Adjustment clause: An introspection into the timing of increases in electricity bills

Her Virginia Kimbouropoulou

Until a few months ago, the phrase “adjustment clause” was unfamiliar to most of us.

And yet, electricity providers, such as PPC since last August for C1 household tariffs, had already decided to activate the adjustment clause in the bills.

The result; In the last four months, more and more households and businesses have realized its imprint on the rapid increase of electricity in bills, which often exceed the basic salary in amounts.

What do we mean by the term adjustment clause, which is stated in the contracts? It is essentially a charge per kilowatt hour depending on the wholesale price of the electricity market, which is formed daily on the Energy Exchange, by the electricity providers which allows them, in contrast to the fixed pricing contracts, to adjust the charges on the bills or upwards. either down.

However, international fuel price hikes and the energy crisis, culminating in the war in Ukraine, have pushed up wholesale electricity prices even further.

This led to 1/3 of the total consumers, as the Minister of Environment and Energy, Costas Skrekas, had characteristically stated, facing the additional increases in his bills, with the adjustment clause being responsible for most of the charges.

It is worth noting that the issue was recently mentioned by the Ombudsman, to whom a large number of complaints have been filed regarding consumer problems with the clauses, who asked the independent authority to mediate against the excessive charges of PPC and other providers.

The consumer organizations INKA and EKPOIZO for their part have currently resorted to collective actions against the electricity providers.

Both have filed collective lawsuits against PPC, with the court set for June 1, while they have announced similar lawsuits against other electricity suppliers.

The goal of consumer organizations is in the first phase to highlight the abusive nature of the adjustment clause and to put a limit on the unreasonable increases it brings.

Companies, on the other hand, are defending their position and disputing the abuse of the clause. They also object that in order to support consumers in these increases, they have already offered big discounts, with PPC specifically stating that it has allocated 800 million euros in discounts on electricity bills.

In addition, the government, in addition to the monthly subsidies already provided to households in the autumn, proceeded (on May 7) to announce support measures for electricity, in which, among other things, it spoke of a substantial suspension of the adjustment clause from the 1st July It is therefore interesting to capture the position of each side just a few days before the first trial for the clause.

Why was the collective action against individual litigation chosen? According to INKA’s lawyer, Giorgos Kaltsas, the collective lawsuits have advantages, both in terms of their legal significance and in terms of speed, as they can be tried more quickly.

He also adds that “after the irrevocable conclusion of the trial, the state is given the opportunity to legislate and this is something that promotes the collective trial”. In addition, consumer associations point out that they have chosen this path, due to the lack of measures to address the phenomenon by the competent ministries and supervisory authorities.

“The contractual term concerning the adjustment clause is opaque, illegal and abusive and therefore invalid,” said the president of EKPOIZO, Panagiota Kalapotharakou.

“With the adjustment clause, the supply charge is calculated based on a complex and difficult methodology, which requires the execution of continuous mathematical operations and the familiar knowledge of data and terms of the energy market.

It contains various factors and sizes that are difficult for the consumer to understand, which are determined without transparency and are determined in a way that essentially prohibits the reduction of the charge, condemning the consumers to continuous and huge increases.

Also, the connection of the price with an index that is subject to the risks and games of the stock market is opaque and makes the adjustment unreasonable and unfair “, he continues, explaining the position of EKPOIZO for the abusive and illegal nature of the clause.

The revaluation clause was initially provided for in the Electricity Code in 2013. In 2018, the Electricity Exchange was introduced, where the right to adjust the wholesale price of the clause was introduced for the first time and in 2021, electricity providers introduced the term as the contract. we know today, explains Mr. Kaltsas.

While the relevant Energy Regulatory Authority (RAE) has set ceilings and thresholds for the wholesale price, providers usually activate only the ceilings, with results that are super-profits for electricity providers, say representatives of consumer associations.

Of course, both consumer organizations are determined to continue their efforts in future collective lawsuits that are expected to be filed against providers other than PPC, while, as Panagiota Kalapotharakou reports, letters have already been sent to the competent Ministries, to RAE. and the Competition Commission, in order to take the necessary corrective actions, to supervise and limit the notoriety and to accelerate the transition to RES.

The government support measures, although the representatives of the consumer associations recognize their positive character, as, as George Kaltsas said “anything that saves even 1 euro from the consumer is good”, are not enough.

“Structural measures are needed on a permanent rather than temporary basis. We do not see an effort to consolidate the energy market to bring it into line with EU legislation which explicitly states that energy prices must be affordable for consumers.

We need to change the model of price formation, which is extremely problematic (prices are determined by the energy exchange 100%, since there are no bilateral contracts) “comments the president of EKPOIZO.

Examples of the need for support measures are examples of high bills on electricity bills. According to EKPOIZO, a typical example is a clearing account for the period 22/11/21 – 17/03/22 with electricity consumption of 672.55 euros, in which the Rebalancing reached 1,137.00 euros.

Another example of a counter bill from 2 / 10-27-10-2021, for 26 days, with electricity consumption of 43.45 euros, with the adjustment clause amounting to 84.30 euros.

Of course, there is the other side of the coin, the side of the electricity providers themselves.

Mr. Miltos Aslanoglou, General Manager of ESPEN (Hellenic Association of Energy Suppliers), contrary to the claims of the consumer associations, states that consumers could leave the respective provider, in case they saw unreasonable increases in the bills or were not informed. .

“The clause simply reflects the increased cost that providers have to sell to consumers per kilowatt hour. If that had not changed, given that so far many have offered fixed tariffs, power companies may even have been forced to close.”

The increases in the cost of electricity production, according to the electricity companies themselves, are large and must be reflected in the bills, while at the same time, as mentioned above, PPC has already offered relief of 800 million euros to consumers.

For Mr. Aslanoglou, what should be examined in court is, first of all, if someone had a fixed invoice and it changed unilaterally and second, if his information about this change was timely and sufficient.

Although he considers that, given the widespread increase in the wholesale price, individual consumer information is not necessarily required. It should be noted at this point that there will be no intervention of ESPEN in any of the providers’ lawsuits, so each company will handle it in its own way.

Which side will find its right will be judged, of course, in court, with the court date for PPC being set for the first of June. However, consumers are the ones who are in the middle of developments.

For them, the most essential part of the court decision is that it will be the trigger for taking or not further and more effective political decisions for the abolition or not of the adjustment clause or for the legislative change of the way of electricity billing.