energy

Insights

The raise in surcharges to the power price gives early termination right

In a recent decision the Federal High Court (BGH) confirmed that a raise of surcharges to the power price as claimed by power suppliers leads to early termination rights for the customers. This explicitly applies to surcharges that are determined by other market participants than the power supply company, such as the EEG surcharge, grid fees, CHP surcharge, etc.

Background

In Germany the power price usually consists of the commodity price (plus margin) plus external costs as charged by other market participants (such as grid operators) that need to be disclosed to the customers: EEG surcharge, CHP surcharge, grid fees, § 19-StromNEV surcharge, etc. However, in many power purchase agreements the power suppliers is entitled – not obliged - to increase the power price if such surcharges are raised. The Federal High Court now stated in a decision of 07/05/2017 (VIII ZR 163/16) that such an increase in price is deemed to be a one-sided right to change the contract and thus the customer is entitled to early terminate the contract according to Annex I (1) b) of the Electricity Directive 2009/72/EC.

The power supplier claiming that no early termination right applies argued that the surcharges are non-influenceable and thus to be treated like tax increases (which do not lead to an early termination right). Yet, the BGH explicitly made reference to the English and French language versions of the Electricity Directive 2009/72/EC. In Annex I (1) b) it is stated that an “increase in charges” is deemed to be a contractual modifications due to which the customers shall have the right to withdraw from the contract if they do not accept.

Hence, any minimum contract term could end yearly, as surcharges mostly increase on a yearly basis.

Resumee and outlook

The restrictive German jurisprudence in terms of price adjustment clauses in energy supply contracts combined with the comprehensive transparency obligations of supply companies, supply companies are very limited when adjusting supply prices. They are close to a cost-plus pricing. The German (an European) legislator would need to implement a new regime to grant supply companies more freedom in pricing.

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