Discount as an Example of a Guarantee Instrument in the Field of the Consumer’s Right to Energy of an Adequate Quality

Abstract

The European Union obliged the member states to introduce monitoring and control tools in order to improve the quality of provided transmission services and to guarantee the contracted amount of energy to end users. However, the EU has left the member states the freedom to create and implement compensation tools, enabling customers to claim their rights arising from non-compliance by transmission companies with the provisions of distribution agreements. The introduction of quantitative energy monitoring and an appropriate compensation mechanism is of great importance not only for end users but also for distribution companies. For end users, this would be a tool to enforce their rights against transmission companies, while transmission companies would gain a tool to control and manage both legal and financial risks. The aim of this study is to analyze discount as an example of a guarantee instrument in the field of the consumer’s right to energy of an adequate quality based on the Polish example supported by a systematic legal review. In the EU, discount is not regulated directly at the EU level; hence, it is impossible to base it on acquis and analyze it through the prism of EU regulation. In Poland, the possibility for recipients to apply for a discount for poor-quality electricity was introduced into the first version of the Energy Law in 1998, long before the adoption of Directive 2019/944 by the EU. The fundamental issues that were addressed and discussed in this paper were as follows: (1) Is the discount compensatory in nature? (2) Should it be included in the compensation due to the consumer? (3) Is it possible to reduce it when the power supply interruption results from circumstances beyond the control of the energy company (e.g., unforeseen weather conditions)?

1. Introduction

Despite the fact that energy is covered by treaty law, it remains an area in which the European Union shares its competencies with the member states (Art. 4(2i) of TFEU). The integration in this field is progressing quickly due to existing threats and challenges faced by developed economies, related in particular to the achievement of the so-called energy neutrality as part of the implementation of the European Green Deal [1]. The Framework Strategy for a Resilient Energy Union published by the European Commission on 25 February 2015 as part of the 4th Energy Package is currently a reference point for the EU energy policy [2]. Its aim is to provide EU households and businesses with safe, sustainable, competitive, and affordable energy supplies. On 30 November 2016, the Commission presented the package “Clean energy for all Europeans”, which consisted of eight legislative proposals. From the point of view of the purpose of this study, Directive (EU) 2019/944 on electricity, which defines the structure of the electricity market, is the most important act. It should be noticed that each document concerning the energy market published by European institutions draws attention to the significant role of end users in shaping a modern energy market and stresses the need to protect energy consumer rights.

Energy rights are guaranteed not only under international law (see, e.g., Art. 14(2h) of the convention adopted by Resolution 34/180 of the UN General Assembly of 18 December 1979 on the Elimination of All Forms of Discrimination against Women) but also under national legislations (for example, France, South Africa, or Great Britain, where access to electricity is compared to access to running water) [3]. The EU legislation also shows the importance of access to energy for the development of communities. Recital 59 of Directive 2019/944 emphasizes that energy services are fundamental to safeguarding well-being. It also indicates electricity as a prerequisite for ensuring adequate warmth, cooling, and lighting, and energy to power appliances is essential in guaranteeing a “decent” standard of living and citizens’ health. Hence, the right to energy should be seen as one of the fundamental human rights [4]. Thus, it is subject to particular protection, serving not only the development of humanity but also the protection against energy exclusion. The right to access electricity from the protection of human rights perspective focuses on the existence of an economically available and technically accessible source of energy of adequate quality for personal and home use [3]. This means that this right is universal, and access to it must be real in geographical, economic, and physical terms. Electricity must therefore be “reliable”, which means its supply is constant and predictable, while deprivation of access to electricity is not arbitrary but rather based on objective premises, associated mainly with security of the network, the environment, unlawful use of the power grid, or the consumer’s violation of the obligation to pay for the delivered and used energy. Quality is therefore an element that completes the right to electricity, which must be protected. At the same time, the very deprivation of access to electricity should be procedurally safeguarded [5]. This is confirmed in the EU legislation that formulated the postulate of “prohibition of disconnection of electricity to vulnerable customers in critical times” (see Art. 28(1) of Directive 2019/944).

Out of all energy consumer rights, the economic and technical issues concerning selling the produced energy to the grid are the most frequently discussed in the literature. Nasir et al. [6] describe a cost-effective energy management system, Mohammad et al. [7] describe a home energy management system, and Li et al. [8] describe a flexible hybrid renewable energy system. Umar et al. [9] discuss the possibility of creating a blockchain-based trading platform for managing peer-to-peer energy transactions. Vieira and Zhang [10] present a peer-to-peer trading system that enables energy trading in micro-networks supported by smart contracts. Efficient, optimal, cheap, and easy-to-integrate energy management and energy trading systems constitute the basis for building awareness among end consumers, which may translate into greater involvement and participation of consumers in the energy market. Another problem that is relatively often discussed in the literature is power quality (PQ). That should come as no surprise as both unstable power quality and power outages are costly for end users and economies [11]. According to the Leonardo European Power Quality Survey, poor energy quality costs European businesses around EUR 150 billion a year. Bollen [12], Chattopadhyay et al. [13], Singh et al. [14], and Das et al. [15] study and discuss the problem of energy quality, its definition, methods of measurement, and its impact on the economy and consumer satisfaction. However, there is only limited research that discusses legal issues concerning broadly understood energy law, e.g., Talus [16], Kruger [17], Cottier et al. [18], Heffron [19], and Dobravec et al. [20]. Research into the legal aspects of energy consumer rights is even more limited, e.g., Bouzarovski et al. [21] discuss the problem of energy poverty in Europe, the reduction of which is the basis for the protection of consumer rights in the field of energy. Galende-Sanchez and Sorman [22] emphasized the importance of activating consumers in creating energy policies and laws, which should translate into increased customer satisfaction, co-production potential, and better coping with the energy crisis. Ines et al. [23] identified key barriers for renewable energy prosumers in the European Union. Sokołowski [24] described the legal framework for the recognition of prosumers and RES consumers. Lowitzsch et al. [25] extended the REP concept to clustering. Diestelmeier [26] identified and discussed the political implications of the use of blockchain technology on the EU electricity market, which would be the basis for the integration of prosumers as independent market participants. Grycan et al. [27] discuss the problem of the quality of electricity from solar farms in Poland and emphasize the lack of legal regulations in this way.

