BGH: Balance sheet allocation of electricity withdrawals at higher voltage levels in the event of supplier failure - recommended action for grid operators

*Update on the decisions of the Düsseldorf Higher Regional Court of 2 March 2023 (Ref. 5 U 1/22 and 5 U 3/22)

What are the decisions about?

In two decisions dated 17 September 2024 (case no. EnZR 57/23 and EnZR 58/23), the BGH recently ruled on the question of the balance sheet allocation in higher voltage levels in the event of an energy supplier default. On appeal by the plaintiff and the defendant, the BGH amended and revised the respective previous decisions of the Düsseldorf Higher Regional Court (we reported).

What happened?

In the facts of the cases underlying the decisions, the planned supply to end consumers at the medium-voltage level was no longer possible due to the insolvency of their new electricity supplier. The end consumers then concluded short-term transitional supply contracts with their previous electricity supplier. However, these supply contracts were not registered with the responsible grid operator in good time due to a system error on the part of the supplier. The grid operator then assigned the electricity consumption at the relevant market locations to the balancing group of the local basic and replacement supplier in accordance with the specifications for the low-voltage level. The local basic and replacement supplier invoiced the end consumers for the electricity supplied from the time of allocation. The assessment of these facts by the BGH (preceding: OLG Düsseldorf, decisions of 2 March 2023, 5 U 1/22 and 5 U3/22) was made from two different perspectives in the two sets of proceedings:

• In the proceedings EnZR 57/23, the (old) supplier, which - due to the insolvency-related loss of the new supplier - had concluded transitional supply contracts with the affected end consumers, asserted claims against the network operator (defendant 1) and the locally responsible basic and substitute supplier (defendant 2) for injunctive relief, removal and damages due to the disclosure and use of customer-related data and due to the (in their view) incorrect allocation of the end consumers to the balancing group of the basic and substitute supplier.
• In the proceedings EnZR 58/23, one of the end consumers concerned filed an action against the locally responsible basic and replacement supplier for repayment of the payments already made because of the balance sheet allocation to its balancing group.

Which aspects of the decisions are particularly relevant for network operators?

1. An allocation to the substitute supply, as stipulated in Section 38 (1) sentence 1 EnWG for the low-voltage sector, does not apply accordingly to cases of energy procurement at higher voltage levels. The requirements for an analogous application of Section 38 (1) sentence 1 EnWG are not met. There is neither an unintended regulatory gap nor is the situation of interest (special need for protection of household customers) comparable.
2. A contract between the end consumer and the default and replacement supplier cannot be established by including informative price sheets in the grid operator’s connection usage contract that refer to a replacement supply by the default and replacement supplier. The BGH left undecided whether an authorisation contained in the general terms and conditions of the network operator to allocate the delivery point of an end consumer to the default and replacement supplier in the event of a supply shortfall is invalid due to a breach of the prohibition of discrimination (Section 20 EnWG), the unbundling regulations (Section 6 EnWG) or the requirement of network neutrality (according to the opinion of the Düsseldorf Higher Regional Court).
3. The principles developed by the BGH in the area of low voltage, according to which the provision of energy represents a real offer by the basic supplier, which is implicitly accepted by the end consumer with the withdrawal, cannot simply be transferred to higher voltage levels. It depends on the circumstances of the individual case whether this actual behaviour (provision and consumption of electricity) can establish a contractual relationship. At higher voltage levels, an implied contract is not concluded by the withdrawal of energy if the end consumer is unaware of the failure of their supplier, or at least does not know who is supplying the electricity (outside of low voltage) and under what conditions. This also includes cases in which the end consumer has already concluded an electricity supply contract with another supplier and therefore had to assume that electricity would be supplied, but this supplier defaults and does not supply in breach of contract. If, on the other hand, there is no contract at all, a legal obligation in the form of management without an order may be considered in the meantime by making the electricity available. This continues to exist until the end consumer becomes aware of the “real offer” in the form of the provision of energy and an implied supply contract is concluded by accepting the electricity supply.
4. If an energy supplier fails at the medium-voltage level and there is no contractually agreed replacement supply, a connection block is the last resort. At least for the transitional period required to implement the disconnection, the grid operator must allocate the supply point to the balancing group of the supplier who, from the grid operator’s point of view, is likely to be able to ensure the supply in the short term. Blocking is in line with the specifications of the Federal Network Agency (GPKE 2017, page 42). However, in the opinion of the BGH, an immediate disconnection is not in the interests of the end consumer, who may not be aware of the outage of their supplier. A sudden cap would lead to considerable disadvantages, which is why a cut-off should only take place after a corresponding lead time.
5. The grid operator must carry out the allocation on a non-discriminatory basis according to objective criteria. In doing so, it must take account of grid stability, security of supply and the other interests of the end consumers concerned. If there is still a contractual relationship with the previous supplier at the time when the subsequent supplier ceases to exist, the grid operator must allocate the delivery point to this previous supplier beyond the end of the contract. If there is no contractual relationship, the network operator has the right to choose (within the scope of its duty to decide on a non-discriminatory basis according to objective criteria). The default and replacement supplier can also be considered suitable, but not on the basis of its position as a public default supplier, instead only if it fulfils the aforementioned criteria.
6. If the balancing group allocation was unlawful due to a breach of the prohibition of discrimination (Section 20 (1) EnWG), the grid operator must correct the incorrect allocation retroactively within the clearing periods if necessary. This also applies - contrary to MaBiS – even if the supplier to whom the delivery point was incorrectly allocated refuses to give its consent.

Checklist to be used in practice:

• Section 38 (1) sentence 1 EnWG does not apply (by analogy) at higher voltage levels.
• A contract between the end consumer and the basic and replacement supplier is not concluded by including informative price sheets in the connection usage contract.
• Whether the conclusion of a contract can be justified by corresponding general terms and conditions remains undecided.
• The principles applicable to low voltage for the implied conclusion of a contract through the provision and consumption of electricity are not transferable to higher voltage levels. Whether a contract is implied depends on the individual case.
• At the “start of the replacement/basic supply” process within the meaning of GPKE, the grid operator must first check whether the market location is at low voltage.
• Only if this is the case will the grid operator (initially) report the market location to the replacement/primary supplier.
• For market locations at higher voltage levels, in the event of a supply shortfall, the grid operator must allocate the delivery point for a transitional period (at least until the blocking is implemented) to the balancing group of the supplier that it believes is likely to be able to secure the supply in the short term.
• If there is still a contractual relationship with the previous supplier at the time of the subsequent supplier’s cancellation, the delivery point must be assigned to this supplier even after the end of this contractual relationship.
• The allocation must be non-discriminatory and based on objective criteria, considering grid stability, security of supply and other interests of the end consumers concerned.