for tariff group changes as well as the conditions of introducing of prices and rates, methods of making settlements of accounts and calculating charges and the dates of payment, detailed data concerning the scope and method of completion of transmission services, 4). detailed data concerning the scope and method of completion of transmission services, 5). measures methods for the delivered electric energy, 6). quality standards of electric energy other than specified in separate provisions, 7). the responsibility of the parties for breach of the contract including in particular the consumer service quality standards, 8). term of validity of the contract and provisions concerning the change of the conditions of the contract and its termination. Energy enterprises that transmit and distribute fuels and energy to customers shall be obliged to maintain the ability of the equipment, installations and grids to provide supplies in a continuous and reliable manner, with the observance of binding quality requirements

95 Poland Authorized representatives of energy enterprises that transmit and distribute electric energy shall control the metering facilities, conformity of contracts and correctness of settlements. Energy enterprises may discontinue supplying electric energy, if the inspection indicates that: 1). customer s installation poses a direct threat of life, health or environment, 2). illegal drawing of electric power took place. Energy enterprises may discontinue to supply electrical power if a costumer delays to pay for drawn electric energy or for rendered services for at least one month after expiration of due date, despite a written notification of intention to terminate the contract and setting an additional, two week period for paying outstanding and current amounts due (Art. 6, section 3a). An energy enterprise is obliged to resume supply of electrical power that was discontinued for mentioned reasons immediately after reasons justifying such discontinuance cease. Section 3a does not apply to structures used for the State defense purposes. According to the Ordinance of the Minister of Economy of September 25, 2000 the consumer of electric energy is obliged, among other things, to: 1). consume power and electric energy according to the regulations in force and contract conditions, 2). maintain the owned network, internal supplying and receiving installations in technical condition complying with the requirements specified in separate provision, 3). effect in due time payments for electricity and other payments connected with the delivery of electricity, 4). maintain the utilized real estate as not to make difficult the proper functioning of the network, and in particular, in case of erecting new buildings and planting trees to keep the required distance from the existing equipment according to the requirements specified in separate provisions. If the parties have not agreed the quality standards of electric energy in their contract for sale, the following quality standards are obligatory for them: 1) frequency 50 Hz with maximum deviation from 0.5 Hz to Hz, 2) admissible mean voltage deviation from the rated value during 15 minutes within the interval from 10% to + 5% on networks of rated voltage less than 110 kv and in the network of voltage 400 kv, +/- 10% on networks of rated voltage 110 and 220 kv, 3) voltage deviation coefficients and the contents of particular harmonics related to the basic harmonic cannot exceed respectively: a). 1.5 % and 1.0 % for delivery points on the network of rated voltage less than 11 kv, b). 2.5% and 1.5% for delivery points on the network of rated voltage not exceeding 110 kv and greater than 30 kv. c). 5.0% and 3.0% for delivery points on the network of rated voltage not exceeding 30 kv and greater than 1 kv, d). 8.0% and 5.0% for delivery points on the network of rated voltage not exceeding 1kV. The condition for maintaining voltage within the specified range is to consume by the customer the power not greater than the contracted power with the coefficient tanφ not greater than 0.4 The total time of emergency shut-downs per year, calculated for individual shutdowns for the time from customer s notice on no supply to its restoration, shall not exceed for connection group IV i V: 1) 72 hours within a period to the day of 31 December 2002, 2) 60 hours within a period from 1 January 2003 to 31 December 2004, 3) 48 hours within a period from 1 January The duration of a single break in supply of electric energy of connection group IV and shall not exceed: 1) 48 hours within a period to the day 31 December 2002, 2) 36 hours within a period from January 2003 to 31 December 2004, 3) 24 hours within a period from 1 January

96 Poland For connection groups I, II, III, and VI, the allowable total time of emergency, shutdowns per year and the duration of mentioned single breaks is determined by the sale contract or transmission contract (Paragraph 32-the ordinance of the Minister of Economy of September 25, 2000). Within the scope of consumer servicing quality standards, the electric enterprise is obliged to: 1). receive at the 24 hour basis notices and complaints from customers, 2). correct immediately the disturbances in delivery of electric energy caused by incorrect operation of the network, 3). at their request, provide customers with information on the forecasted time of restoration of delivery of electric energy broken because of a failure of the network, 4). inform the customers in advance of at least 5 days on dates and times of planned breaks in the delivery of electric energy. 5). grant rebates in amount specified in tariffs, for not maintaining parameters mentioned in paragraph Control of terms and conditions for the supply of electricity. The task connected with the regulation of the energy economy and the development of competition shall be implemented by Chairman of the Energy Regulatory Authority, hereinafter referred to as the Chairman of ERA (art the Energy Law Act). According to Article 22.3 the task and duties of the Chairman of ERA shall cover in particular: a) control of supply, as well as customer service quality standards in respect of trade in electric energy and gaseous fuels (art point 4); b) imposing fines upon principles provided in the Act (art point 6); c) cooperation with the relevant organs in counteracting monopolistic practices of energy enterprises (art point 7). There is another central government administration organ competent in the protection of competition and consumers in Polish legal order - the President of the Office for Competition and Consumer Protection. According to Article 26 Act of 15 December 2000 on Competition and Consumer Protection the scope of the activities of the President of the Office shall include: a) exercising control over the observance by entrepreneurs of the provisions of the present Act (point 1), b) addressing entrepreneurs and associations thereof in the matters of the protection of the rights and interests of consumers (point 11), c) undertaking activities resulting from the provisions on combating unfair competition (point 12) Regulation in/by Concessions Licenses: According to Article the Energy Law Act a license should determine: 1. subject and scope of activities covered by the license (point 2); 2. date of commencing activities covered by the license and conditions of their performance (point 3); 3. period for which the license is valid (point 4); 4. particular terms of performance of activities covered by the license, having in purpose proper service of customers with respect to ensuring capacity to supply fuels or energy in a continuous and reliable manner, meeting qualitative requirements specified in the ordinance issued under art. 9 s. 1. (point 5a) 5. the environmental protection safeguards during the licensed operations and after their termination (point 6)

