Vulnerability of consumers can have many causes. One is poverty, or low income. One of the most tangible problems of low-income consumers is energy poverty, which the EU Commission has described, in Commission Recommendation (EU) 2020/1563 on energy poverty, as “a situation in which households are unable to access essential energy services”. According to the EU Commission, nearly 34 million Europeans were unable to afford to keep their homes adequately warm in 2018, and warmth is only one aspect of energy supply. The Commission recognised that cooling, lighting, and energy to power appliances are essential services that underpin a decent standard of living and health, and that access to energy services is therefore essential for social inclusion.
EU law – universal service
The response of EU law to essential needs is its policy, and indeed legal instruments, on services of general interest, including energy supply. While one of EU’s goals was and is to create competition by breaking up monopolies, increasing market transparency and facilitating the switching of suppliers, the EU legislator has accompanied these measures with so-called universal obligations. Universal service means guaranteed access for everyone, whatever the economic, social or geographical situation, to a service of a specified quality at an affordable price. It is meant to serve as a safety net for those that energy suppliers are not interested in, for example due to their geographical remoteness, handicaps or low income. The element of access includes physical connection to the supply network as well as the supplier’s obligation to contract, while the Member States can impose that obligation on all suppliers or only one of them, the so-called supplier of last resort. Affordability is not defined, and it cannot be translated into an EU-wide price, as the purchasing power of customers greatly differs among EU Member States. Despite these general default rules, statistics gathered in 2023 reveal significant price differences between three countries that shall be compared in the following: the United Kingdom (which was still an EU Member State when this policy was developed), France and Germany. Whereas in the UK and Germany, the average price is 0.4 US dollar per kWh, it is only 0.28 US dollar in France.
EU law – protection of vulnerable consumers but unspecific
Even with universal service in place, many consumers are not able to pay their energy bills all the time. Therefore, EU policy has added another feature: the protection of vulnerable consumers. In its Consumer Policy Strategy 2007 – 2013, the EU Commission referred to social inclusion as part of its consumer policy and emphasised that no consumer is left behind. The New Consumer Agenda “Strengthening consumer resilience for sustainable recovery” of 2020 expressly addresses the “specific needs of certain consumer groups” as one out of five key priority areas. More precisely, the Commission stated: “Affordability is crucial to ensuring access to products and services for low income consumers (…). Some Member States use consumer protection measures alongside social protection measures to target low-income people. The Commission Recommendation on Energy Poverty (…) provides Member States with guidance on ways to address energy poverty, in order to empower vulnerable energy consumers.”
Indeed, there is much leeway for Member States to deal with energy poverty. While Article 28(1) Energy Market Directive (EU) 2019/944 requires Member States to take appropriate measures to protect customers and to ensure, in particular, that there are adequate safeguards to protect vulnerable customers, it leaves the definition of the concept of vulnerable consumers and the selection of appropriate measures to protect them to the Member States and only makes certain proposals. Thus, Article 28(1) goes on to explain that “(t)he concept of vulnerable consumers (…) may refer to energy poverty and, inter alia, to the prohibition of disconnection of electricity to such customers in critical times. The concept of vulnerable customers may include income levels, the share of energy expenditure of disposable income, the energy efficiency of homes, critical dependence on electrical equipment for health reasons, age or other criteria.” In relation to appropriate measures, Article 28(1) exemplifies providing benefits by means of their social security systems to ensure the necessary supply to vulnerable customers, or providing for support for energy efficiency improvements, to address energy poverty. As a result of this leeway, there are significant differences in the Member States’ policies and laws relating to vulnerable customers in the energy sector.
France
France has always placed great emphasis on social rights, and access to energy is one of them. The electricity price that the state-owned supplier EDF (Electricité de France) charges is regulated by law. There are also private suppliers who can determine their prices freely but EDF has a market share of around 80%.
According to Article L115-3 Code de l’action sociale et des familles, any person or family experiencing financial difficulties, particularly with regard to their assets, the insufficiency of their resources or their living conditions, is entitled to assistance from the community to have access to the supply of water, energy, a landline telephone service and an internet access service. Protective measures for persons that are below a certain threshold established by tax law include the right to an “energy cheque” and privileged treatment in case of delayed payment of the energy bill. Thus, the period for the first reminder is extended from 14 to 30 days, and if they still do not pay, the second letter with which the supplier would warn the customer of disconnection, or a supply cap must include information of the possibility to turn to the Fonds de solidarité de logement (FSL) for financial support. If a request to FSL is made, disconnection is preliminarily prohibited. FSL will respond within 2 months. If FSL does not help and the bill can still not be paid, the supplier can disconnect or cap electricity supply – but only in principle, as the law provides for further restrictions. Interruption of energy supply to the main residence is prohibited between 1 November and 31 March. During the rest of the year, energy supply must first be reduced, for at least one month, to the amount that is necessary to satisfy one‘s basic needs. In practice, customers that are with EDF are not disconnected at all, and customers that are supplied by other companies can switch to EDF any time.
Germany
Germany takes a different approach. The general idea is that welfare law provides every resident with sufficient funds to pay their energy bills. German energy law does not even mention vulnerable customers.
The law distinguishes between the supplier of last resort and other suppliers. Other suppliers are under no obligation to contract, and few safeguards exist against termination of a contract if the customer does not pay the bill on time. In this case, the customer will automatically be caught by the supplier of last resort. Low-income customers are usually supplied by the supplier of last resort.