The aim of this study is to analyze discount as an example of a guarantee instrument in the field of the consumer’s right to energy of an adequate quality. Discount is not regulated directly at the EU level; hence, it is impossible to base it on acquis and analyze it through the prism of EU regulation. This is evidenced not only by a review of the EU legislation but also by the position of the Committee for European Integration, which provides justification for the draft law that introduces the discount to the Polish legal order [28]. That is why we used Poland as a case study and performed a systematic legal review to show how discount is functioning and implemented in the legal order and what its impact is on the effectiveness of consumer rights protection. The fundamental issues that must be resolved are, first, the legal nature of the discount (the possibility of accepting or rejecting the thesis that the discount is of a compensatory nature) and second, whether the discount may be applied toward compensation due to the consumer in the event of damage caused to the consumer by the energy company in connection with the interruption in the supply of electricity. The answers to these questions will also help to determine whether the discount may serve as an instrument that guarantees the consumer’s right to energy of an adequate quality. Establishing that the discount acts as compensation and that, by default, provisions of the Civil Code apply to it would weaken the consumer’s protection, taking into account the need to demonstrate, on regular terms, the premises of liability for damages, including the amount of the damage suffered. Such a qualification would also mean that the energy company could exempt itself from taking into account the discount in settlements with the customer by demonstrating premises that exclude liability, such as force majeure. This problem is not only theoretical but above all practical, as the answers to the above questions determine whether the energy company (Art. 3(12) of the Energy Law Act (hereinafter referred to as EnL)) may be discharged from granting a discount to a consumer (Art. 3(13) of the EnL) and whether it is possible to measure the amount of the discount depending on the facts and circumstances. It should be noticed that Art. 10(3f) of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (hereinafter referred to as Directive 2019/944) (OJ L 158, 14.6.2019, pp. 125–199) only lays down that contracts executed with consumers should specify “any compensation and the refund arrangements which apply if contracted service quality levels are not met, including inaccurate or delayed billing”. Going further, the reasoning for the draft law of 26 May 2000 amending the Energy Law Act (Journal of Laws 2000 no. 48 item 555), which introduced the discount to the Polish legal order [28], stipulates that the examination of the act’s compliance with EU law did not cover the discount. Therefore, this measure may provide an inspiration for further legislative works at the EU level that aim to harmonize the model of protection of energy consumers. This will be achieved by determining how useful the discount is to guarantee the consumer’s right to energy of an adequate quality and to answer the questions asked in the introduction about the place of the discount in the theory of law in the continental system (private law/public law).

2. Materials and Methods

The methodology used in this study was a systematic literature review, which should enable the reader to consult sources that are practical and relevant to the topic [29], as well as to show shortages in the current state of knowledge regarding the subject under analysis (Section 1). In addition, a case study analysis supported by a doctrinal legal approach was used to present and verify the issue of the discount as a tool for protecting the consumer’s right to energy in the context of Polish law. The research is based on the concept of interoperability of regulations in Poland and specifically on the derivative concept proposed by Prof. Maciej Zieliński [30]. These methods are important in the case of this study due to the scarcity of the literature and statements of representatives of the doctrine. Nevertheless, the judicature in Poland often referred to the issue of non-performance or improper performance of an obligation under an electricity sales contract. The juxtaposition of the statements of the judicature and representatives of the legal science with the results of theoretical and legal research serves as a starting point for conclusions as to the legal structure of the discount and its impact on guaranteeing consumers the right to energy of an adequate quality.

3. Consumer’s Right to Energy of an Adequate Quality—Technical and Economic Perspective

The consumer’s right to energy of an adequate quality means that it must be put in a broader perspective before it will be discussed in more detail. An analysis of EnL provisions, which implement European Community directives with respect to the electricity market, allows the identification of six basic consumer rights in the energy market [5,31].

(1)

The right of access to the grid, as the right to being connected to the distributor’s grid if it is technically and economically possible and the consumer meets the requirements for being connected to it and for receiving the energy continuously and reliably. This right also includes an obligation of non-discriminatory treatment of consumers who are in similar circumstances.

(2)

The right of purchase of electricity from a selected supplier or from a supplier of last resort if one does not exercise one’s right of choice.

(3)

The right of using the service of distribution of energy calculated on rates and terms of their use resulting from tariffs of a given distributor, approved by the president of the Energy Regulatory Office.