97 Poland - The obligation to supply correct quality. The obligation to supply correct quality is generally included in contracts. However, according to paragraph 32 the ordinance of Minister of Economy of September 25, 2000 concerning detailed conditions for connecting entities to electrical power networks, trade for electric energy, rendering transmission services, electrical power network operation and maintenance and consumer servicing quality standards, if the parties have not agreed the quality standards of electric energy in their contract for sale, the following quality standards are obligatory for them: 1. frequency 50 Hz with maximum deviation from 0.5 Hz to Hz, 2. admissible mean voltage deviation from the rated value during 15 minutes within the interval from 10% to + 5% on networks of rated voltage less than 110 kv and in the network of voltage 400 kv, +/- 10% on networks of rated voltage 110 and 220 kv, 3. voltage deviation coefficients and the contents of particular harmonics related to the basic harmonic cannot exceed respectively: a. 1.5 % and 1.0 % for delivery points on the network of rated voltage less than 11 kv, b. 2.5% and 1.5% for delivery points on the network of rated voltage not exceeding 110 kv and greater than 30 kv. c. 5.0% and 3.0% for delivery points on the network of rated voltage not exceeding 30 kv and greater than 1 kv, d. 8.0% and 5.0% for delivery points on the network of rated voltage not exceeding 1kV. The condition for maintaining voltage within the specified range is to consume by the customer the power not greater than the contracted power with the coefficient tanφ not greater than The obligation to supply in due time. The obligation to supply in due time is generally included in contracts. - Control of terms and conditions for the supply of electricity In Poland control of terms and conditions for the supply of electricity is performed by Chairman of the Energy Regulatory Authority. According to Article 41 3 point 3 the Energy Law Act the Chairman of ERA withdraws a license if an activity conducted grossly violates the terms of license, and a licensed enterprise has failed to remove the shortcomings revealed by the regulatory organ within the indicated period of time. It was mentioned that a license should determine inter alia particular terms of performance of activities covered by the license, having in purpose service of customers with respect to ensuring capacity to supply fuels or energy in continuous and reliable manner, meeting qualitative requirements specified in the ordinance of the Minister of Economy of September 25, On the other hand: - according to paragraph 9 point 12 the ordinance of the Minister of Economy of September 25, 2000 the contract for service connection should specify inter alia the responsibility of the parties for breach of contract including postponing the completion date of the work., - according to paragraph 13 point 10 the contract of electric energy should specify inter alia responsibility of the parties for breach of the contract including in particular the consumer service quality standards. This means that control of terms and conditions for the supply of electricity is established in law Private of Public Electricity Supply Companies which are not Publicly Regulated Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down?

98 Poland Consequences of not Fulfilling the Obligations According to article 41.3 point 3 the Energy Act Law the Chairman of ERA withdraws a license if an activity conducted grossly violates the terms of the license, and a licensed enterprise has failed to remove the shortcomings revealed by the regulatory organ within the indicated period of time. Fines According to article 56.1 a fine is imposed on anyone who: - does not maintain the objects, equipment and installations in the proper technical shape (point 10), - does not obey obligations stemming from the license (point 12), - discontinues or limits supply of gaseous fuels, electric energy or heat to customers, due to unjustified reasons (point 14). The fine shall be imposed by the Chairman of ERA. Irrespective of the specified fine, the Chairman of ERA may impose a fine on a manager of an energy enterprise; however such fine must not exceed 300% of his monthly remuneration. Imposing the fine, the Chairman of ERA takes into consideration a degree of social harm of an action, prior behavior of an entity and its financial standing. Fines mentioned in subparagraph 1 are subject to execution according to execution proceedings in administration. According to article 5.1 of the Energy Law Act supply of fuels, electric energy or heat takes place on the basis of sales contract or transmission contract. According to article 5.2 contracts mentioned in sub.1 should consider the principles determined in the Act and licenses and should contain at least: 1. sales contract clauses on the quality of electric energy to be sold, broken down by contractual periods of time, way of setting prices of terms for their modification, way of settlement, liability of parties for the breach of contracts terms, period of their duration and conditions for their termination, 2. transmission contract clauses on quality of electric energy to be transmitted, their destination, quality standards, conditions of ensuring reliability and continuity of supply, way of setting free rates and terms of changing them for a group customers specified in the tariff, way of settlement, liability of parties for the breach of contracts term, period of their duration and conditions of their termination. According to paragraph 9 the ordinance of the Minister of Economy of September 25, 2000 the contract of service connection should specify inter alia the responsibility of the parties for breach of contract including postponing the completion date of the work (point 12). According to paragraph 13 the contract for sale of electric energy made between an electric enterprise whose business is transmission and distribution of electric energy and a customer who has not acquired the right to utilize the transmission services or has acquired such a right but does not exercise it should specify responsibility of the parties for breach of the contract including in particular the consumer service quality standards (point 10). According to paragraph 23 subparagraph 1 of the ordinance of the Minister of Economy of September 25, 2000 the transmission contract should specify the responsibility of the parties for breach of the contract including in particular the consumer service quality standards mentioned in paragraph 32 (point 11). According to article 41.1 point 3 the Energy Act Law the Chairman of ERA withdraws the license if an activity conducted grossly violates the terms of license, and a licensed enterprise has failed to remove the shortcomings revealed by the regulatory organ within the indicated period of time

