Effective consumer Effective consumer

empowerment & protection empowerment & protection in liberalised electricity & in liberalised electricity &

gas markets in Europegas markets in Europe

Kyriakos Gialoglou, European Commission, Consumer Kyriakos Gialoglou, European Commission, Consumer AffairsAffairs

Congreso Energia y Derechos de los ConsumidoresCongreso Energia y Derechos de los Consumidores, , Valencia, Valencia,

24 – 25/11/200924 – 25/11/2009

Contents of presentationWhy 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 ReviewReconnecting with citizensEvidence-based & outcome-oriented policiesGeneral market monitoring exercise

EU Consumer Policy Strategy 2007-2013Better monitoring consumer markets and national consumer policies Consumer Markets ScoreboardTo 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 marketFragmentation, Cross border issuesCross 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 ScoreboardMarkets 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 electricityTools 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 consumersConsumer participation empowerment

Information: correct, concise, comparableCase 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 Directiveprohibits 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 measuresSingle contact points (possibly sub-national)Ombudsmen

Protection of consumersMember State definition of vulnerable consumers refer to energy povertyProhibition on disconnection at critical timesInteraction with other social policy measures

3 weeks max. switching period, final bill in 6 weeksConsumer 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

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

Competitive energy markets & affordability 2

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!