(4)

The right of choice of the type of contract under which a legal relationship between a consumer and energy company arises. This right boils down to deciding on whether the consumers want to sign two contracts, one with the supplier and the other with the distributor, or if they want to sign one, the so-called comprehensive contract, under which electricity will be sold and supplied.

(5)

The right to information. Additional information-related obligations toward household consumers rest with the supplier. It is necessary to point out the supplier’s obligation to inform the consumers about their rights, including the information on the procedure for bringing complaints and settling disputes (Art. 5(6d) of EnL), and the obligation to deliver to the household consumer a copy of “the collection of energy consumer rights” and to ensure public access to this collection (Art. 5(6e) and 5(6f) of EnL) [31]. “The collection of energy consumer rights” is included in a document prepared by the president of the Energy Regulatory Office in cooperation with the president of the Office of Competition and Consumer Protection on the basis of guidance from the European Commission and in consultation with national regulatory authorities, consumer organizations, social partners, energy companies, and other stakeholders. It includes practical information on the rights of consumers of electricity and gas fuels (Art. 5(6e) of EnL) [11] (p. 240). Information-related obligations of an energy company are very extensive and include, among others, the obligation to inform about a planned change in the contract, about the right to switch suppliers, about the structure of the energy sold, or about the consumer’s energy consumption (see more in [5]).

(6)

The consumer’s right of access to energy of an adequate quality that includes the right to the following:

• Receive electricity with specific qualitative parameters resulting from the provisions of the ordinance of the Minister of Economy of 4 May 2007, on the detailed conditions for the operation of the electric power system (Journal of Laws No. 93, item 623, as amended), passed on the grounds of Art. 9(3) and 9(40) of EnL (“Electric System Ordinance”—“ESO”).
• Call on the distributor to verify that qualitative parameters of the energy supplied from the grid are maintained by taking appropriate measurements. If the intended parameters match the standards specified in laws and the contracts, then the costs of the verification and of the measurement are borne by the consumer on the terms specified in the distributor’s tariff.
• Call on the distributor to take immediate actions to remove energy supply interruptions caused by a grid malfunction.
• Request from the distributor to check the correctness of operation of the measurement and settlement system. The inspection should be conducted no later than 14 days from the date of the notification. The consumer covers the cost only if no irregularities are reported.
• Submit to the supplier or the distributor (depending on the provisions of the contract) notifications and complaints on the supply of energy from the grid.
• Receive with at least five days’ notice information from the distributor about the dates of planned interruptions in energy supplies. Such information should be provided in the form of press, internet, radio, or television announcements or in another manner customarily accepted in a given area.
• Receive from the distributor information on an intended date of resumption of supply of energy interrupted due to a grid failure.
• Receive free information on settlement rules and current tariffs.
• Receive with at least one year’s notice written information from the distributor, about the need to adapt devices and installations to the changed rated voltage, increased short-circuit currents, changes in the type of connection, or other network operating conditions.

The analysis of the rights described above associated with access to energy of an adequate quality allows a claim that these rights may be classified under three fundamental sub-groups. The first group will include rights related to the electricity quality itself (a and b), the second will encompass rights related to safeguards of energy supply and verification of the amount of energy supplied (c and d), and the third group will include rights related to the quality of customer services (e–i). Therefore, the right to energy of an adequate quality is not only a right that refers to energy parameters (as discussed below) but also a right of a guarantee nature that ensures the adequate quality of consumer service.

Power Quality Characteristics

Parameters specifying the power quality and the permissible ranges of their deviations in low-voltage networks (up to 1 kV) are defined in the standard EN 50160:2010 “Voltage characteristics of electricity supplied by public distribution systems”. It should be emphasized that the EN 50160 standard was not mandatory for European countries; however, for most countries, it was the basis for creating their national solutions defining the power quality. This is one of the reasons why there are differences among countries in terms of PQ definitions and discrepancies in the use of power quality indicators. For example, according to the 4th Benchmarking Report on Quality of Electricity Supply in France, Hungary, Netherlands, Norway, Portugal, and Spain, the national PQ standards differ from the norm EN50160 [32]. The European standard PN-EN 50160 adopted in Poland lists the main voltage parameters in low- and medium-voltage networks under normal operating conditions. According to it, the indicators of voltage quality are the following parameters: frequency, voltage level and its variability, sudden voltage drops, periodic or transient voltage swells, voltage harmonics, and voltage fluctuations. The individual customers fall under the so-called fifth connection group. These are entities whose equipment, installations, and networks are connected directly to the grid with a rated voltage of no more than 1 kV, a power of connection not greater than 40 kW, and an ampacity of pre-meter protection not greater than 63 A. Quality parameters of electricity for this group are specified in great detail in the program regulation. Therefore, for the energy company to meet them, it must ensure the following:

(1)

The average value of frequency measured for 10 s is in the following ranges:

(a)

50 Hz ± 1% (from 49.5 Hz to 50.5 Hz) for 99.5% of the week;

(b)

50 Hz −6%/+4% (from 47 Hz to 52 Hz) for 100% of the week.

(2)

In each week, 95% of the set of 10 min RMS average values of the supply voltage should remain in the deviation range of ±10% of the rated voltage.

