Household consumers and small businesses can terminate their energy supply contract without any termination fee
According to recent case law, it is clearly established that household consumers, micro-enterprises and small enterprises have the right to unilaterally terminate their electricity sales contract and switch to an independent supplier free of charge from 15 July 2021, without paying any termination fees.
According to Mantas Baigis, Senior Associate at AVOCAD, the Lithuanian Court of Appeals has recently issued a very important decision rejecting a claim of more than EUR 1 million for the payment of termination fees.
"Until now, both household consumers and small businesses have been afraid to initiate the termination of uneconomic electricity contracts and change electricity supplier, because electricity suppliers demand huge termination fees for terminating contracts," Mantas Baigys notes.
Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 concerning common rules for the internal market in electricity and amending Directive 2012/27/EU (Directive 2019/944) provided for an obligation for Member States to ensure that unreasonable switching charges are not levied, and for the Member States to ensure, by their proactive action, that relevant unreasonable charges (i.e., switching-only charges that are unrelated to a specific loss of the supplier) are not levied against household consumers and small businesses.
Legislator 01 June 2023 The Energy Law of the Republic of Lithuania established that household consumers, micro-enterprises and small enterprises as defined in the Law on Small and Medium Business Development of the Republic of Lithuania shall have the right to unilaterally terminate the contract for the sale and purchase of electricity or the contract for the sale and purchase of electricity and provision of the transmission service to an independent supplier, and shall have the right to change the independent supplier.
According to the legislator, it is prohibited to provide for termination fees, switching fees and penalties to be charged to the consumers referred to in this paragraph for the unilateral termination of a contract for the sale and purchase of electricity or a contract for the sale and purchase of electricity and the provision of a transmission service.
Recent case law has clarified that the provisions of Directive (EU) 2019/944 have been properly transposed into the Lithuanian legal system since the adoption of Law No XIV-483 of 30 June 2021, which meant that as of 15 July 2021, it was ensured that household consumers and small businesses would not pay any switching fees when unilaterally terminating their contracts.
In other words, even if the termination fee was provided for in the contract between the parties in the electricity sales contracts concluded after 15 July 2021, it cannot be applied to the termination of the contract in accordance with the legal framework. Even if a termination fee has been paid (on or after 15 July 2021), you have the right to claim its reimbursement.
According to the lawyer, both ordinary consumers and businesses (micro and small enterprises) have the right to review their electricity contracts and assess whether there are any objective criteria for choosing another electricity supplier, and not to pay any termination fee. Even if termination fees are fixed in the contract.
"This does not in itself mean that it is possible to initiate the termination of contracts in haste. It is necessary to responsibly assess whether all the necessary conditions for such action exist. It is therefore advisable to seek legal advice," points out the AVOCAD lawyer.