If a small undertaking wants to terminate early a fixed-term, fixed-price electricity supply agreement, in order to switch supplier, it may have to pay a penalty under the agreement.
According to the CJEU case law, this penalty could even be equivalent to the full price of the electricity that the undertaking has committed to buy, even if it has not consumed that electricity and will not consume it in the future. Union law does not preclude such a practice, but national law also has a say.
In the event of early termination by a small undertaking of an electricity supply agreement concluded for a fixed term and at a fixed price for the purpose of switching supplier, that undertaking is required to pay the contractual penalty stipulated in the agreement, the amount of which may correspond to the full price of the electricity it has undertaken to purchase, even if that electricity has not been and will not be consumed, without the European Union law impeding such a situation.
Such a method of calculating penalties may be provided for in the agreement where the Member State’s legislation does not lay down any criterion for the calculation of such a penalty or for its possible reduction, in so far as the legislation, on the one hand, ensures that such a contractual stipulation must be clear, intelligible and freely consented to, and, on the other hand, provides for the possibility of an administrative or judicial redress in the context of which the authority before which the matter is brought may assess the proportionality of that penalty in the light of all the circumstances of the case and, where appropriate, require the reduction or annulment of the penalty.