(3)

For 95% of the time of each week, the long-term perceptibility (Ptl) caused by variations of the supply voltage should not be greater than 1.

(4)

In each week, 95% from the set of 10 min RMS average values:

(a)

The symmetrical component of the negative sequence of the supply voltage should be between 0% and 2% of the value of the positive sequence component;

(b)

For each harmonic, the supply voltage should be less than or equal to the values specified in the program regulation.

(5)

The total harmonic distortion (THD) that takes into account harmonics up to 40 should be less than or equal to 8%.

In order to obtain parameters of the supply voltage in boundaries specified in points 1–5, the recipient must consume power not greater than contracted capacity, where the coefficient tg φ is not greater than 0.4.

End users who do not have at home specialized software for energy management only in glaring circumstances, such as falling voltage, are able to presume that the supplier does not fulfil its obligations and does not provide them with energy of appropriate quality. All the rest of the cases are power outages that are easy to notice. From the industrial perspective, to ensure the comparability of units in terms of power quality, in 1998 the IEEE Power Engineering Society published Standard 1366, which proposed twelve different power quality indicators (SAIFI, SAIDI, CAIDI, CTAIDI, CAIFI, ASAI, CEMIn, ASIFI, ASIDI, MAIFI, MAIFIE, and CEMSMIn). As for now, this list of indexes was extended by many more, and new ones are created such as the CPQI Index [33]. The most commonly used are SAIDI and SAIFI for the measurement of energy supply continuity for the distribution network and ENS and AIT for measurement of the continuity of energy supply for the transmission network:

• SAIDI (System Average Interruption Duration Index) is a measure of an average total time of no energy supply to the customer, which is the number of customers exposed to the effects of all short interruptions during the year, divided by the total number of customers served.
• SAIFI (System Average Interruption Frequency Index) is a measure how often an average customer suffers interruption in energy supply, which is the number of customers exposed to the effects of all interruptions during the year, divided by the total number of customers served.
• ENS (energy not supplied) is an indicator of electricity not delivered by the power transmission system, expressed in MWh per year, being the sum of the products of the power not delivered as a result of the interruption and the duration of this interruption, including short, long, and very long interruptions, including catastrophic interruptions and excluding these interruptions.
• AIT (average interruption time) is the average duration of interruption in the power transmission system, expressed in minutes per year, being the product of the number 60 and the ratio of energy not supplied by the power transmission system (ENS) divided by the average power delivered by the power transmission system, expressed in MW.

These indexes can be counted for planned and unplanned energy outages. It should be noted that the definition of indicators differs among countries [32], so they should be analyzed and compared with caution: e.g., in Bulgaria, Croatia, Greece, Latvia, and Germany, the SAIDI and SAIFI Index contains only low and medium voltage; in Poland the low voltage is not included; and in Portugal, the total SAIDI and SAIFI results are calculated only for low voltage. To measure interruptions in the Irish transmission system, the system minutes lost indicator is used instead of AIT and ENS.

4. Regulation of the Discount in Polish Law

The energy company grants discounts or compensations for failure to meet the quality standards of services provided to the consumers at the amount specified in the tariff or in the contract (Art. 45a(3) of EnL). Currently, the notion of “compensation” is no longer used in the executive regulations to the Energy Law Act, which has not been reflected in Art. 45a(3) of EnL [34]. The said provision specifies circumstances in which “discount or compensation” may be applied. The legislator links this possibility with “failure to meet the quality standards of the services provided to the customers”. Hence, in order to determine what a “discount” is at its core, it is necessary to refer to the provisions regulating the manner in which energy supply contract should be executed. The act provides a very general regulation of the institution of the discount. Art. 46 of EnL contains authorizations to issue executive acts in the field of gaseous fuels (Art. 46(2)(6) of EnL), electricity (Art. 46(4)(8) of EnL), and heat (Art. 46(6)(8) of EnL), the subject of which is to regulate the method of calculating discounts for failure to maintain the quality parameters and quality standards of services provided to the consumers. Bearing in mind the above, it is necessary to refer to the provisions of the regulations issued in the field of electricity on the basis of the Energy Law Act:

• Electric System Ordinance;
• Ordinance of the Minister of Energy of 6 March 2019 on the detailed rules for the development and calculation of tariffs and settlements in electricity trade (Journal of Laws of 2019, item 503, as amended), passed on the grounds of Art. 46(3) and (4) of EnL (“Electric Tariff Ordinance”—“ETO”).

In accordance with the Energy Law Act, in electricity sales contracts, contracts for the provision of transmission or distribution services for gaseous fuels or energy, and comprehensive contracts (Art. 5(2)(1) and (2) and Art. 5(3) of EnL), one of the essential elements is the determination of the amount of the discount for failure to meet the technical parameters of energy and quality standards of customer service [35] (p. 537). Discount rates are determined by energy companies in their tariffs (Art. 3(17) of EnL, § 4(1)(3a) and § 5 of ETO), which, as a rule (see Art. 49 of EnL), are subject to approval by the president of the Energy Regulatory Office (Art. 47(1) in connection to Art. 45 of EnL). Discounts given by energy companies may also be specified directly in the contracts with the consumers (Art. 45a(3) of EnL). In such cases, priority should be given to the contractual regulation, in the absence of which the provisions of the tariff set in genere by the energy company will apply [36]. Pursuant to the act, any energy company operating under the license for gaseous fuels, electricity, and heat, regardless of whether in its settlements with the consumer it applies a tariff approved under Art. 47 of EnL or uses prices or fees that are not subject to approval, is obliged to grant discounts to the consumers [36]. According to the Electric Tariff Ordinance (§ 40–42), a discount can be granted by the energy company to the consumer for the following:

• For failure to deliver voltage within acceptable voltage deviations specified in separate regulations (parameters of electricity quality and relevant norms are regulated in § 38 and § 39 of the Electric System Ordinance);
• For each unsupplied unit of electricity;
• In the event of the company’s failure to meet the quality standards with regard to customer service:

  (a)

  For failure to accept any notifications or complaints from the consumer;

  (b)

  For unreasonable delay in removing disruptions in electricity supply caused by any malfunctions of the power grid;

  (c)

  For refusal to provide consumers, on their request, with information about the anticipated time of resumption of energy supply discontinued due to a power grid failure;

  (d)

  For failure to notify consumers, at least five days in advance, of the dates and duration of planned interruptions in the supply of electricity;

  (e)

  For failure to notify consumers supplied from a grid with a rated voltage higher than 1 kV of the dates and duration of the planned interruptions in the supply of electricity;

  (f)

  For failure to notify in writing consumers supplied from a grid with a rated voltage higher than 1 kV of the scheduled changes to the settings of automated power protection systems and other parameters that influence operational interaction with the grid;

  (g)

  For failure to notify in writing consumers supplied from a grid with a rated voltage of not more than 1 kV of the necessity to adjust the installation to the changed supply conditions;

  (h)

  Fsor failure to notify in writing consumers supplied from a grid with a rated voltage higher than 1 kV of the necessity to adjust the installation to the changed rated voltage, increased short-circuit power level, and other operating conditions of the grid;

  (i)

  For an unjustified refusal to take appropriate actions on the grid, at a charge, in order to enable the safe performance of works by the consumer or another entity in the area of influence of the grid;

  (j)

  For failure to provide, at the consumer’s request, information on the rules of billing and current tariffs;

  (k)

  For extending the 14-day period for processing the consumer’s request or complaint regarding billing rules and answering queries;

  (l)

  For extending the 14-day period for checking the performance of the metering and billing system or for extending the 14-day period for laboratory testing of the performance of the metering and billing system;

  (m)

  For preventing the performance of additional expertise of the tested metering and billing system, at the consumer’s request submitted within 30 days from the date of receiving the laboratory test results.

In the context of the issue analyzed herein, it is essential that the rate of the discount results directly from the provisions of law. The Electric Tariff Ordinance clearly specifies the method of calculating discount rates by providing the following:

(1)

A formula for calculating deviation of the voltage from acceptable standards (§ 40 of ETO):

• If the value of the voltage deviation from admissible limits does not exceed 10%, the consumer is eligible for a discount (W_UT) in a 24 h period in the amount calculated according to the following formula:

  $$W_{UT}={\left(\frac{\Delta U}{10\%}\right)}^2{A}_T{C}_T$$

  (1)

  where individual symbols stand for the following:
  • ΔU—the value of voltage deviation from the limits of voltage deviation from the rated voltage [in %] laid down in separate laws;
  • A_T—the quality of the electricity supplied to a consumer during a 24 h period [in units of energy];
  • C_T—the price of electricity referred to in Art. 23(2)(18b) of EnL, binding in the period in which the voltage deviation from the limits of voltage deviation from the rated voltage laid down in separate laws occurred [in PLN per unit of energy].
• However, if the value of the voltage deviation from admissible limits does exceed 10%, the consumer is eligible for a discount in a 24 h period in the total amount calculated according to the following formula:

  $$W_{UT}=A_T{C}_T+b_{rT}{t}_T$$

  (2)

  where individual symbols stand for the following:
  • A_T and C_T—as defined above;
  • b_rT—a discount for failure to maintain the voltage level within the admissible limits of the voltage deviation from the rated voltage [in PLN per hour], specified in separate laws, fixed in a tariff;
  • t_T—the total time of failure to maintain the voltage level within the admissible limits of the voltage deviation from the rated voltage [in PLN per hour], specified in separate laws [in hours].

(2)

The multiple (10 or 5 multiple) of the average price of electricity determined in accordance with Art. 23(2)(18b) of EnL for the failure to supply electricity (§ 41 of ETO);

(3)

The appropriate portion (from 1/10 to 1/250) of the average earnings in the national economy in the calendar year preceding the year when the tariff was approved, stipulated in the announcement of the Head of Statistics Poland with regard to the breach of quality standards of customer service by an energy company (§ 42 of ETO).

Pursuant to § 43(2) of ETO, the energy company grants the discount within 30 days from the date of the incident justifying the consumer’s claim. As a rule, the energy company with whom the consumer concluded a contract for the transmission or distribution services of energy or a comprehensive service contract applies the discount granted in the nearest billing period. This means that the discount reduces the consumer’s liability arising out of the purchase of electricity.

5. An Attempt to Establish the Legal Nature of the Discount

The legislator did not determine the legal nature of the discounts in the act [36]. Hence, it is justified to ask whether the discount for failure to meet quality standards of customer service and quality parameters of electricity constitutes an institution similar to a statutory penalty (Art. 485 of CC) or whether it is a “monetary recompense” consumers are entitled to regardless of the reasons that led to the improper performance of the contractual liability by the energy company.