Before the implementation of the Energy Market Directive in 2021, there were only a few fairly weak safeguards against disconnection. Disconnection was allowed when the unpaid bill exceeded 100 Euro (which is nowadays easily reached, in particular as the annual bill may be much higher than the sum of the monthly lump-sum payments), after a warning period of four weeks, and after a further announcement of the precise date of disconnection three days before disconnection. The law provided for an exception for cases where disconnection would be “disproportionate”, but without mentioning under what circumstances that might be the case. Some 400,000 households were disconnected every year.
With the implementation of the Energy Market Directive, Germany has not changed this approach conceptually but has introduced numerous practical improvements, thereby implicitly recognising to some extent the vulnerability of those that are typically affected by difficulties in paying their energy bills. Regarding the threshold above which disconnection is allowed, the second criterion of an amount exceeding two monthly bills was added, which is usually much higher than 100 Euro. The law now concretises that disconnection is disproportionate if there is danger for the life or health of the customer or his or her household members. Moreover, the supplier must inform customers what disproportionality means and how customers can raise it to avoid disconnection so that legally ignorant customers have a real chance to safeguard their rights. The warning period is still four weeks but the warning must include information on ways how to get help, for example, from welfare authorities, debt counselling or consumer advice bureaus. The final announcement period was increased from three to eight days, giving the customer a more realistic last chance to pay. Finally, the supplier must offer the customer an „avoidance agreement“, meaning instalments free of interest spread over at least 6 months, depending on the amount of debt. As a result, annual disconnections have fallen below 200,000 per year, despite the energy crisis.
United Kingdom
The United Kingdom is a special case in that it was the first country in the EU to liberalise the energy market, with drastic social consequences and a stark increase of so-called winter deaths. As a reaction, the UK introduced at an early stage a fairly robust system of safeguards, enshrined in the licencing conditions of the Gas and Electricity Markets Authority. That system was continuously developed further and has led to an immensely complex and complicated rulebook. That rulebook offers special rules concerning a „domestic customer in a vulnerable situation“. “Vulnerable situation” means that the personal circumstances and characteristics of a domestic customer create a situation where he or she is significantly less able than a typical domestic customer to protect or represent his or her interests; and/or significantly more likely than a typical domestic customer to suffer detriment or that detriment is likely to be more substantial. Suppliers are required to identify such customers and to establish a „Priority Services Register“ of persons that need additional support. The rules specifically mention persons of pensionable age, being chronically sick or having an impairment, disability or long-term medical condition.
Generally, the licencing conditions place much emphasis on crisis prevention. Suppliers have to proactively get in touch with customers if they become aware of payment difficulties through two consecutively missed monthly scheduled payments, one missed quarterly scheduled payment or notification by the customer of inability to pay the next charge. They have to inform customers on how to save energy and where to get help or advice, including on energy efficiency measures and social, financial and energy efficiency programmes. If payment problems arise, suppliers have to offer customers to pay charges by way of deduction at source from a social security scheme, by regular instalments, or to avoid debts by using a prepayment meter. Disconnection is only allowed if all these attempts fail. Disconnection of vulnerable customers, in particular persons of pensionable age and living alone or living only with persons who are of pensionable age or under the age of 18, is prohibited between 1 October and 31 March. Beyond this, the supplier must take all reasonable steps to avoid disconnecting domestic premises in winter if the occupants include a person who is of pensionable age, disabled or chronically sick (but also persons that are not vulnerable).
A peculiarity of the UK is the relatively frequent use of prepayment meters. According to the Council of European Energy Regulators (CEER), 14% of households in the UK use prepayment meters, whereas this is highly uncommon on the continent. Prepayment meters allow customers to control their consumption but they also entail the risk of self-disconnection, or hidden disconnection if customers do not (have the money to) feed the meter. In the prepayment meter scandal of 2022, 94,000 prepayment meters were even forcibly installed in homes without customers’ consent, which therefore forced customers to self-disconnect. To avoid this, the licencing conditions now provide for strict requirements for the imposition of a prepayment meter on customers. These include charges that are outstanding for three months or more, with no repayment plan in place, multiple attempts by the supplier to engage with the customer, compliance with the above-mentioned obligations to customers in payment difficulties, site visits to identify vulnerabilities and consideration of the precautionary principle and the priority service register. Moreover, if suppliers identify self-disconnection, they have to offer the customer emergency credit and friendly-hours credit (even at night or on the weekend) when the meter credit runs low or runs out, and in case of vulnerable customers additional support credit, and they have to inform customers of these credit facilities.
Comparison
Overall, this comparison shows quite different approaches between France, Germany and the UK, which even extend to the enforcement side. They can be best explained by meta-legal formants (in the terms of the comparative methodology that underlies the Common Core of European Private Law project. France strongly focuses on social rights and access to essential services, and protective measures do not depend on vulnerability beyond living on low income. In the UK, while many protective measures apply to all customers, there is a clearly defined group of vulnerable customers that enjoy special protection, namely persons that are of pensionable age, disabled or chronically sick. This is the group of persons that suffered most from deregulation of the electricity sector in the 1980s, with a sharp rise of so-called winter deaths. Non-compliance with the complex system of safeguards can trigger severe sanctions by the regulator. Germany in principle acts on the assumption that due to the welfare system, people have enough money to pay their bills, but had to acknowledge that this does not reflect reality, and has increased the level of protection generally, without, however, defining any group of customers as vulnerable. The focus is on self-responsibility, which is fundamental in the German civil law system, but since the implementation of the 2019 Electricity Market Directive at least on the basis of information that the supplier must provide.
The most visible difference between the approaches of the three countries is in the rules on disconnection in winter, which France prohibits entirely, UK in relation to vulnerable customers, and Germany only if the customer raises the disproportionality of that measure, due to danger to life or health in the individual case.
Posted by Prof. Dr. Peter Rott, Carl von Ossietzky University Oldenburg
British Association of Comparative Law 
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