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Christina Veigl-Guthann, Chair of ERGEG Customer Empowerment Task Force

Definitions of vulnerable customers, default supplier and supplier of last resort - European Status Review. Christina Veigl-Guthann, Chair of ERGEG Customer Empowerment Task Force Citizens’ Energy Forum, London, 29-30 September 2009. Background.

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Christina Veigl-Guthann, Chair of ERGEG Customer Empowerment Task Force

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  1. Definitions of vulnerable customers, default supplier and supplier of last resort - European Status Review Christina Veigl-Guthann, Chair of ERGEG Customer Empowerment Task Force Citizens’ Energy Forum, London, 29-30 September 2009

  2. Background The European Commission stressed the importance of final customers´ rights at the First Citizens’ Energy Forum in London 2008. The Forum requested an overview of the situation regarding customers’ rights issues covering: • vulnerable customers • supplier of last resort • default supplier ERGEG carried out a status review: questionnaires were answered by NRAs from 25 Member States plus Croatia and Norway for electricity and 25 countries for gas

  3. Support systems Consumer protection mechanisms may be designed in different ways:  General support system (social network):  Support systems within the energy sector: 10 MS • economic support systems • non-economic support systems EU directives mention the term “vulnerable customer”, although it is not defined. In 8 out of 27 countries (~30%) the term “vulnerable customer” is commonly known or used.

  4. Main Target groups for economicsupport within energy sector Main target groups for economic support systems are: 7 countries (electricity) 8 countries (gas) All households with a defined low income 3 countries (electricity) 2 countries (gas) Elderly people (with a defined low income) 2 countries (electricity) 1 country (gas) Families with children (and a defined low income) 4 countries (electricity) 3 countries (gas) Disabled persons (with a defined low income)

  5. Means of economic support Other means may be: Heating aids (A), trust funds and cold weather payments (UK), government subsidy (IE), financial benefits for heating (RO),… NRAs do not have data on how many people/households qualify and receive support  Not within NRA`s competence

  6. Economic support outside energy system Nearly all countries have a mandatory, economic support system outside the energy system  General social systems Support system outside energy system does not exist Support system outside energy system exists Not available

  7. Non-economic support system Most common means for non-economic support: protection against disconnection: about 60% of all countries Other non-economic support schemes: • Special services, such as • more meter readings • bills read via phone or in Braille • Information duties

  8. Conclusions – Vulnerable Customers (1) • Few countries use the term vulnerable customers • There are different ways of supporting weak energy customers: • Almost all countries have support systems not specific to the energy sector • A majority of the countries do not have specific economic support systems for vulnerable customers within the energy sector • A majority of the countries also have non-economic support systems, such as protection against disconnection

  9. Conclusions – Vulnerable Customers (2) • In most countries that do have an economic supports system within the energy sector, customers with a defined low income are covered by the system. • Very few NRAs can present figures on the share of households and inhabitants qualifying for and receiving support. • Some countries have regulated prices for certain customer groups. • Support systems must not hinder competition but allow those customer groups to actively take part in the liberalised market to profit from cheaper offers and to be able to shop around for the best deal.

  10. Definition of Default Supplier The term is not mentioned in the directives In less than half of the countries, a definition of default supplier is in use: • 11/27 electricity • 8/25 gas Term not used Term used Not available

  11. Which situations are covered Default Supplier in use for the following situations: • Customer does not choose supplier (9 mentions) • Moving in without choosing supplier (7 mentions) • Customer cannot find supplier on the market (7 mentions) • Supplier going bankrupt (4 mentions) • Expired contract (3 mentions) • Other (1 country)  For countries which have a definition, it is most common that the default supplier is activated when the customer is passive or when the customer cannot find a supplier on the market.

  12. Main findings – default supplier • No time limit for providing the service. • Incumbent supplier acts as default supplier in all MS. • Most commonly designated by the regulator. • This system does not promote activity among the customers. A limitation - given sufficient and adequate information is presented to customers - would empower customers to make a choice of available suppliers and strengthen the competition.  Barrier for market entry for new suppliers. This is not an ideal situation if competition amongst suppliers should be promoted and enhanced.

  13. Definition of Supplier of Last Resort • The term is used in the directives: possibility to protect customers • A majority of countries have a definition of supplier of last resort (20/27 electricity, 16/25 gas) • Twice as many of the responding countries define the term supplier of last resort compared to the term default supplier. • It is not unusual that the default supplier also acts as the supplier of last resort, or vice versa.

  14. SLR – which situations are covered In use in 20 countries (electricity): • Supplier going bankrupt (15 mention) • Customer cannot find supplier on the market (8 mentions) • Customer does not choose supplier (5 mentions) • Moving in without choosing supplier (3 mentions) • Expired contract (3 mentions) • Other (4 mentions) • Customer non-payment (1 mention)  The definition of supplier of last resort applies in most countrieswhen a supplier goes bankrupt.

  15. Main findings – SLR • The supplier of last resort is designated by the regulator in about 50% of the countries. • In 50% of the countries it is the incumbent supplier who acts as the supplier of last resort. • Other solutions: DSO (BE), winner of a tender/auction (CZ, IT), any supplier (AT, GB), volunteering suppliers (HU), market leader in a network area (NL) • The service of the supplier of last resort is not time limited in the majority of countries.  Barrier for market entry for new suppliers; This is not an ideal situation if competition amongst suppliers should be promoted and enhanced.

  16. Thank you for your attention! www.energy-regulators.eu Mark your diary for the World Forum on Energy Regulation IV October 18-21, 2009 Athens, Greece www.worldforumiv.info

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