Vienna Court Overturns Electricity Price Increase by Verbund

The Vienna Commercial Court has overturned the electricity price increase of Verbund, the partially state-owned electricity group, which was set to take effect from May 2022. The decision was made after the Association for Consumer Information (VKI) sued Verbund on behalf of the Ministry of Social Affairs, claiming that the clause for adjusting the electricity work price was surprising and disadvantageous for customers. The judgment is not yet final.

The VKI explained that the legal basis for the increased tariffs charged since May 2022 no longer applies following the court’s ruling. The fees charged on the basis of the clause since the price increase must be reimbursed to the extent of the corresponding increase, according to the VKI.

In March 2022, Verbund announced a price increase for its household and commercial customers, which was set to take effect from May 1, 2022. It is not known how many customers were affected. At the end of 2021, Verbund had around 450,000 electricity and 80,000 natural gas customers. In the case of electricity, Verbund relied on a clause that referred to the Austrian electricity price index (ÖSPI), which is dependent on the stock market price.

However, the court ruled that the price adjustment clause was headed “Value protection working price,” which was surprising and disadvantageous for customers. According to the court, customers could not expect that this clause was not intended to compensate for general inflation but rather to depict a forecast of future wholesale prices. The court also noted that no “accidental profits” should be made possible in favor of one contracting party, and a clause that uses the ÖSPI as the basis for calculating price increases in the working price is not appropriate for the association in order to maintain the proportionality between service and remuneration and is therefore inadmissible.

VKI lawyer Maximilian Kemetmüller argued that Verbund’s customers had deliberately chosen the company as their contractual partner that claims to produce the electricity itself from 100 percent hydropower, and that there was no proper basis why the association should be able to use the stock market prices as a benchmark for value protection. Kemetmüller called on the association to make repayments to the extent of the corresponding increase amount to those affected.

Verbund has emphasized that every customer was informed of the clause clearly and in a way that was easy to understand when they agreed to it. The company also announced a further price increase as of March 1, 2023, on the basis of the clause. The energy price for existing customers with a standard load profile in the household segment will then rise to 23.9 cents net per kilowatt-hour (kWh).

The decision of the Vienna Commercial Court about electricity price increase has significant implications for electricity consumers in Austria, particularly those who are customers of Verbund. The ruling sets an important precedent for consumer protection and highlights the importance of clear and transparent pricing structures in the energy sector.