Thursday, 8 May 2014

Transparency in energy supply contracts - AG Wahl's opinion in Schulz (C-359/11 and C-400/11)

8 May 2014: AG Wahl's opinion in Schulz (C-359/11 and C-400/11)

During the liberalisation of the energy market, the European legislator tried to introduce a high level of consumer protection. To that end, consumers are supposed to be well-informed by their service providers as to the energy prices, their usage thereof, and they should also be protected from the threat of disconnection. In Germany, gas and electricity suppliers need to provide consumers with a standard rate for energy supply, but it was not quite certain whether they could then unilaterally vary prices. As a result, consumers started bringing up claims for reimbursement of the raised energy prices, claiming that the price increases were unreasonable. (Par. 21) German courts thought that whether the energy suppliers had a right to adjust prices unilaterally would depend on the interpretation of the provisions of the Electricity and Gas Directives, which require that contractual terms and conditions must be transparent. (Par. 1-2) The specific question is whether it is sufficiently transparent for the supplier to inform consumers about the price increase with an adequate notice and providing consumers with a right to terminate contracts. (Par. 30)

AG Wahl believes that the question as to what should be understood as a transparent contractual term and condition should NOT be answered on the grounds of the test established by the Directive on Unfair Contract Terms, in its Art. 3 and 5. (Par. 3) Instead, the AG argues for an independent assessment in light of different objectives pursued by these instruments, especially due to the fact that these energy contracts are not really governed by the freedom of contract principle, since suppliers are limited in their options to refuse to conclude a contract or to terminate it (Par. 34). AG Wahl argues therefore against using the judgment of RWE Vertrieb (see our discussion thereof here) as a guideline to solve the issue at hand (see Par. 38-47 for more details on this point). Still, the AG recognizes that in order to ensure effective level of consumer protection, consumers need to be guaranteed two rights: to terminate the contract and to challenge the reasonableness of the price increase. The second right demands that consumers are given sufficient information "concerning the reason for the price increase and the method of its calculation" (Par. 60). Moreover, the need to disclose such information may in AG's opinion deter some suppliers from unjustifiably increasing energy prices. (Par. 66) As a result, the AG advises the Court to determine that German legislator should oblige energy suppliers to disclose not only what the price adjustment will be, but also the "grounds, preconditions and scope of the price adjustment at the latest by the time that the customer is informed of the adjustment". (Par. 78)

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