The answer to this question is essential for a correct application of regulations on discounts and discount rates (Art. 485 of CC in conjunction with Art. 484(2) of CC), as well as for ensuring that the debtor is not discharged from the obligation to provide the service by paying the statutory penalty (Art. 485 of CC in conjunction with Art. 483(2) of CC) [37] (p. 1331). In this regard, it is particularly important—for practical reasons—to establish whether the discount foreseen in Art. 484(2) of CC may, or may not, be applied. The doctrine aptly points out (contrary to the dominant opinion of the judiciary [38]) that if no damage is proven, the debtor may be fully exempted from the obligation to pay the contractual penalty (statutory penalty in this case), whereas if minor damage occurs, there is a necessity for the penalty to be measured [39]. Naturally, a statutory penalty may not lead to the creditor’s enrichment. Therefore, if the obligation has been executed in the large part or if the penalty is excessive, the statutory penalty should be mitigated (reduced proportionally to the damage) (Art. 485 of CC in conjunction with Art. 484(2) of CC). This would enable an energy company to fend off accusations considering the size of the damage incurred by the consumer as a result of the failure to supply energy or violation of customer service standards, and in consequence, it would result in the limitation of the company’s liability. Moreover, the adoption of the concept that the discount regulated in the Energy Law Act is in fact a statutory penalty would require recognition that the energy company will be exempt from including it in settlements with the consumer in the event of power supply interruptions that occurred for reasons not attributable to the company. Since the purpose of a statutory penalty (similarly to the contractual penalty) is to compensate for damage resulting from the non-performance or improper performance of an obligation (through payment of a lump-sum compensation specified in the regulations) [40] and the provisions on the contractual penalty apply accordingly (Art. 485 of CC), the liability in this case is based on the principle of guilt [41]. Thus, it would be possible for an energy company to be exempted from the obligation to grant a discount by proving the existence of a circumstance releasing it from liability, which, in this case, would be damage caused by a third party or by the consumers (creditors) themselves (e.g., by damaging the power line) or force majeure (e.g., power outages resulting from bad weather).

The institution of statutory penalty is regulated in Art. 485 of CC. It provides that if a specific provision stipulates that in the case of non-performance or improper performance of a non-pecuniary obligation, the debtor, even without a contractual reservation, is obliged to pay the creditor a specified amount, the provisions on the contractual penalty apply accordingly. The term “statutory penalty” (“normative penalty”) is applied in reference to the debtor’s obligation, arising from the provisions of the act, to pay a specific amount to the creditor in the event of non-performance or improper performance of a non-pecuniary obligation. Such penalties may also arise from ordinances passed on the basis of acts [37] (p. 1330). The doctrine equates statutory penalty with lump-sum compensation for non-performance or improper performance of non-pecuniary obligations, which are determined in terms of tariffs or percentages [37] (p. 1330). The grounds for that are provided, e.g., in the Telecommunications Law (Art. 105(1) of the Act of 16 July 2004—Telecommunications Law, Journal of Laws of 2021, item 576, as amended), which specifies the compensation due to the subscriber for each day in which the subscribed service was not provided [42]. It is thus indisputable that the statutory penalty has a compensatory nature (flat rate compensation) intended to remedy the damage incurred by the creditor caused by the debtor’s breach of contractual obligations. Since the fundamental role of statutory penalty is to redress the damage, it is necessary to determine whether the purpose of discount is also to compensate for the damage incurred by the creditor (electricity consumer).

The institution of discount was scrutinized in one of the judgments passed by the Supreme Court [43]. The case adjudicated by the Supreme Court refers to the reality of awarding discounts in Poland to energy consumers. The plaintiff, an energy company, was penalized by the president of the Energy Regulatory Office with a fine of PLN 500,000 for failure to perform the obligation to apply the tariff, in accordance with the terms specified therein, specifically, the discount for power outages (Art. 56(1)(6) and (12) of EnL). The penalty was imposed on the company as a result of unforeseen bad weather conditions in January 2010, which, as a result of heavy snowfall, frost, and wind, caused icing of power lines and tilting and breaking of snow-laden trees and branches near power lines [44] (pp. 129–133). In consequence, the power outages lasted an unusually long time, that is, up to 410 h. Yet, despite the contractual obligation, the energy company refused to award discounts for these unplanned power outages. The company was planning to exempt itself from liability for the damages by proving the presence of exculpatory circumstances, which in casu took the form of force majeure (sudden and unforeseeable weather breakdown) [44] (pp. 129–133).

The Supreme Court pointed out that a “discount” is a reduction in the regular price of goods or services, whereas “discounted sale” falls within the scope of a standard sales contract in which the buyer acquires ownership rights to certain goods at a discounted price, i.e., lower than the price for which the seller had previously offered the product on the market [45] (pp. 86–88). Thus, in the opinion of the Supreme Court, discounts are not compensatory in nature since they apply regardless of whether damage or loss has arisen, and their essence lies in reducing the purchase price of electricity caused by the supplier’s failure to meet the quality standards (including, for example, failure to deliver electric energy). The obligation to pay the discounted price and the discount terms are clearly defined (cf. e.g., Art. 5(2)(2) of EnL). Moreover, applying a literal interpretation of the provisions of Art. 45(1–3) of EnL, the Supreme Court noticed that a “discount” constitutes a price component of electricity that results from the tariff or contract. In effect, the consumer is eligible for the discount regardless of whether any damage—or not—has been caused to the consumer’s property. Indeed, failure to meet the terms and conditions of the contract, e.g., by failing to supply electricity for a certain period, results in the obligation to apply the discount. Hence, regardless of the circumstances, the discount must be applied to the consumer’s bills. Consequently, fault of the energy company or the lack of it does not affect this obligation.

