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DTe Sets a Maximum for Cancellation Payments on the Termination of an Energy Contract

Energy suppliers may charge a maximum of EUR50 if consumers cancel their annual contract prematurely. The Office of Energy Regulation (DTe) decided this following complaints about compensation for cancellation which was too high. Consumers may always cancel contracts for an unspecified period without the energy supplier charging for this. Cancellation payments which are too high constitute an unnecessary barrier to switching to a different supplier. The cancellation payments applicable as of today are set out in the guidelines which DTe has determined following consultation of the parties involved.

If a consumer cancels the agreement within a year, the energy supplier may also charge an amount of EUR 50 for a gift given. In the case of a contract which is tacitly renewed, the energy supplier may charge a maximum of EUR 25. A cancellation payment which increases by EUR 25 for every additional six months of the remaining contractual period applies to contracts for a longer period than a year. These amounts cover the most important costs incurred by suppliers if customers cancel their contracts early, such as energy already purchased and acquisition costs.

The guidelines include a number of criteria for small-business customers which are required to pay a reasonable cancellation fee. A different scheme is necessary for small-business customers because these agreements may differ considerably from those for consumers.

Energy suppliers which charge cancellation payments must include the payments in their general terms and conditions at the latest by 1 July 2005. As of today, cancellation payments must comply with the guidelines. If this is not the case, DTe may take appropriate measures, for instance by imposing a sanction. The document on cancellation payments is obtainable from DTe's website.