99 Poland Regulation of the Obligation to Uninterrupted Supply The regulation of the obligation to constant supply is generally included in contracts. According to paragraph 14.1, point 2 the ordinance of the Minister of Economy the electric enterprise whose business is the trade of electric energy is obliged to purchase electric energy co generated with heat to which the purchase obligation mentioned in regulations issued pursuant to art. 9, sub. 3, of the Act is applied. According to paragraph 15 point 4 the enterprise whose business is transmission and distribution of electric energy is obliged to liquidate immediately the interruptions and limitations in delivery of electric energy. Moreover, according to paragraph 31 subparagraph 1 of the ordinance of Minister of Economy of September 25, 2000 the total time of emergency shut-downs per year, calculated for individual shutdowns for the time from customer s notice on no supply to its restoration, shall not exceed for connection group IV i V: 1) 1). 72 hours within a period to the day of 31 December 2002, 2) 2). 60 hours within a period from 1 January 2003 to 31 December 2004, 3) 3). 48 hours within a period from 1 January The duration of a single break in supply of electric energy of connection group IV and shall not exceed: 4) 48 hours within a period to the day 31 December 2002, 5) 36 hours within a period from January 2003 to 31 December 2004, 6) 24 hours within a period from 1 January For connection groups I, II, III, and VI, the allowable total time of emergency, shutdowns per year and the duration of mentioned single breaks is determined by the sale contract or transmission contract (Paragraph 32-the ordinance of the Minister of Economy of September 25, 2000) Quality of Supplied Electricity Regulation of Tariffs Towards Customers Tariffs: Tariffs for electric energy should ensure: 1). coverage of justified costs of energy enterprises operation in the field of production, transformation, storage, transmission, distribution or trade in energy and costs of modernization, development and environmental protection, 2). protection of interest of customers from unjustified level of prices. Energy enterprises shall use different tariffs for electric energy for different groups of customers, exclusively on justified costs relating to the provision of services, unless otherwise provided in the provision of law Detailed terms of formulation and calculation of tariffs for electric energy including detailed rules for settlements in trade of electric energy were determined in the Ordinance Minister of Economy dated December 12, Regulation of General Conditions for the Supply of Electricity Liability Limitations or Limitation Caps

100 Poland 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES The Product Liability Directive was implemented in Polish legal order by the Act on the protection of certain consumers rights and on the liability for damage caused by a dangerous product dated March 2, This Act contains three chapters: - Chapter One refers to the contract signed outside the premises of the enterprise. - Chapter Two refers to the contract signed from a distance. - Chapter Three changed the Civil Code and the Petty of Fences Code. The Act on the protection of certain consumers rights and on the liability for damage caused by a dangerous product has forced to the Civil Code rules which regulates the liability for damage caused by a dangerous product. According to art of the Civil Code anyone who produce in the scope of its economic activity (producer) a dangerous product is liable for the damage caused to anyone by this product. According to art electric energy is also treated as a product. Dangerous product is a product which not assure such a safety that should be expected from normal using of the product. In this connection there are some liability rules. Producer is liable for damage to property if the thing which was damaged belongs to things of personal use and product was used in this way by the injured person. Producer is not liable for a damage caused by a dangerous product, if this product wasn t bought out by the producer or if bringing out has been done out of producer s economic activity. There is a presumption that dangerous product, which caused a damage, was produced and brought out in the scope of producer s economic activity. Compensation for a damage to property doesn t contain neither the damage of the product nor profits which injured person could have because of its use. Compensation based on the article of the Civil Code shouldn t be given to injured person if the value of damage to property doesn t exceed amount of 500 EURO. Claim for damage caused by a dangerous product is barred by limitation after three years since the day when injured person got to know about damage and the person who is obliged to compensation. However in any case claim for damage is barred by limitation after ten years since product was brought out

101 Portugal PORTUGAL SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier The concept of supplier of electricity is wider than the one of distributor of electricity. Under the system in force in Portugal, the generators supply the national grid operator (but may also enter into bilateral supply agreements with consumers or sell in the open market), the national grid operator supplies the distributing companies, and these supply the clients in general. All these situations are subject to contractual and statutory obligations. We will concentrate on the specific situation of the distributor of electricity. The liability of the electricity distributor in Portugal is based partly upon general civil law, partly upon specific provisions of concession contracts agreed between the distributor and local authorities and partly upon statutory rules of Quality of Supply, issued by the General Directory for Energy Regulation Through Law Regulation in/by Concessions 1.1.1/ Decree-Law nr. 182/95, of 27 July 1995, sets the basis and terms of the organization of the National Electrical System. The different types of agents of this system (generators, transmission grid operator, distributors) have their respective roles defined in this law. The specific activities of distributors are regulated by Decree-Law nr. 184/95, of 27 July, This law defines, in general terms, the statutory duties and obligations of the distributing companies. Distributors shall be granted an administrative license and as they operate on a regional basis, they also need to enter into standard concession contracts with the respective local authorities. These standard concession contracts correspond to a uniform model that was approved by Ministerial Order 454/2001, of 5 May, Quality of service of supply by distributors must comply with the Regulation on the Quality of Service, approved by the General Directory for Energy. (Order nr A/2003, of 5 February 2003). This Regulation defines in great detail the standards of quality of electricity of supply and establishes penalties for the failure of theses standards. Distributors are meant to render a universal service and have therefore an obligation to supply whoever requests their services (article 5 of Decree-Law 184/95, of 27 July 1995). The Regulation on the Quality of Service addresses both technical and commercial obligations. Technical obligations relate to the continuity of service and the quality of tension wave. Continuity of service deals with the cause, the duration and the consequences of interruptions. Any service interruption that falls outside the situations contemplated in the Regulation shall give cause to compensation to the affected clients

102 Portugal The national transmission grid operator and each distributor shall install and maintain the necessary equipment to continually register and monitor the standards of quality of supply. On top of these regulations the general provisions of the civil code also apply to the matter. The only provisions of the Civil Code which govern the distributor s liability are those relating to risk. Article 509 of the Civil Code provides as follows: The party who, in practice, is responsible for the management of an installation for the transmission or distribution of electricity or gas, and who operates this system on a profit-making basis, shall be liable for any damage arising from transmission or distribution, or from the installation itself, unless the installation was consistent with technical regulations in force and was in a perfect state of repair at the time of occurrence of the accident. No compensation shall be payable in respect of damage resulting from force majeure. In addition, where there is no wrongful intent, compensation payable shall be limited to certain specified sums. Since individual contracts between distributors and the clients generally refer to statutory provisions, they contain no specific provisions on liability Private of Public Electricity Supply Companies which are not Publicly Regulated All distributors of electricity in Portugal are subject to public regulation Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? Consequences of not Fulfilling the Obligations As mentioned above the distributor has an obligation to supply whoever requests his services. This obligation has a limit of 100 kva for networks situated within urban perimeters with more than inhabitants and of 50 kva in case of other networks. Non fulfillment of these obligations will consist in a violation of distributors statutory duties and may give cause to heavy fines and even the revocation of their licenses Regulation of the Obligation to Uninterrupted Supply Continuity of supply is regulated in the Regulation on the Quality of Service Certain interruptions are accepted and not sanctioned, such as those caused by force majeure, safety measures, public interest, action of the client, agreed with the client, service reasons. The Regulation fixes the standard number and duration of interruptions per year and per type of network. When interruptions exceed those standards the clients are entitled to receive the corresponding monetary compensation Quality of Supplied Electricity Energy shall be distributed in the form of three-phase alternating current (article 9 of standard concession contract approved by Ministerial Order 454/2001, of 5 May 2001). The voltage shall be 230/400 V, with the tolerance of ± 10%. The frequency shall be 50 Hz, with the tolerances of respectively ± 1% applicable to 95% of the time unit corresponding to one civil year and +4% and 6% applicable to 0,5% of the same time unit of one year. For medium and high voltage supplies, tolerances are defined in the Portuguese standard norm NIEN

