As electricity contracts often involve a long-term duration, occasionally there is a need to make amendments to them. Amendments to prices or other contract terms must, however, be made with great care and attention to detail . A mendments to contracts w ith both Fortum and Helsingin Energia resulted in reports to the Consumer Agency .
Last spring, Fortum Oyj informed consumers that it had amended the pricing of its ”Tarkka” agreements. The company indicated that the basis for the amendment was the need to modernise outdated contract and pricing systems. However, that basis is not considered legal justification for amendment of electricity contracts not covered by the duty to deliver, which is what the Tarkka agreement is.
The justification for the amendment, which was a change in the vendor's own costs of electricity acquisition, was left out of the company's letter to customers due to human error. After being reprimanded by the Consumer Agency over the matter, the company stated it will cancel the price amendment slated for June 1st and send new price amendment notifications to customers in July before impl ementing the pricing change in September 2009. This meant that customers continued to pay the old rates for their electricity usage through the summer.
The Consumer Agency considered the decision to cancel the price amendment to be in line with the provisions of the Electricity Market Act. Nevertheless, the company was reminded that price amendment notifications must clearly explain the justification for the amendment to consumers in order to provide them with sufficient detail for understanding what the basis of the vendor's price amendment is. 5086/41/2009
Previously linked prices amended
Helsingin Energia changed its contract terms for steered night-time electricity through amendments that entered into force in June 2008. The amendment concerned agreements for steered night-time electricity concluded in the early 1990s. The old terms of contract had specified that the rate for night-time electricity and basic charges in proportion to wattage were linked to the price of hot water district heating. In practice, this price link constituted a ceiling for the rate of steered night-time electricity based on the rate for district heating. This price link was eliminated in conjunction with the amendment of contract terms.
The Electricity Market Act states that as agreements for electricity supply are often long-term in nature, a justified need for contract amendment may arise during the term of agreement. Unilateral amendment of an agreement is, however, always considered an exceptional circumstance and it must be supported with adequate justification. The more substantial the amendment, and the greater its effect on the user of electricity, the higher the threshold should be for making amendments to agreements.
The vendor may amend terms of agreement if special justification exists for making amendments due to the modernisation of outdated contract and pricing arrangements. In this case, the night-time electricity product was based on circumstances that prevailed prior to the liberalisation of electricity markets. Nevertheless, it is problematic from the consumer's standpoint when unilateral amendments to agreements, however justified they may be, have the practical implication of resulting in substantial price changes for the user of electricity. If a user of electricity considers deviation from the agreed price to be unreasonable, he may pursue arbitration of the agreement e.g. through the Consumer Disputes Board. 6646/41/2008