ENERGY

The stealthy increase in power bills

Electricity retailers making use of adjustment clause in contracts to the frustration of consumers

The stealthy increase in power bills

The Regulatory Authority for Energy has been receiving a growing number of consumer complaints about the prices of electricity that power suppliers have unilaterally hiked, and about adjustment clauses in their contracts that they were unaware of before the energy crisis erupted. 

More specifically, for months now, suppliers have been unilaterally reviewing the fixed-price contracts of their customers, which have become, due to the energy crisis, unprofitable.

Companies have resorted to these measures by utilizing, often arbitrarily, the so-called Electricity Supply Code, which guarantees this right of the suppliers to change the terms of the contract, for “important reasons” under certain conditions which are often interpreted subjectively.

As a result, the suppliers evaluate the increase in energy costs as an “important reason” and proceed to unilaterally change the fixed prices.​​​​​​

In addition, according to the Electricity Supply Code, the unilateral modification of the contract for an “important reason” can be done on the condition there is a written notification in 60 calendar days in a separate form that will accompany the electricity bill.

In most cases the information that charges will change in 60 days is carefully buried in very fine print at the bottom of the bill.

Consumers usually realize it only when the first bill with the new rates arrives. The argument of the suppliers who proposed the relevant regulations, accepted by the Regulatory Authority for Energy, was that the Code does not entail a penalty for consumers to break their fixed contract whenever they want and to go to another company.

Therefore, the suppliers insist they should be insured against this risk, since they have committed to supply energy for one year for the customer at a specific price.

In practice, however, this risk that consumers will break their contracts unilaterally is negligible for two reasons.

The first is that these contracts usually last one or two years and do not say that consumers have the right to break them without compensation.

Therefore consumers are not aware of it. The second is that most suppliers, in order to be fully secured against such a potential risk, usually sell fixed invoices with promotional actions – e.g. checks for a certain amount or a specific discount with a commitment that will not be valid if the contract is broken.