Last autumn started a series of collapses of companies supplying energy, mainly electricity and gas. A number of smaller, so-called alternative suppliers were constantly affected by the development of energy prices on world markets and were unable to purchase energy in such a way that they could profitably sell it to their customers at the agreed prices. What are the current options when choosing a supplier, what can we influence with the contract and what should we watch out for?

Many supplier companies have ceased operations or are heading towards liquidation or insolvency. Customers have switched to the supplier of last resort regime, which means the obligation to pay energy prices that are several times higher than market prices, in addition, deliveries in the supplier of last resort regime are limited to a period of six months. Affected customers are therefore faced with the choice of a new supplier.

Unfortunately, it must be stated that the person interested in the supply of energy will not influence practically anything in the contract. So-called form contracts are concluded with final consumers - small customers, where the customer can choose perhaps only the tariff of the energy purchased and the method of determining the price (see below). It has no chance to influence any business conditions.

Even a "larger" customer, for example a company with several collection points, does not have a much better position. After last year's storm on the energy markets and the ongoing uncertainty regarding the development of energy prices, traders' interest in acquiring new energy customers is lower than it was in the past, which is also due to the technical and commercial capabilities of suppliers.

Those interested in energy supplies must therefore carefully compare the available offers of individual suppliers, their pluses and minuses. First of all, the customer should consider whether the energy supplier he wants to choose is big and strong enough so that the story of last year does not repeat itself and the customer does not have to look for a new energy supplier again soon.

When comparing individual offers, it is necessary to make sure that they are listed including value added tax. Traders in general, not excluding energy traders, often like to state energy prices without value added tax in large letters and add a sip below in significantly smaller letters that value added tax must be added to the price.

Spot or fix?

Probably the biggest issue solved today is the mechanism for determining the price for the delivered energy, which the customer will be obliged to pay. There are two basic mechanisms – the so-called spot price, i.e. the price at which energy is traded on the exchange markets, plus a trader's surcharge, or a price fixed for a certain period.

In the first case, the price paid by the customer is determined every day according to the development of energy prices on defined world exchanges. The merchant's surcharge is added to the price determined in this way, and the end customer pays this price. In the case of price fixation, the agreed price is valid for a specified period, after which the supplier is entitled to change the price.

Whether to choose a fixed price or a so-called spot price I will leave to the economists. I recently read a survey article on this topic in a leading economic daily, where about ten experts were interviewed. What an answer to an opinion.

Pay attention to the length and beginning of the notice period

But what is important to look out for in contracts are the options for terminating them. I will leave aside the cases where the contract can be terminated directly by law. What is important to us is the conditions under which contracts can be terminated without meeting these legal conditions. These so-called contractual cases of contract termination must always be carefully studied and pay particular attention to the length of the notice period and the beginning of its term.

In some cases, the notice period begins to run from the moment the notice is delivered, in some cases, until the first day of the month following the month in which the notice was delivered. The possibility of termination will be significantly more limited when the price is fixed for a certain period, when the customer undertakes to remain in the contractual relationship for a certain period in exchange for having a certain price for this period. This option is suitable for customers in the event of expected increases in the price of energy on the markets, however, it was this method of price negotiation that led to the collapse of a number of energy suppliers last year, which the customer should keep in mind when concluding contracts.

Attention should also be paid to the sanctions agreed upon in case of non-fulfillment of the terms of the contractual relationship. Of course, sanctions are negotiated in such a way that, in most cases, they primarily affect customers. We encountered provisions according to which the supplier could terminate energy supplies and contracts immediately after the customer defaulted on its obligations. Without having to remind him of the payment and setting him an additional deadline for payment. Last year, a number of suppliers took advantage of this option and in many cases elegantly got rid of the need to supply energy at the originally agreed prices.

More contracts? Don't even read that!

What we need to be really careful about in our practice is the situation where the customer has concluded several contracts with the supplier, whether for different energies (for example, gas and electricity), or for one commodity, but with multiple contracts for several points of consumption . In these cases, we encountered sales representatives representing suppliers telling customers, "The terms and conditions of each contract are the same, don't even read it." The opposite was true. In some of the contracts, it was possible to find a number of dangerous provisions, for example the above-mentioned provision on the possibility of the supplier withdrawing from the contract in the event of even the slightest delay in payment by the customer.

We can only recommend, especially when it comes to "large" supply contracts, where the customer is in a slightly stronger negotiating position than traditional consumers and is able to at least partially influence the contract texts, to have the draft contract revised by a lawyer specializing in the issue of contractual and energy law.

Source: construction.cz

JUDr. Ing. Jan Vych, attorney and partner