103 Portugal Regulation of Tariffs Towards Customers Tariffs are approved for each regulatory term (normally three years) by the regulatory authority ERSE. For those clients who have elected to select their own supplier, outside the national regulated public system, tariffs are subject to conditions agreed on a case by case basis Regulation of General Conditions for the Supply of Electricity The regulatory authority ERSE is an independent body, with competence to deal with the management and evolution of tariffs in the public electricity system and to supervise the compliance of the system rules by the different participants, namely the distributors and the quality of service and commercial matters Liability Limitations or Limitation Caps Contractual liability is normally not limited, but electricity distributors have a statutory obligation to insure their liabilities towards clients and third parties. Poor quality of service gives way to automatic payment of an adequate compensation to clients, which calculation method is described in the Regulation on the Quality of Service. Risk liability, in the case of distributor of electricity, is limited by law to a fixed amount. 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES The status of the EC Directive regarding Defective Product Liability This Directive was incorporated into Portuguese national law under Decree-Law no. 383/89 of 6 th November 1989, as amended by Decree-Law no. 131/2001 of 24 th April Although the definition of a product does not refer specifically to electricity, there is no doubt that electricity and gas are included in the concept of a product. Producer s liability is limited to 500 Euros in case of damages to goods. Liability in case of personal injuries has no limit Other Product Liability Regulations There are no other product liability regulations Liability limitations No specific limitations Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply No such clauses exist. Note: The laws governing the structure and functioning of the electricity sector in Portugal and defining the role of the different operators are being subject to revision, due to the implementation of the IEM. However, it is not expected that those specific rules that deal with the liability of distributors will be changed

104 Slovak Rebublic SLOVAK REPUBLIC SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier The obligations as electricity supplier are based on the Energy Act 70/98 and Act 276/2001 about the regulation of network industries Regulation Through Law Act 70/ The obligation to build, maintain and run a electricity supply network Act 70/ The obligation to supply correct quality Act 70/ The obligation to supply in due time Act 70/ Control of terms and conditions for the supply of electricity Act 70/1998, Network codes and commercial-technical conditions for the supply of electricity authorised by the regulatory office - Other legal rules entail in contracts Not applicable Regulation in/by Concessions Conditions regarding the granting of licences and the obligations of licence holders are governed by Act 70/1998 and Act 276/2001 on the regulation of network industries. In the license are listed the obligations to follow the Energy Act, what means also following of the obligations listed below (- The obligation to maintain and run a electricity supply network, etc.). Building of electricity networks is not stated as an obligation Private of Public Electricity Supply Companies which are not Publicly Regulated All private and state-owned electricity generating companies in the Slovak Republic are subject to regulation Liability Towards Customers In case of break of the above mentioned items a financial sanction can be given by State Energy Control Authority, and customer can enforce the fulfilling of the obligations or compensation of the damages by Court. However, there is no criminal proceeding previewed for these cases

105 Slovak Rebublic The Obligation to Supply Customers. How and where is this obligation laid down? A holder of a license for the distribution of electricity is obliged pursuant to Act 70/1998 Coll. to supply electricity continuously and an interruption of supply is only permitted in the following unavoidable cases: - to undertake planned reconstruction, repair, maintenance and control of electrical facilities - in an emergency or to prevent an emergency occurring - in the event of imminent danger to life and health or to property - to repair failures and faults on electrical distribution equipment Consequences of not Fulfilling the Obligations Contractual relationships between a supplier and a purchaser are regulated by contract and noncompliance is governed by the provisions of the Commercial Code Regulation of the Obligation to Uninterrupted Supply Obligation of supply correct quality and in due time is based on the Energy Act 70/98. Interruption is possible for the cases of maintenance, accidents and when Customer does not pay his consumption as stated in the contract. In the event that an electricity supplier restricts the supply of electricity for reasons stated in item and in the event of planned work gives notice of the planned work 30 days in advance, he is not obliged to compensate damage caused by non-supply. In other cases a purchaser has the right to claim for any damage through the courts Quality of Supplied Electricity The standards for the supply of electricity are specified in the norm STN EN and in the network codes of the distribution system, - nominal frequency is 50 Hz (95% during a week in the interval 49.5 to 50.5 Hz ) - effective value of the supply voltage: high voltage 110 kv medium voltage 22 kv low voltage 230/400 V Under normal operating conditions (medium and low voltage) during every period of one week 95% of 10 minute medium effective values of supply voltage should be in the range U n ±10% - the total harmonic distortion coefficient (THD) may not exceed 3% (110kV) and 8% (22kV, 230/400V ) - asymmetry: during a week 95% of ten minute medium effective values of the negative sequence component of the supply voltage must be less than 2% of the consequent component Regulation of Tariffs Towards Customers For tariff regulation purposes customers are divided into two basic categories: eligible customers and protected customers. Tariffs for the use of the distribution and transmission network are set by the regulatory office which also sets the maximum price for the supply of electricity for protected customers in all tariffs Regulation of General Conditions for the Supply of Electricity The basic legal conditions for the supply of electricity are given by Act 70/1998 and Directive 549/2002. The conditions for the supply of electricity are authorised by the regulatory office and a holder of a licence for supply is obliged to make them public Liability Limitations or Limitation Caps This is not addressed by the Energy Act 70/1998. It is addressed by the Commercial Code: - by the provisions on the impossibility of fulfilment (force majeure) - by the status of a company (s.r.o./ltd. guarantees by the amount of the deposit required for registration

