Automatically extending a fixed-duration electricity contract without a consumer's consent violates basic principles of contract law.
On the open market electricity contracts are often concluded for a fixed duration of two years.
Some power companies have used a procedure in which they have informed a customer at the end of the two-year contract period that a contract will automatically be extended for another two years unless the customer notifies the company that he wishes to cancel the contract.
This procedure is not in compliance with basic principles of contract law or the provisions in the Electricity Market Act, however. According to contract law, a contract can only be concluded if the customer expressly wishes it. Passive acceptance is not enough.
If a power company wants to extend a contract after two years, the parties must conclude a new contract in which the customer expressly accepts an offer. If a customer does not give his consent, the contract continues until further notice.
According to the Electricity Market Act, a consumer has the right to terminate a fixed-duration electricity contract if the contract has been in effect for two years. According to electricity delivery terms a consumer's right to terminate a fixed-duration electricity contract begins when two years have elapsed from the beginning of the first term conforming to the same contract.
A consumer cannot be tied to an electricity contract for longer than two years without having the right to terminate the contract as provided in the Electricity Market Act.