Another argument in support of the adopted interpretation comes in the provisions of § 41 of the Electric Tariff Ordinance. These provisions clearly state that the prerequisite for granting a discount involves a joint appearance of (1) a power outage and (2) its duration (cf. § 41(2) of ETO), whereas the rated voltage that should have been supplied (<1 kV/>1 kV) affects the discount rate. As it comes to the amount of unsupplied power on the day on which the power interruption occurred, it is estimated on the basis of power consumption on a respective day of the preceding week, adjusted by acceptable power interruptions specified in the contract or separate provisions. The “separate provisions” referred to in § 41(2) of ETO are the provisions of § 40 of ESO, according to which there are two types of interruptions—planned and unplanned. The first are outages resulting from the power grid maintenance program, whereas the latter are interruptions caused by a failure in the power grid. Both types of outages, depending on their durations, are classified as temporary outages (“momentary interruptions”), short, long, very long, and catastrophic power outages. Catastrophic power outages include blackouts and power line failures, i.e., all outages that last more than 24 h. In the regulation, the minister also specified the permissible duration of interruptions for electricity consumers, and for entities belonging to the fourth and fifth connection groups, the permissible duration of a single unplanned interruption in the supply of electricity may not be longer than 24 h. It is thus obvious that a blackout lasting for several days, and in some cases even for several weeks, may have given rise to the energy company’s obligation to grant a discount.

Based on the above opinion of the Supreme Court, it can be concluded that the regulation of the discount makes its payment independent of the cause of the interruptions in the electricity supply, and the lack of indication in the regulations of circumstances excluding the obligation to grant a discount indicates that it is absolute. Therefore, the discount is a reduction in the price payable to the supplier for failure to supply electricity for periods of time exceeding the legal limit. The Supreme Court concluded that such a discounting framework should motivate energy companies to provide services of the highest quality and to ensure the optimal maintenance of power grids.

6. Results and Discussion

The aforementioned opinion of the Supreme Court [43] may be treated as an argument for acknowledging that the obligation to apply discounts can be neither discharged nor limited by the contract. Moreover, the discount rates cannot be lower than those defined in the regulations passed on the grounds of Art. 46 of EnL [36]. This extremely consumer-friendly interpretation of the provisions creates a situation in which, for example, interruption of natural gas supply caused by a military conflict outside the territory of Poland, e.g., at the place of its extraction or transit, which will lead to disruptions in supplies, will result in an obligation to grant a discount. Ipso facto, an energy company cannot invoke force majeure as an exclusionary premise that would release it from responsibility in such circumstances [46]. It must be emphasized that in the event of the limitation or interruption of supply of power, an energy company has no grounds to charge variable fees, which reduces its revenues [36].

It should be thus acknowledged that the discount reduces the amount of the pecuniary benefit (price or fee) in connection with the performance of a lower-quality non-pecuniary service, and the function of the discount is to align payment and service quality and not to compensate the damage caused. This implies that legal scholars and commentators are right in asserting that a discount is not compensatory in nature [46,47,48]. Hence, the service defined under the provisions of Art. 45(3) of EnL is a reserved service to be provided in the event of non-performance or improper performance of an obligation also due to circumstances for which the debtor is not responsible. In such a case, the energy company has an absolute obligation to [49] provide “monetary recompense” from which it cannot be discharged. However, the purpose of the discount is not expressly to complete an incomplete service rendered by the supplier by reducing consumer chargers in order to restore economic equivalence between services rendered by parties based on a reciprocal contract. This is, first, because the discount can also be granted for inadequate customer services such as, e.g., failure to notify consumers about the time of removing the power grid failure, and second, the discount rates can be adjusted. It must also be noted that in cases where the discount may be treated as a balancing measure intended to level out the financial value of services rendered by parties, the value of the discount significantly exceeds the value of a non-pecuniary service provided by the energy company, e.g., in the event of a failure to supply energy, pursuant to the regulations, the discount rate is set at an amount at least five times higher than the value of the electricity lost by the consumer. This means that the discount is not merely an instrument meant to restore the contractual balance distorted by the energy company’s failure to provide services on terms agreed in the contract. This “non-equivalence” in terms of comparing the value of non-supplied energy with the value of the discount proves that the discount is supposed to play a different role than to compensate and level out losses (complement the non-equivalent service of one party). This holds true even despite the fact that the equivalence of services does not mean that they are nominally equivalent.