106 Slovak Rebublic 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES In general terms, product liability is governed by the Commercial Code and Act 634/1992 about the customer protection. The Product Liability Directive has not yet been implemented. Amendment of act is under preparation The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Liability limitations At national level there is no liability limitation or cap, with exclusion of emergency cases. Liability for damages is based on Civil Code and Commercial Code. Compensation of the damages can be enforced by Court Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply

107 Slovenia SLOVENIA SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier The basis is Energy Act (Official Gazette 79/99, 8/00 and 50/03) that determines the principles of energy policy, the rules for the energy market, the manner and form of the implementation of commercial public services in the area of energy, the principle of reliable supply and efficient use of energy, the conditions for the operation of energy facilities, the conditions for the performance of energy-related activities, the issuing of licences and permits, and the bodies performing administrative tasks under this Act Regulation Through Law Providers of electricity transmission activities shall produce a development plan every two years for the electricity transmission and distribution network of the Republic of Slovenia and a development plan for generation capacity. Development plans must be compiled for a minimum of 10 years and must be harmonised with the National Energy Programme. The Government shall issue the consent for the plan. The providers of energy and fuel generation or processing activities, and providers of petroleum derivatives shall also produce a development plan for a minimum of 10 years. The obligation to build, maintain and run an electricity supply network is regulated in sub law for the transmission of electricity as a compulsory national commercial public service. The operation of the transmission network, distribution of electricity, the operation of the distribution networks and electricity supply for households is a compulsory national commercial service. Organising the electricity market is a compulsory national commercial public service. The Government in accordance with Energy Act shall arrange the organisation and the manner of provision of commercial public services and with the Act that governs commercial public services. The Government determined a public company that performs the transmission of electricity on the entire territory of the Republic of Slovenia for the authorised purchaser. The operator of the transmission network shall on the State level balance the deviations of supply and the use of electrical energy according to the quantities agreed upon on the organised market. The distribution activity provider shall be responsible for the maintenance and development of the distribution network. The distribution network operator shall be responsible for the management, operation and harmonised functioning of this network with the transmission network. The Government determined the public companies that shall perform the distribution of electricity as the distribution network s authorised purchasers and the suppliers of electricity for the nonlegitimate purchasers Article

108 Slovenia Regulation in/by Concessions There is no concession, but there is an obligatory licence. Licences must be obtained in order to perform activities in the area of energy supply for: generation of electricity, transporting of electricity, managing of electricity networks, supplying of electricity, organizing the electricity market and trading. Licences shall be issued by the regulator Private of Public Electricity Supply Companies which are not Publicly Regulated The supply of electricity is regulated in a special sub law Liability Towards Customers There is an obligation to supply only non eligible customers (households). Law regulates this obligation. (Energy Act, Obligation Law, Public service Law) The Obligation to Supply Customers. How and where is this obligation laid down? Consequences of not Fulfilling the Obligations Damage restitution Regulation of the Obligation to Uninterrupted Supply The obligation of continuity of supply is regulated in the contracts; there is no regulation by law Quality of Supplied Electricity The quality of the supplied electricity must guarantee the operator of the transmission network and the operator of the distribution network. Special energy inspection body is due to control the quality of supply Regulation of Tariffs Towards Customers There is a tariff only for households. Government controls the prices. Regulator controls the price for the accession to the network Regulation of General Conditions for the Supply of Electricity A special sub law is regulating the conditions of supply Liability Limitations or Limitation Caps There are no liability limitations or caps, except if they are foreseen in the individual contracts. 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES There is a special law regulating the consumer protection The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Liability limitations Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply

109 Spain SPAIN SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Spanish Electricity act 54/1997, 27 November Royal Decree 1955/2000 of December 1, 2000 whereby the following activities are regulated: transmission, distribution commercialisation, supply and authorisation procedures for electricity installations sites Regulation Through Law - The obligation to build, maintain and run a electricity supply network Spanish Electricity act 54/1997, 27 November 1997, art 41.1 c), 45.3 a) Royal Decree 1955/2000, art. 18 (transport), 41.1 d) (distribution) - The obligation to supply correct quality Spanish Electricity act 54/1997, 27 November 1997 art g) Royal Decree 1955/2000, art The obligation to supply in due time Royal Decree 1955/2000, art Control of terms and conditions for the supply of electricity Royal Decree 1955/2000, art Other legal rules entail in contracts Civil code Regulation in/by Concessions The Spanish electricity system is not regulated by concessions Private of Public Electricity Supply Companies which are not Publicly Regulated Royal Decree 1955/2000 establishes that the government is obligated to approve a standard contract for supply and for access to grids, but actually these standards contracts are not published Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? The universal service condition contained in the electrical supply is specified in section 10 of the Electrical Sector Act. This establishes the right of all users to electrical supply. This is to be provided in conditions of quality and safety. Given the nature of the universal and essential service of electrical supply, the Government becomes a guarantor of this supply when any of the following circumstances occur: - A certain risk for the provision of the service - Situation of supply failure Situations from which a physical or safety threat may arise to the physical or safety integrity of persons, apparatus or installations, or for the integrity of the electrical energy transport or distribution network

