Effective consumer empowerment
& protection in liberalised
electricity & gas markets in Europe
Kyriakos Gialoglou, European Commission, Consumer Affairs
Congreso Energia y Derechos de los Consumidores, Valencia,
24 – 25/11/2009
Contents of presentation
Why an EU (energy) consumer Service?
Evidence-based policy and tools
How to empower consumers in open (energy) markets?
Principles & tools
Consumer legislation relevant to energy
Consumer protection in new EU legislation
Spain and electricity and gas markets
Discussion: market competition and affordability
Why a Commission Service for Consumers?
Single Market Review
Reconnecting with citizens
Evidence-based & outcome-oriented policies
General market monitoring exercise
EU Consumer Policy Strategy 2007-2013
Better monitoring consumer markets and national consumer policies
 Consumer Markets Scoreboard
To empower EU consumers, with real choices, accurate
information, market transparency, effective protection and solid
rights;
To enhance EU consumers‘ welfare, in terms of price, choice,
quality, diversity, affordability and safety;
To protect consumers effectively, by ensuring protection against
risks and threats that cannot be left to individuals to deal with.
Consumer Markets Scoreboard
Screening consumer markets
5 Top level indicators: complaints, prices, satisfaction,
switching and safety
Identify malfunctioning markets for further in-depth analysis
Integration of retail internal market
Fragmentation, Cross border issues
Cross border sales, information, complaints, disputes, enforcement,
consumers and retailers attitudes towards cross border purchases
Benchmarking the national environment
Performance of national policies / instruments
Enforcement & empowerment
2nd Consumer Markets Scoreboard
Markets that are not functioning well:
energy, banking, transport (rail and bus)
Findings based on satisfaction and switching surveys comprehensive
questionnaire, in-depth findings
Follow-up study on retail electricity
Tools to be used:
Surveys, Mystery shopping, Stakeholder consultation
Questions:
Can consumers benefit from a well-functioning market in terms of price,
choice and quality?
Are consumers able to make informed, rational and empowered choices?
Issues:
Information and awareness, switching and comparability of offers, unfair
commercial practices, billing, contract terms, dispute resolution
Results will be published in Autumn 2010
Consumer empowerment in competitive
energy markets: making markets accessible
Competition: unknown territory for most individual
consumers
Consumer participation  empowerment
Information: correct, concise, comparable
Case in point: energy bills
Citizens’ Energy Forum mandate:
Commission led a Working Group on Billing
Participation: ERGEG, consumers (ECCG sub-group on
Energy), industry
Focus: regular paper bills, annual reconciliation statement
Deliverable: Recommendations, good practices
 Commission created model bills
Consumer legislation relevant to energy
Unfair Commercial Practices Directive
prohibits misleading practices  affect purchase
decision
false or deceiving information e.g. nature of
electricity, its specifications or price and how it is
calculated.
Omission or unclear/unintelligible information also
be misleading.
Energy companies must advertise or inform consumers about
the main characteristics of their services or the price in a clear,
truthful and intelligible manner.
prohibits aggressive commercial practices
Unfair Commercial Practices Directive cont.
Examples of possible unfair practices in energy under UCP:
- misleading green claims: e.g. green label without authorisation
- using general claims e.g. "green electricity" without being able to
substantiate the claim, may deceive consumers  misleading.
- onerous or disproportionate barriers for consumers terminating a
contract or switch to another energy company
Example: a company excessively delaying contract termination could be an
aggressive commercial practice
Case study: Italian Antitrust Authority fined companies in telecoms sector
for excessive delays /obstacles to terminate contract on the basis of UCP.
UCP will become a Spanish law in the next 2-3 months.
National enforcement: determination of unfair practice and action.
Consumer protection authorities, consumers & energy regulators must
co-operate effectively to discontinue any such practices.
Consumer protection in new EU legislation
Third Energy Package: Consumer provisions
Complaint handling measures
Single contact points (possibly sub-national)
Ombudsmen
Protection of consumers
Member State definition of vulnerable consumers  refer to
energy poverty
Prohibition on disconnection at critical times
Interaction with other social policy measures
3 weeks max. switching period, final bill in 6 weeks
Consumer access to consumption data in (sufficient)
time periods (defined nationally)
Consumer perceptions in Spain: electricity and gas
Electricity
19% find difficult to compare offers from suppliers (EU-27 average 29%)
68% did not try to switch provider in the last two years  not interested in
switching, (1% did not try because too difficult).
47% of those who switched provider claim the new one is cheaper, ( EU-27
average 69%)
61% find prices increased in the 12 month before the interview.
Gas
19% found difficult to compare offers
70% did not try to switch provider  not interested in switching.
37% of those who switched claim the new one is cheaper, while 31% think that
prices remained apprx. the same after switching.
62% find prices increased in the 12 months before the interview.
Flash EB 243 "Consumers' views on switching service providers"
Spain status quo: energy and consumers
No regulated tariffs any more
"Last resort services" and
"social bonus" for vulnerable customers
 in force since 1st July 2009 as Public Service
Obligation.
 Ministry to report to Commission on such
PSOs by end of this year.
Competitive energy markets & affordability 1
1/3 EU consumers find electricity, gas and water too
expensive (Eurostat)
In some EU countries 1/3 consumers faced difficulties to
keep houses warm (2006)
Low income consumers have a budgetary need to 'pay as
they go' – this has created higher bills in the past (UK)
UK defined fuel poverty & published data: in 2008 more
than 20% households fuel poor (>10% of income on
energy), UK target: no fuel poor by 2016-18
Similar stories for “newer’’ EU Member States
Competitive energy markets & affordability 2
EU law: "reasonable prices" for electricity & gas.
Member States must define reasonable prices & who
benefits from special treatment (social tariff or other)
Commission to make sure that definition will not
impact on competition and
Commission will facilitate dialogue, exchange of
good practice, make sure that competition will
not negatively affect consumer welfare
Further input in the framework of Citizens’ Energy
Forum
Information on
Energy and Consumer Bills:
http://ec.europa.eu/consumers/citizen/my_rights/energy_en.htm
Report by the Working Group on Billing:
http://ec.europa.eu/energy/gas_electricity/forum_citizen_energy_en.htm
(click on 2nd Citizens’ Energy Forum, Reports)
Monitoring markets and the Consumer Markets Scoreboard
http://ec.europa.eu/consumers/strategy/facts_en.htm
DOLCETA: sustainable consumption and services of general interest
www.dolceta.eu
Thank you
for your attention!