Undoubtedly, it is difficult to unequivocally categorize discounts from a strictly dogmatic point of view. The analysis conducted for the sake of this study suggests only that discounts do not have a strictly compensatory character. As aptly pointed out in the academic literature, the discount is due ex ante—after certain contractual obligations listed in implementing acts are violated by an energy company [50]. However, this circumstance—contrary to the opinions of some researchers [50]—does not affect the categorization of the discount in the case of a contract for the transmission and distribution and a comprehensive contract regulated under Art. 5(3) of EnL as a “normative penalty” that is supposed to play a “compensatory role”. The mere moment of granting the right to a discount does not affect its role and potential categorization as a kind of a compensation benefit. Moreover, an argument against such a categorization is the possibility to claim compensation, based on applicable law, for the damage incurred by the consumer due to non-performance or improper performance of services. It should be noted that the mere granting of a discount does not exclude or restrict the amount of compensation the customer is entitled to in the event of, e.g., a power outage resulting also in material damage [51]. Moreover, in the said judgment, the Supreme Court has aptly remarked that the consumer may claim compensation for the damage caused by a power outage regardless of the discount received. This implies that the discount does not affect compensatory damages in accordance with the general principle of compensatio lucri cum damno.

The discount, therefore, cannot be forced into the framework of the “statutory penalty” known from the Civil Code. It is an institution separate from the statutory penalty, and it does not affect the consumer’s claim for compensatory damages from the paying of which the energy company cannot be exempt by proving that the failure to meet the contractual conditions was for reasons beyond its control. The discount, in its essence, results in reducing—regardless of the reason of the violation of the non-pecuniary contractual obligations—the amount of payment due to the energy company. The application of discounts or discount rates in settlements with the customer does not affect the energy company’s liability for damages. Since the discount does not affect the amount of compensations for damages for non-performance or improper performance of the contract, which implies that is has no compensatory function [51], it should be concluded that the role of the discount is to lead to the performance of the obligation of supplying electricity to the consumer.

Furthermore, an energy company whose activity consists in transmission or distribution of energy is obliged to maintain the operability of equipment, installations, and grids to provide supply in a continuous and reliable manner, with the observance of binding quality requirements (Art. 4(1) of EnL). This is an obligation under public law [52]. It is related to the activity of energy companies and their obligation under public law to ensure the energy security for the state, and it also sets conditions for proper performance of the services of transmission and supply of fuels and energy to consumers [53] (p. 25). The public law nature of the obligation is reflected in the fact that it is imposed on energy companies for the sake of public interest, specifically, to ensure that energy companies meet such a basic need as the continuous supply of electricity [52]. Hence, the non-performance of the obligation to supply energy without unreasonable interruptions [54] or energy that meets specific parameters constitutes a breach not only of a contractual obligation but also of an obligation under public law. In other words, the difficulty in the legal categorization of the institution of discount may be attributed to this very fact, i.e., the specific, mixed nature of obligations imposed on energy companies arising from energy sales contracts.

In conclusion, a discount plays two important roles, i.e., a stimulating role (motivating to provide the agreed service) and a repressive role (being a sanction for non-execution of the service for the creditor). This also means that the discount, the payment of which depends on the damage incurred by the consumer, must guarantee an adequate level of services and that the energy company meets its contractual obligations and obligations under public law. The consumer’s right to energy of an adequate quality is guaranteed by the discount introduced to EnL, be it for the very parameters of the supplied energy or for the degree of service. This is also the case due to the fact that other instruments known to civil law that could theoretically ensure the achievement of such an objective turned out to be insufficient. The reason for this is that they require the fulfilment of strict premises (vide Art. 471 ff. of CC) for the emergence of liability for damages. The construction of the discount, excluding the risk of the energy company releasing itself from liability even on the basis of force majeure, forces the implementation of the obligations of an energy company toward a consumer. In other words, a discount ensures automation and in consequence adequate stimulation to honor its commitments. Moreover, the comparison of the scope of application of the discount with the content of the right to energy of an adequate quality directly demonstrates that the Polish legislator matches the protection tool to its subject.

Finally, it must be noted that although the obligation to apply discounts in circumstances defined by the law is absolute, in some cases it is possible for an energy company to protect itself against financial claims. Such an option is viable in the event when the consumer did not cooperate with the company in the execution of the contract by, e.g., preventing or hindering the supply of electricity. In such cases the consumer’s claim for discount payment may be dismissed [55] by reference to the volenti non fit iniuria maxim. However, it has to be proven that the consumer’s lack of cooperation has affected the possibility for the energy company to directly meet its obligation by, e.g., preventing the company’s employees from entering the property in order to conduct repair works that would enable the supply of energy.

7. Conclusions

In conclusion, and taking into account the arguments raised above regarding the construction of the discount and its role as an instrument to guarantee the consumer’s right to energy of adequate quality, the following should be stated:

[1]

The discount is intended to level off the position of the energy consumer in relation to the energy company, and it also has a motivating and repressive function toward the energy company;

[2]

The discount itself does not serve to repair the damage related to the broadly understood failure to meet the terms of the contract by the energy company, because it does not have a compensatory nature;

[3]

The discount is a reduction of the price payable to the supplier for failure to supply electricity for periods exceeding the statutory limit, regardless of the reasons for the reduction in the qualitative and quantitative amount of supplied energy;

[4]

The discount does not determine the amount of compensation for the damage suffered by the recipient because of the failure of the energy company to meet the terms of the contract.

Therefore, it should be concluded that the discount itself, including the statutory method of calculating it, is an appropriate legal guarantee instrument to protect consumer rights to the energy of adequate quality.