110 Spain Consequences of not Fulfilling the Obligations Title X of the Electrical Sector Act establishes the administrative penalising regime applicable to companies owning electrical activities. This penalising regime sets out, in a detailed form of classification, a series of administrative infringements, classified as very serious, serious and minor. Each one of these is associated with a financial penalty that the law also sanctions, though there is a certain margin of graduation, and in each case it will depend on the following circumstances: - The danger resulting from the infringement for the life and health of persons - The significance of the damage - The detriment produced - The degree of participation in the action or omission classified - Intentionality - Recurrence of the situation Article 105 of the Royal Decree 1955/2000, in regulating the quality of the service, establishes the distributor's obligation - for the cases of breach of individual quality of service - to apply discounts in the billing of the consumers affected. Nevertheless, regardless of the purely administrative penalties established in the electrical industry legislation, section 7 of article 105 of this same Royal Decree establishes the possibility that is also available to the consumer who is affected to bring a claim in the civil process, and the indemnity for damage that said failure to comply may have caused him (article 1101 of the Civil Code) Regulation of the Obligation to Uninterrupted Supply Article 101 of the Royal Decree 1955/2000 regulates the continuity of the supply in terms of the number and duration of the interruptions. The same article likewise differentiates between unexpected and scheduled interruptions. These latter ones shall be reported to the clients beforehand by the distributor company, following the authorisation of the competent Authority. With respect to unforeseen interruptions, the Regulations establish certain annual values (by time of interruption and by number of interruptions) in order to measure the continuity of supply. Failure to meet these values shall give rise to the application of discounts in the invoicing, with the maximum limit of 10% of the total of the annual billing for the consumer affected Quality of Supplied Electricity The quality of the electrical supply is configured in accordance with article 99 of the Royal Decree 1955/2000, with the following contents: - Continuity of the supply relating to the number and duration of the interruptions (see answer 1.2.3) - Quality of the product, relating to the characteristics of the voltage wave. On this point, the - Royal Decree 1955/2000, refers to the criteria established in the UNE-EN norm, relating to the characteristics of the voltage wave. - Quality in attention to and relations with the client: the Royal Decree 1955/2000 makes reference to the range of activities concerning information, advice, contracting, communication and possible claims. Likewise, a distinction is made between the two types of quality of service, these covering the following scope: - Individual quality: that of a contractual nature that makes reference to each one of the consumers. Zonal quality: referring to a determinate geographical zone, provided by a sole supplier. In this respect, there is a distinction, between three zones: urban (more than 20,000 supplies), semi-urban (between 2,000 and 20,000 supplies) and rural

111 Spain Regulation of Tariffs Towards Customers Spanish consumers may presently opt, regardless of their level of consumption, to acquire their electrical energy by means of an integral tariff. This tariff is singular for the whole of the national territory (section 17 of the Electrical Sector Act), and shall include the following items: The energy production cost. This shall be determined with reference to the average price established per kilowatt hour in the production market. These costs shall be independently reviewed. The charges correspond to transport and distribution. - The commercialization costs - The permanent costs - The costs of diversification and safety of supply. This tariff shall be approved annually by the Government. The other option that Spanish clients currently have is to purchase the energy directly from the distributor or through a market agent. In this case the consumer shall pay the price of the energy and also the tariff for accessing the network approved by the Government. (Royal Decree 1164/2001, of October 26, by which the tariffs for access to the electrical energy transport and distribution network are established. The method for determining the tariffs of access shall be based on the following general principles: - Recovery of the costs of access, which is determined on a regulatory basis - Efficient cost allocation between the different suppliers - Maximum and singular tariffs in the whole of the national territory In any event, the access tariffs shall include the following costs: - The transport costs - The distribution costs - The commercial management costs - The costs of diversification and safety of supply - The permanent costs (compensation for extra-peninsular consumers, system operator, market operator, National Energy Commission and CTC s) Regulation of General Conditions for the Supply of Electricity Any consumer may currently choose between signing a contract of supply on a tariff basis or by means of the free circulation of energy and the corresponding access to the networks. The contract of supply on a tariff basis is personal and its holder shall be the effective user of the energy that he shall not be able to consume in a place other than that for which it was contracted, nor assign or sell it to third parties. The consumer shall be entitled to choose the tariff that he considers suitable from amongst those that are officially approved, taking account of the voltage on the network available in the area as well as the amount of power he wishes to contract. At the time of contracting, the distributor shall be able to require the provision of a guarantee deposit for a sum equal to the theoretical monthly billing corresponding to fifty hours of consumption of the power contracted. The consumer is entitled to be informed and advised by the distributor at the time of the contracting, with the data that are provided to him, regarding the tariff and types of power or powers to be contracted that are most suitable, the complementary tariff rates and the other contract conditions, along with the power associated with the installation

112 Spain The second option enables the consumer to acquire the energy and at the same time sign a contract of access to the networks. In this case, the consumer is able to select between contracting the access to the networks with the distributor and the energy with a market agent directly, or to contract the energy and access through a market agent. In the first case, the consumers shall provide documentary justification substantiating the existence of a contract of energy acquisition with a market agent. In the vent that he undertakes all - that is to say the purchase of energy and the contract of access through a market agent - the latter shall only be able to contract access to the networks as an agent of the consumer with a distributor (art. 3 of the RD 1435/2002) Liability Limitations or Limitation Caps The electrical regulations, specifically the Royal Decree 1955/2000 (art. 105), establishes certain discounts in the electricity billing as a consequence of the failure to provide the quality of transport service. To this end, it establishes the maximum limit of 10% of the annual billing of the client concerned. 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES The object of the 22/1994 Act of July 7, 1994 is the adapting to Spanish law of the Directive 85/374/EC. The application of this law to the electrical energy distribution business seems to be clear one takes account of the fact that article 102 of the Royal Decree 1955/2000 defines the status of electricity as being a product. This in turn makes reference to the UNE-EN norm in which the characteristics of the voltage wave are established. Consequently, any disturbance in the characteristics of the voltage wave and the interruptions or "gaps" of less than three minutes are events that give rise to the aspect of electrical energy being a defective product. In such cases the 22/1994 Act is applicable. This law establishes an objective liability regime which, whilst it is not absolute, permits the manufacturer to be exonerated from liability in certain circumstances that are detailed in the law. The 22/1994 Act establishes a threshold of euros. This means that this law is not applicable in terms of claiming damages less than this sum, which can be reviewed. Meanwhile, the maximum limit for liability that is established is the sum of 63,253 euros The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations In addition to the liability deriving from the electrical regulations in themselves, the liability may be demanded of the supplier of electricity by virtue of the norms contained in the Civil Code concerning contractual liability (art, 1101 and successive articles) and extra-contractual liability (articles 1902, and successive articles) Liability limitations While the electricty regulations do establish certain limits on liability for the supplier, as has been stated in answer , with regard to public liability, the Civil Code regulations cited above do not establish any limit on liability. - the supply of electricity - the performance of the networks (construction) - the risk of being responsible for damages caused by the networks both as a producer (power plant owner) and seller (for the product which is transported through the network)

