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03 March 2014
The Energy Agency recently released a legislative proposal introducing a general supply obligation for all electricity retailers that provide electricity to household consumers. If enacted, the supply obligation would enter into force on October 1 2015.
The supply obligation aims to guarantee all household consumers the legal right to be supplied with electricity at reasonable, transparent and non-discriminatory prices, in accordance with the EU Electricity Directive. The obligation is limited to companies that provide electricity to household consumers. Companies that exclusively supply business customers will not be subject to the obligation.
The supply obligation applies to all household consumers in the grid areas in which the company markets its products to such household consumers. An electricity retailer cannot limit its activities to consumers in a specific part of a grid area by, for example, refusing to supply electricity to household consumers in remote areas within the relevant grid area. However, electricity retailers will be allowed to market products only in specific grid areas without being obliged to provide electricity for household consumers nationwide.
The obligation applies to all electricity products marketed by the company for household consumers in the relevant grid area. This broad application aims to avoid price discrimination between household consumers and to ensure that an electricity retailer cannot force financially weak consumers to purchase a product at higher prices than the company's other products.
Electricity retailers will not be entitled to require collateral in the form of a deposit as a means to ensure future payments. However, the proposal does allow retailers to require advance payment for up to three months' supply in situations where there is particular reason to expect an inability or lack of willingness to pay from a household consumer.
Where warranted by the circumstances, advance payment may be used as a condition for entering into a supply agreement with a specific consumer, but may also be required at a later stage for existing agreements, even if it was not an initial condition of the agreement.
The proposal entitles household consumers to complain to the Energy Supply Complaint Board if an electricity retailer refuses to comply with the supply obligation.
For further information on this topic please contact Nicolaj Kleist at Bruun & Hjejle by telephone (+45 33 34 50 00), fax (+45 33 34 50 50) or email (firstname.lastname@example.org). The Bruun & Hjejle website can be accessed at www.bruunhjejle.com.
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