Let’s call her Mrs. Miroslava, for example. She had not been satisfied with her electricity supplier for a long time, the prices were really high. So she compared, calculated carefully, and finally decided to change. “I had a fixed-term contract, so I read it thoroughly and the only thing I found was that if I end the commitment early, I will have to pay a contractual penalty,” she describes.
She agreed with that, but even with a fine of CZK 6,000, the transition paid off for her. She signed a new contract online, and started buying electricity from a new supplier. At that moment, however, the original supplier called and sent an invoice for damage compensation, the charged amount of CZK 34,787.50. The footnote read: If you change your mind about switching to a new supplier, please contact us immediately.
“It doesn’t seem fair to me, but I don’t have 30,000 to pay another fine, and when they told me that if I stayed with them, they would cancel all the sanctions, I didn’t hesitate,” says the iDNES.cz reader.
Mrs. Miroslava was a little lucky in her misfortune after all. It is possible to terminate a distance contract without penalty up to the 15th day after the start of delivery. As soon as she documented the acceptance of the termination of the new contract to the original supplier, he canceled the fine.
Dozens of complaints are registered by SOS and ERÚ
But this is far from an isolated case. The Consumer Protection Association – Asociace, zs. deals with dozens of similar complaints, many dissatisfied consumers turn directly to the Energy Regulatory Office (ERÚ).
“We are now more often encountering cases where some suppliers charge so-called lost profit in addition to contractual fines. At the same time, in some cases it amounts to tens of thousands,” confirms Markéta Zemanová, a member of the ERÚ Council.
The issue affects customers who are trying to end their fixed-term contract early. It is possible to terminate the contract free of charge only in specific situations established by law. These include price increases or changes to other contractual terms and conditions, or perhaps moving. And, of course, also signing the contract remotely or outside the supplier’s business premises – then it is possible to terminate it up to the 15th day after the start of deliveries.
“A contractual penalty generally fulfills the function of so-called flat-rate damages. In the event of a breach of duty, which is subject to early termination of the contract by the consumer, the supplier cannot, by default, claim additional compensation in the form of lost profit for it,” adds Zemanová.
“In order for the supplier to be entitled to compensation for damage or lost profit, he would have to prove that he properly informed the consumer about the content of the terms and conditions and that the consumer agreed to them. Furthermore, the supplier must also prove that the damage actually occurred to him and also specifically quantify and justify it. Consumers could also argue the inadequacy or surprise of such an arrangement, which could lead to the said arrangement being considered ineffective,” explains Jan Šůra, head of the legal department of the consumer organization dTest.
“It is also not certain whether the original supplier would have filed a lawsuit at all. Because he offers his former clients that they can return to him and the contractual penalty and lost profit will be cancelled, it is a certain pressure so that clients do not go to other suppliers,” says Alena Máčová, president of the SOS Association.
Of course, it is significantly easier to change the supplier if you have a contract for an indefinite period. You can cancel here at any time, without giving a reason and without any fees. You just have to take into account the notice period, usually three months.
Ten tips before you sign a new contract
Have you received an offer for the supply of electricity or gas? Do you think you can improve? Do not succumb to euphoria and think carefully about your move. Ten pieces of advice have been prepared for you by the Energy Regulatory Office.
1. Don’t rush
You are not going to make a one-time purchase of a small appliance, but to conclude a long-term and binding agreement for something you need every day. It is therefore not reasonable to nod without thinking at the first offer that looks like the guaranteed best one. Before you even start negotiating a new contract, take a look at your existing one, which may contain heavy early termination penalties.
2. Do you know who you are dealing with?
In addition to the energy supplier itself, you may be approached by intermediaries who only resell energy. Therefore, you want to know who exactly you are talking to and what kind of company it is – and don’t just be satisfied with the fact that it has an offer for you from this and that supplier. Will the salesman ring right at your door? Are you under pressure to sign immediately? All the more, be cautious and definitely take time to think.
3. Check it out
Do you deal directly with the supplier? Try to find references to it. Other customers can give you valuable advice and draw your attention to some tricks that you would otherwise not notice. The same applies to intermediaries whose register is maintained by the Energy Regulatory Office from July 2022. If you do not find the intermediary in the register, it is quite possible that he did not apply for registration at all, and is therefore carrying out his activity illegally.
4. Read carefully (the contract!)
Why the parenthesis and exclamation point? It is important not only how, but mainly what you read. The key for you is the contract (full title “Contract on Combined Electricity/Gas Supply Services”), which will include business conditions and a price list. You subscribe to it, not to what they wrote to you in the mail, what is in advertising brochures or what they promised you over the phone. If there is a conflict between the general terms and conditions and the main contract, the provisions in the main contract apply. Compare the final price list from the contract with the one in the offer. No different?
5. The price list may change
The supplier can change the list price during the duration of the contract, if you agree on this in the contract. However, they must notify you at least 30 days in advance, demonstrably and by address – so, for example, just information on the website is not enough. If you want to purchase energy for a certain period at the same price, you must have a so-called price fixation/guarantee agreed in the contract.
6. You can also get fired
A fixed price is not the same as a fixed term contract. With the contract, you enter into an agreement for a specific period of time about the electricity or gas supplies themselves, not about their price. By default, you must adhere to a fixed-term contract, on the other hand, you can terminate an indefinite-term contract at any time – in that case, it expires after the notice period ends. However, the counterparty also has the same option, so watch out for a fixed price commitment in combination with an indefinite period. It should be borne in mind that the supplier can easily get rid of such an obligation in practice.
7. Beware of dynamic pricing
A specific type are products with so-called dynamic price determination (previously called spot). With them, the amount of your payments depends on the current commodity prices (power electricity and natural gas) on the stock exchange. They can be advantageous for the customer if energy prices fall on short-term markets, but at the same time the customer is not protected against a sharp price increase. It is a product suitable only for informed and active consumers who follow the development of energy prices. In order for the contract with dynamic price determination to take effect, the point of consumption must be equipped with continuous electricity or gas metering.
8. Watch the fines and rewards
Pay close attention to the details related to the duration of the contracts. How high is the contractual penalty in case of early termination of the contract? And doesn’t the supplier demand compensation for damages or lost profits? Does he offer you a financial bonus if you stick with him for a while, but otherwise you have to pay the discount?
9. Don’t you understand? ask
If you do not understand something in the contract, some passage does not make sense to you or seems non-standard, ask. If the merchant does not answer your questions satisfactorily, and of course in writing, then carefully consider whether to continue negotiations. Definitely don’t sign anything you don’t understand.
10. Keep the contract
In seemingly banal advice, we also point out the hidden threat that the intermediary will not give you the contract immediately after signing. “One copy is for me, the other is for the supplier, we will send you the contract later…”. No such thing, insist on the original contract and keep it carefully.
