Transposition of Consumer Rights ERGEG Monitoring Report Christina Veigl-Guthann, ERGEG Task Force Chair

Transposition of Consumer Rights

ERGEG Monitoring Report

Christina Veigl-Guthann, ERGEG Task Force Chair

2 First Citizens’ Energy Forum, London, 27 October 2008

Report on the transposition of consumer rights as defined in Annex A of the Electricity and Gas Directives of 2003

Requested by the European Commission

Report on consumer protection instruments in Member States Related to the provisions for strengthening the role of customers in the

Third Package A set of three best practices in relation to the supplier switching process,

price transparency and customer protection was published by ERGEG in July 2006. Two years later, it seems particularly relevant and highly valuable to try to review if Member States (MS) have put in place these different consumer protection instruments

Scope: household customers Report focused on household customers only, as Annex A of the Directives

applies at least to household customers – it is up to each MS to decide whether other customer groups should enjoy the same level of customer protection as set out in Annex A

Monitoring Report on Transposition of Consumer Rights


Monitoring Report on Transposition of Consumer Rights

Methodology:

Based on the results of two questionnaires, one for electricity, one for gas

Questionnaires contained 46 closed questions

Questionnaires administered to the NRAs of EU Member States + Norway and Iceland

27 countries answered (exceptions: Malta and Bulgaria)

Responses are displayed with a focus on some countries’ individual characteristics, where deemed appropriate


General Comments

There are many different ways to implement the consumer-related obligations at national level, depending on the retail market design and the level of maturity of the retail market.

The position of European electricity and gas customers is determined not only by European energy legislation but also by EU consumer legislation (e.g. on unfair contract terms and commercial practices), national contract law, national consumer protection law, etc.

The varying national situations are also shaped by the interpretation of existing European legislation – which is itself sometimes not entirely clear.

In many MS with open markets, end-user price regulation still exists


Contractual Relationships – great variety

One contract (often with the supplier) or two contracts, in some countries both situations coexist, in some countries there are no written contracts (especially with the DSO)

Separate contracts for network and supply

12

6

10

0

2

4

6

8

10

12

14

electricity

one contract both situations coexist tw o contracts


Bills

There is no correlation between having one or two contracts and receiving one or two bills

More than 50% of MS have one single bill, in the other countries both situations coexist, almost no country with a provision for having two bills

In 2/3 of MS without regulated prices, suppliers have the obligation to separate amounts for supply price and network charges on bill(s)

16

12

00

5

10

15

20

electricity

one bill both situations coexist tw o bills15

9

1

02

468

1012

1416

gas

one bill both situations coexist tw o bills

Separate bills for network and supply


Transposition of Annex A Provisions (I)

High level of transposition for suppliers:

customers have to be informed of the most relevant aspects of the supply contract prior to signing it – Annex A (a)

Information to customer prior to signingelectricity

11

22

12

6

0

5

10

15

20

25

DSO supplier

YES NO


Transposition of Annex A Provisions (II)

High level of transposition for suppliers:

Information on price changes and changes of general terms and conditions – Annex A (b)

Customers shall not be charged for switching – Annex A (e)

Universal service and information about these rights– Annex A (g)


Transposition of Annex A Provisions (III)

Room for improvement

Transparency and comparability of offered prices and services – Annex A (c)

Dispute resolution mechanisms – Annex A (f)

Wide choice of payment methods – Annex A (d)


Information

Price calculators:

In 16 MS for electricity, only in 8 MS for gas

In 9 out of 16 MS, price calculators are provided by NRAs

In 13 out of 16 MS, they are provided by private companies (often in addition to an “official” one)


Information

Consumption and cost:

Requirements vary from once a month to every three years

Majority of MS: requirement to inform customers on an annual basis

actual customers’ experience may differ

Bills based on estimated consumption values

24

4

0

5

10

15

20

25

electricity

YES NO

Bills based on estimated consumption exist in almost all countries. However, we do not know how many customers are concerned and often NRAs do not have data on this


Legal Minimum Frequency to Inform about Consumption


Supplier Switching

In 1/3 of MS, customers have to be in contact with more than one market actor

There seems to be room for improvement to ensure customer confidence and convenience with switching suppliers

Data exchange when switching supplier

1920

15

0

5

10

15

20

electricity

standardized f ormat standardized content automated


Support Systems

Alternative Dispute Resolution Board

Exists in about 2/3 of MS

9 NRAs are responsible for this board

responsible for alternative dispute settlement boardelectricity

9

3

5 5

0

2

4

6

8

10

regulator consumerorganisation

other public entity other


Vulnerable Customers

40% of MS have a definition of vulnerable customers within the electricity and gas framework

50% of them offer a support system within the electricity market and 60% in gas

6 countries have a special regulated price for them

Nearly all MS have a general support system for vulnerable customers, i.e. social services

14

6

14

0

2

4

6

8

10

12

14

16

support system withinenergy system

if yes, regulated price

YES NO

16

6

9

0

2

4

6

8

10

12

14

16

18

support system withinenergy system

if yes, regulated price

YES NO

support system for vulnerables within energy system


Other Findings

Information is key for customers to make their choices

Relevant information is often provided on the internet

In some countries this may be not sufficient, information campaigns or other information tools may be required

Market participants (suppliers & DSOs) play a key role in informing customers actively (through billing, companies’ marketing activities)

The bill is very relevant in customer communication


Other Findings

Customers may be treated in different ways within one country if they are supplied with or without regulated end-user prices

- some legal provisions apply only for regulated but not for liberalised market

- price calculators can be found more often in countries without price regulation

Information about price changesenergy prices on the liberalised market

electricity

15 14

0

67 6

18

13

0

5

10

15

20

individuallyaddressed

bill customer newsletter other media

YES

NO

Information about price changesenergy prices on markets with end-user price regulation

electricity

1

11

0

911

2

12

3

02468

101214

individuallyaddressed

bill customer newsletter other media

YES

NO


Next Steps

ERGEG’s priority for 2009 is to examine areas where further work (and what kind of work) is needed to work on consumer empowerment (also in line with the focus of the Citizens’ Energy Forum)

Complaint handling has been identified as an issue for 2009 (methods of complaint collecting, classification & reporting, plus recommendations on complaint handling)

A status review on the definition of vulnerable customers in MS is also envisaged for 2009


Thank you for your attention.

For more information on ERGEG’s work on customer issues visit: www.energy-regulators.eu

Documents

Transposition of Consumer Rights ERGEG Monitoring Report Christina Veigl-Guthann, ERGEG Task Force Chair