113 Spain 2.2. Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply These problems do not presently exist in Spanish legislation since the types of contracts of supply and the contracts of access to the network have not yet been passed into law by the Government

114 Switzerland SWITZERLAND SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Regulation Through Law In Switzerland there is a federal law of 24 June 1902 on feeble and power current (Electricity Law/EL) that contains provisions on liability for risks associated with electricity. It is a law entirely based on strict liability, concerning the direct impact of electricity on the human body or on objects, independent of any existing contract or public law relationship. This law does not include any provision regarding the supply of electricity itself. To date conditions for the supply of electricity have not been defined by any specific law Regulation in/by Concessions Certain provisions of public law will apply on the grounds that some concession documents contain provisions whereby the distributor is obliged to observe certain principles in relations with customers. In addition, since public property within Cantons and municipalities will be used in the distribution of electricity, the Cantons or municipal authorities concerned may lay down conditions to be observed by the distributor in his relations with customers. It should be noted however that distributors with the legal status of public sector undertakings will very often adopt an organisational structure for the sale of electricity which stems entirely from private law. These concessions are not standardised and there is a big variation concerning the content of these concessions Private of Public Electricity Supply Companies which are not Publicly Regulated The provisions of the Code of Obligations (CO) (e.g. contractual conditions for successive supplies, purchasing law, etc.) will be applied in case of supplies governed by private law, i.e. where the electricity distributor is a company governed by private law. Small customers (receiving supplies 230/400 V) will either be governed by public law when they are supplied by a local undertaking, which is governed by public law. If the supplier is an undertaking governed by private law, the legal relationship is of private law character. In practise, relations between the electricity distributor and the customer are governed by a contract (this applies particularly to large customers or to customers using electricity for special applications) or by general conditions defined in a supply regulation. In Switzerland there exists a standard regulation edited by the Swiss Electricity Suppliers Association (SESA) on which most of the contracts and general conditions (standard supplier regulations) base. At the moment, the standard Regulation which shall be renamed into general conditions for grid usage and electricity supply, are under revision. In the contracts or in the regulation, all essential conditions of an energy delivery contract are ruled, especially conditions concerning correct supply and quality, interruption of supply, etc. Example is in Art. 3.1 of the standard regulation for the supply of electricity (published by the SESA), where it is stipulated that as a general rule, the distributor shall supply electricity without interruption within the normal tolerance values defined for voltage and frequency. This standard regulation is based on the European Norm EN (voltage characteristics of electricity supplied by public distribution system). There are no legal provisions defining the quality of medium and high electricity supplies. Quality requirements shall be established as required in contracts agreed between the supplier and its customer

115 Switzerland 1.2. Liability Towards Customers The Obligation to Supply Customers. How and where is this obligation laid down? There is no federal law which obliges utilities and distribution companies to supply customers and end users. Some Cantonal concessions contain such obligations Consequences of not Fulfilling the Obligations No further comment due to lack of Federal Law Regulation of the Obligation to Uninterrupted Supply In the contract or in the regulation the suppliers commit themselves as a general rule to supply electricity without interruption within the normal tolerance values defined for voltage and frequency. The supplier reserves therein the right to interrupt energy delivery in certain events like force majeure, extraordinary events, operational interruptions, energy shortage, etc Quality of Supplied Electricity The quality of the supplied electricity is set by the industry whereby in the contracts or in the regulation normally it is stated that deliveries shall be within the normal tolerance values defined for voltage and frequency. This standard regulation is based on the European norm EN Regulation of Tariffs Towards Customers In the regulation it is ruled that the tariffs will be determined by the supplier. They can be changed at every time as far as circumstances demand an amendment. The tariffs can be controlled by the Swiss Federal Price Surveillance which has the force to reduce abusively high tariffs Regulation of General Conditions for the Supply of Electricity In Switzerland there is no law or regulation on general conditions for supply of electricity Liability Limitations or Limitation Caps If damage to a person or to an object is caused by an electric installation in operation, the strict liability clauses of the Electricity Law are applicable. In such a case any damage is covered each for personal or material as well as consequential damage. Excluded is any liability for further damages as loss of profit, goodwill, business opportunity or anticipated saving. In cases where electricity flow is stopped the liability clauses of the Electricity Law are not applicable. For these cases the supply contracts and regulations will include an invariable clause, whereby electricity users shall not be entitled to claim compensation for direct or consequential damage (of whatever type or extent) caused by variations in the system frequency or voltage or for interruptions in supply. Due to mandatory law in the CO, this limitation of liability is not valid if damage is caused by gross negligence or wilful misconduct. In short the distributor shall not be liable for interruption in supply, unless a fault on his part can be proved

116 Switzerland 2.1 Product Liability SECTION 2 - LIABILITY TOWARDS THIRD PARTIES As non-member of the EU, Switzerland is not obliged to implement the product liability directive The status of the EC Directive regarding Defective Product Liability Other Product Liability Regulations Since 1 st January 1994 the liability clauses of the Swiss law of product liability apply to domestic customers (commercial customers are excluded). The law of product liability defines electricity explicitly as a product Liability limitations The liability for personal damage is unlimited. Concerning material damage, a domestic customer has to bear the first CHF (= about 600) himself. Exceeding damage has to be covered by the supplier. Consequently claims of domestic customer based on the law of product liability are quite rare in Switzerland. Damaged parties are better covered by the Swiss Electricity Law, which is a strict legal liability and is applicable in parallel to the product liability rules. Furthermore there is no amount to be priory borne by the customer Possible Confusion between the Task as a Supplier and the Clauses in the Terms of Supply Nothing to comment

