Vulnerable consumers copenhagen june2013

Vulnerable Consumers and Supply of Last ResortThe Danish Debate

Søren Dyck-MadsenThe Danish Ecological Council

The Danish Ecological CouncilSeminar with Baltic Associations for Consumer Protection 20.6.13

Supplier of Last Resort – EU Legislation


• Member States shall ensure all private consumer – and possibly also small enterprises – a right to get electricity at reasonably conditions

• Member states shall ensure grid connection and a possible electricity provider

• Member States can appoint a “Supplier of Last Resort” that shall supply the electricity if ordinary electricity traders fail to do so

Supplier of Last Resort – EU Legislation


• This “Supplier of Last Resort” can be mandated to deliver electricity with regulated prices

• There is no obligation for a “Supplier of Last Resort” but if member states does it, it has to do it in a non-discriminating and transparent way

Danish Regulation before December 2012


• Electricity traders connected to the local grid company were obliged to deliver electricity as a “Supplier of Last Resort” in their own area

• They were appointed with a geographical view with no possibility of bidding for other areas

• The electricity prices was regulated by the Danish Energy Authority according to the situation on the electricity market

• About 80 % of small consumers used this possibility

Suppliers of Last Resort


• The regulated price was by many companies seen as too low for active price competition

• Shifting to a commercial electricity product could save money, but very small amounts

• Not many costumers were shifting electricity trader – and around one third of those did shift for at climate friendly product – not because of price

• One electricity trader provoked the legality of just appointing “ Suppliers of Last Resort” within any tendering process

• The Danish way was found not to be in line with EU regulation

December 2012 Actions


• By law the appointing of “Supplier of Last Resort” was stopped and a tendering process was started

• The basis was a still regulated product – plus a topping price

• In Jutland some competition was to be seen – on Seeland there were no competition – and very high bids

• Electricity costumers was obliged to actively choose the new Regulated product – if not they automatically got the most common commercial product from the “old” trader

• A price cap for the commercial products was introduced until October 2014 where new legislation will be adopted

Tendering areas


New conditions from October 2014


• The Danish “Working Group for a Survey of the Electricity Sector Framework” got the task to look at future conditions for “The Supplier of Last Resort” situation and for how to deal with small and vulnerable consumers

• The DEC and the Danish Consumer Council have two seats here together with industry, agricultural sector, the energy companies, wind energy sector, local communities and various experts and representatives for large electricity consumers

• Consensus about the future framework seems to be agreed

Principles for new Conditions


• All electricity traders will get an obligation to supply all consumers that ask for it

• No appointed “Suppliers of Last Resort”

• Free pricing in the retail market for electricity

• The “Pricing Information website” will be improved substantially

• Several bench marks and pricing surveys

Principles for new Conditions


• Information campaigns

• Agreements on possibilities to buy electricity at hourly based pricing

• Solution to secure delivery of electricity to costumers if a trader goes bankrupt

• Clear obligations when costumers move or close the consumption points down

• Clear rules and standard for handling people that do not pay their bills and vulnerable consumers

Vulnerable Costumers


• By law you are obliged to inform the social authorities if mistreatment of children is observed

• You cannot just cut off the electricity if the bill is not paid

• Cutting off the electricity could do harm for children (not being able to heat the house) or for animals (feeding systems and heating systems not functioning)

• Today this is done by a combination of “fairness” from the distribution companies, local informal cooperation and action taken from the local social authorities.

Vulnerable Costumers


• Denmark has just made a legal change in order to just have one entry point to the electricity companies

• Local distribution companies will no more be in contact with the costumers except for some tasks such as cutting and opening for electricity – it will (almost) only be the retailers that will be seen

• The retailers can be situated anywhere – “fairness” is out

• There will be strong need to set up rules and conditions for what to do in situations where the bills are not paid and there is a potential risk for harming vulnerable costumers just by cutting off the electricity

How they do in Finland


• I Finland varetages forsyningspligtopgaven af en på forhånd udpeget leverandør, og elprisen er i udgangspunktet ikke undergivet regulering

• I Finland påhviler forsyningspligten automatisk den dominerende elhandelsvirksomhed i området, dvs. den elhandler, der har den højeste markedsandel i området

• Der skal ske levering til rimelige priser, og sker det ikke, kan den finske regulator skride ind med en prisregulering

• 60 % af de finske husholdningskunder er i dag forsyningspligtkunder i den forstand, at disse ikke selv har valgt en leverandør

• Årsagen antages at være, at forsyningspligtproduktet leveres til en meget konkurrencedygtig pris

How they do in Sweden


• I Sverige varetages forsyningspligtopgaven af en på forhånd udpeget leverandør, og elprisen er i udgangspunktet ikke undergivet regulering

• Hvis en forbruger i Sverige ikke selv vælger en leverandør, udpeger det lokale netselskab en leverandør

• Prisen for levering af el fra en udpeget forsyningspligtig leverandør er ureguleret i Sverige og har i de senere år ligget betydeligt over den pris, som de kommercielle selskaber har taget for kunder, der har valgt en leverandør

• Der er fortsat ca. 20 % af de svenske kunder, som er forsyningspligtkunder, men antallet har været jævnt faldende fra mere end 60 % i 2004

How they do in Norway


• I Norge varetages opgaven med at forsyne kunder, der ikke har valgt leverandør, af netvirksomhederne

• Prisen er reguleret således, at det ved forskrift er bestemt, at prisen i de første 6 uger fastsættes som områdeprisen på Nord Pool Spot plus max 5 øre/kWh

• Efter de første 6 uger skal pris og vilkår for netselskabets forsyningspligt give forbrugerne incitament til at vælge en kommerciel leverandør

• Der er ikke fastsat regler for, hvordan dette skal ske, og det betyder, at prisen efter de 6 uger er ureguleret

How they do in Germany


• I Tyskland udnævner systemoperatøren hver 3. år en ”grundversorger”, som er det elhandelsselskab, der har den største markedsandel i det pågældende område

• Grundversorgeren forsyner alle, der ikke har valgt anden leverandør. Priserne for forsyningspligtkunderne er væsentligt højere end for kunder, der har valgt leverandør

• 45 % af de tyske forbrugere er fortsat forsyningspligtkunder

How they do in Holland and Belgium


• I Holland og Belgien er pligten til at forsyne enhver (der kan/vil betale) en del af kravet til at kunne drive en elhandelsvirksomhed i det pågældende land. Prisen er ureguleret

• I Belgien udpeger kommunerne dog leverandører for kunder, der har problemer med betalingen

How they do in Spain


• Spanien har som Tyskland pålagt forsyningspligten til den leverandør, der har den største kundeandel i det pågældende område

• Der er en meget høj andel af kunderne, der forsynes gennem landets ”forsyningspligtselskab”, nemlig alle de kunder som ikke har foretaget et andet valg (ca. 75 pct. af forbrugerne)

Søren Dyck-MadsenThe Danish Ecological Council

[email protected]


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Vulnerable consumers copenhagen june2013