The Commercial Court of Vienna has reversed the price increase of the partly state-owned electricity group Verbund from May 2022. The clause for adjusting the electricity working price was surprising and disadvantageous for customers, according to the Association for Consumer Information (VKI), which had issued a summons on behalf of the Ministry of Social Affairs. The verdict is not final.
The VKI explains that with the judgment, the legal basis for the increased rates charged since May 2022 no longer applies. In the opinion of the VKI, the fees charged on the basis of the clause since the price increase should be reimbursed in the amount of the corresponding increase.
Increase announced in March 2022
In March 2022, Verbund announced a price increase for its household and business customers as of May 1, 2022. It is not known how many customers are involved. At the end of 2021, Verbund had approximately 450,000 electricity and 80,000 natural gas customers. For electricity, Verbund invoked a clause referring to the Austrian Electricity Price Index (ÖSPI), which depends on the share price.
The price adjustment clause, however, had the headline “Value protection work price”. As the court held, under such a heading, consumers could not expect that this clause was not intended to offset general inflation, but rather to reflect a forecast of future wholesale prices. It is therefore surprising and detrimental to customers.
“Accidental gains” should be avoided
The court also states that according to legal requirements, the original value relationship between the company’s performance and the consumer’s cash payment must be maintained as correctly as possible and thus no “casual profits” may be made in favor of one contracting party. A clause that the ÖSPI uses as a basis for calculating price increases in the labor price does not suit the association to maintain the proportionality between performance and remuneration and is therefore inadmissible.
“Verbund acts as an electricity producer and supplier to consumers. The customers deliberately chose not only an electricity trader as their supplier, but with Verbund as a contract partner for a company that claims to generate its own electricity from 100 percent hydropower. So there is no good basis why the bond could use the stock market prices as a benchmark for – alleged – value protection,’ says VKI lawyer Maximilian Kemetmüller. “We call on the association to refund the corresponding increase amount to those affected.”
Further price increase announced
Until now, the Verbund emphasized that every customer was clearly and comprehensibly informed about this when he agreed to this clause. Incidentally, in January 2023, the electricity company announced a further price increase as of March 1, 2023 on the basis of the clause. The energy price for existing customers with a standard consumption profile in the household segment will then rise to 23.9 cents net per kilowatt hour (kWh).
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