117 ANNEX Questionnaire on Liability towards Customers with regard to Electricity Supply

118 QUESTIONNAIRE Introduction Explanatory Note for Respondents The questionnaire is drawn up with a distinction between liability within contracts and liability towards third parties. The title Liability towards customers with regard to electricity supply indicates that the questionnaire as a priority is asking you about a description of liability within contracts. It is on the other hand of course also important to describe liability towards third Parties. Already in the UNIPEDE-study from 1992, Liability of distributors towards customers with regards to (the quality of) electricity supply this distinction was made. With reference to the above distinction, the questionnaire is divided into two parts. The first part is concerning liability within contracts (including a certain range of the obligations of the seller), where any kind of regulations of the electricity supply task, whether it is by law, by practice or by contract (standard contracts) are elucidated. Regardless of whatever authority (public authority, concession, and private agreement) has given the actual electricity company his obligations he will have to meet a number of legal and/or contractual demands, which he will risk not to be able to fulfil. This means that although the regulation in the EU-Directive concerns any users whether he is customer or just happens to use the product, it is relevant - indeed to describe the kind of regulation in this study). In this meaning, the supplier is liable in case of not fulfilling his obligations. The second part is concerning liability towards third parties: i.e. it is about the task of being an electricity supplier with the risk of causing injury, being responsible for construction and maintenance of the electricity network and as a distributor of dangerous goods. (product liability). The EC Directive on Defective Product Liability is not only regulating the situation between the supplier and the customer that is buying his product. The directive concerns any kind of use of a product that has been put into circulation. You may give examples within the different items on pioneering cases. You may make remarks, e.g. that the actual law/regulation that you are referring to is to be amended by a new act or agreement

119 SECTION 1 - LIABILITY TOWARDS CUSTOMERS 1.1. Obligation as an Electricity Supplier Which are the bases of the obligation (Law, concession (license), contract with authority, private contract with customers)? Regulation Through Law Please mention the law(s) which regulate(s) the tasks as electricity supplier Also mention the regulation with regards to: - The obligation to build, maintain and run an electricity supply network - The obligation to supply correct quality - The obligation to supply in due time - Control of terms and conditions for the supply of electricity - Other legal rules entail in contracts Concessions given by authorities or contracts with either central or local authorities Please describe how concession/contract are regulated with regards to: - The obligation to build, maintain and run an electricity supply network - The obligation to supply correct quality - The obligation to supply in due time - Control of terms and conditions for the supply of electricity - Other legal rules entail in contracts Private or Public Electricity Supply Companies, which are not Publicly Regulated Please describe the obligations in e.g. agreements between the supply company and the customer. (Often single-handed issue supervised by a public authority.) Please explain how these obligations are regulated in such agreements: - The obligation to build, maintain and run an electricity supply network - The obligation to supply correct quality - The obligation to supply in due time - Control of terms and conditions for the delivery of electricity - Other legal rules entail in contracts 1.2. Liability Towards Customers Please explain how the above mentioned items are regulated in relation to customers. Describe the consequences of a breach of regulation -invalidity, criminal proceedings with penalty consequence and/or sufferings pursuing by civil proceeding etc. and also explain the proceedings to obtain compensations. Please specify regarding the following items: The Obligation to Supply Customers: How and where is this obligation laid down? Describe the position and type of customer Consequences of not Fulfilling the Obligations

120 Explain how the Obligation to Continuity of Supply versus Interruption of Supply is regulated. 1 Please specify how the obligation to continuous supply is regulated, (e.g. compensation for nonsupplied electricity). (N.B.: From a legal point of view, interruption of supply is a delay in the delivery of the agreed amount of goods (electricity)) Quality of Supplied Electricity Please describe how the quality of the supplied electricity is regulated, a.o. voltage, frequency, micro-outages and tolerance Regulation of Tariffs Towards Customers Regulation of General Conditions for the Supply of Electricity Liability Limitations or Limitation Caps Is there any liability limitation in general conditions for the supply of electricity (either national conditions or company conditions)? SECTION 2 - LIABILITY TOWARDS THIRD PARTIES 2.1. Product Liability Which is the current status of implementation of the Product Liability Directive in your country? The status of the EC Directive regarding Defective Product Liability Other product liability regulations Please mention the law(s), if any that regulate the liability for electricity supply towards 3 rd parties in performing its tasks as electricity supplier Liability limitations or cap Is there any liability limitation or cap at national level concerning: - the supply of electricity - the performance of the networks (construction) - the risk of being responsible for damages caused by the networks both as a producer (power plant owner) and seller (for the product which is transported through the network) Possible confusion between the task as supplier and the clauses in the terms of supply. Is there any confusion between the task as a supplier and the clauses in the conditions of supply? Describe whether there are clauses in the general conditions for the supply of electricity that regulate the liability towards the customer as a third party (product liability). 1 This title is referred to as Regulation of the Obligation of Uninterrupted Supply in the Comparative Analysis in Part I and the country descriptions in Part II of the Report

121 CONCLUSIONS Liability towards consumers with regard to electricity supply results from a wide range of obligations defined in general and energy legislation, derived regulations, concessions, permits and licenses granted by authorities to electricity companies and contracts concluded with customers, consumers and users. The range of obligations is wide and varies from country to country, often with great regional and local differences. The main obligation of companies is however always to supply correct quality in due time, i.e. without interruption. Other obligations may relate, inter alia, to building, maintaining and running electricity supply networks, and to practising reasonable pricing. This latter case is particularly frequent with regard to captive customers or those customers who did not choose their supplier-for whom customers tariffs are usually regulated. In general, the obligations of companies acting under market conditions differ considerably from companies which maintain a monopoly position. Terms and conditions of contract are often controlled or supervised by competent authorities with the aim of protecting consumers rights. The authorities may check terms regarding data to be supplied; termination and expiry of contract; changes in the terms; delays and interruption of terms; and methods of payment. The consequence of not fulfilling the obligation is generally set out in law and contract and result in penalties and sanctions. Default gives rise to remedies for customers. The remedies available may be of many kinds. Price reduction is the most usual remedy with or without compensation. Reductions and compensation may be standardised. Pecuniary payment in case of liability may be capped, either in absolute terms or in relative terms. Liability for fault arising from contract (subjective liability) is often confused with product liability, i.e. liability without fault arising outside of contract for damages caused to third parties by a defective or dangerous product (objective liability). Countries have implemented the EU Product Liability in national law. In addition, product liability rules may be set out in other legislation, which is often specific to electricity, and/or concessions contracts agreed between relevant authorities and electricity companies. Also, the national general laws of tort apply to the relation between tort feasor and injured third parties. Liability for damages and injuries caused to a third person outside of contract may be unlimited or limited. The limitation applied is either a top cap or a bottom cap. This latter is used to sort out small claims that would cause disproportionate administrative burdens. The top caps are usually very high

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