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. : cbusard@eurelectric.org

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