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Synchronization of the Restoration of Violated Economic Interests in Energy Supply Relations: Legal Issues and Legislative Support
 
PIIS231243500025249-1-1
DOI10.18254/S231243500025221-1
Publication type Article
Status Published
Authors
Petr N. Maksimenko 
Occupation: Division Head of the Department of Legal Expert Examination and Legislative Initiatives of Mosenergosbyt, JSC
Affiliation: Mosenergosbyt, JSC
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 1
Pages52-60
Abstract

In the process of fulfilling contractual obligations for energy supply, cases arise in which a change in the previously fulfilled volume of obligations is required.

In such situations, in order to prevent mutual violation of the rights and legitimate interests of the parties to all contracts executed in the process of energy supply, it periodically becomes necessary to clarify the scope of obligations fulfilled.

At the same time, the law does not contain an unambiguous procedure for correcting such errors, and in law enforcement practices, various approaches are being defined about error tolerance and limits of their elimination.

In this regard, it is advisable to develop legal arrangements that allow synchronizing the procedure for restoring the economic interests of subjects of contractual relationships in energy supply.

The positions, judgments, and statements contained in this article are the author’s private opinion and may not coincide with the official position of the organization in which he works, or any other organizations.

Keywordsenergy supply contract, retail electric power markets, electric power industry, energy law, private law
Received20.02.2023
Publication date31.03.2023
Number of characters27856
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1 1. Introduction
2 An energy supply contract serves as the main and most common contractual structure that ensures the sale of electric power in retail markets, that is, to end consumers of electric power.
3 The Civil Code of the Russian Federation (hereinafter referred to as the “Russian Civil Code”) determines that when entering into an energy supply contract, electric power metering shall be organized (Clause 2 of Article 539), providing measurement of consumption (Article 541), on the basis of which further calculations shall be performed (Article 544).
4 Federal Law No. 35-ФЗ, dated March 26, 2003, on Electric Power Industry and the Main Provisions on the Operation of Retail Electric Power Markets, approved by Decree of the Government of the Russian Federation No. 442 dated May 4, 2012 (hereinafter referred to as the “Electric Power Industry Law” and the “Main Provisions”, respectively), specify that the contractual structure of energy supply, involving the application of the one-stop-shop principle for the consumer, applies if the latter has applied for entering into a contract with an electric power provider of last resort or an energy sales organization (hereinafter referred to as the “provider”) with the simultaneous settlement by the provider of electric power transmission relations with a local grid operator (hereinafter referred to as the “LGO”) in the consumer’s interests. [1]
5 For the consumer, such a structure of contractual relations is the best possible, since it eliminates excessive transaction costs associated both directly with the need to enter into another contract with another market participant (LGO), and monthly administration of settlements with an LGO. For the consumer, all relationships related to the acquisition and use of electric power are centralized through the provider of last resort.
6 However, in such a situation, the provider is assigned an additional function of comprehensive administration of electric power turnover in general, related to the organization of metering and calculations for net supply not only with the consumer, but also with an LGO, based on the generated consumption volumes.
7 In such a chain of legal relations, as in any other commercial relations, the occurrence of certain errors is inevitable, information about which may appear to any of the parties to contractual relations not only in the billing period, but also upon its completion.
8 In general, errors in the performance of contractual obligations may be caused by wrong determination of the volume of net supply or the use of a wrong price (tariff) when making calculations.
9 Having regard to the high level of public legal impact on contractual relations in the retail electric power markets, which are the core of functioning of the economy and the public life activities as a whole, [2] according to the Articles of the Electric Power Industry Law, which is expressed both in increased control (supervision) over the activities of providers, and in detailing the procedure for entering into and fulfilling contractual obligations, as well as taking into account the priority of the provisions of industry-specific laws over the provisions of the Russian Civil Code in terms of regulating an energy supply contract, it must be borne in mind that the elimination of such errors, even if they are very simple in nature, is very difficult in the absence of special legal norms defining the procedure for the actions of the parties in such situations.
10 Since any confirmed fact of fulfillment of an obligation under a contract with a deviation from the required Clause meters entails economic damage to one or another party to the contract (hereinafter referred to as the “errors”) or a group of contracts, it should be possible to restore the violated economic interest of each party to the legal relationship.
11 This approach will fully comply with both the basics of building civil law relations, in particular equality of the parties to contractual relations and ensuring the restoration of violated rights (Clause 1 of Article 1 of the Russian Civil Code), and the principles of functioning of the electric power industry, including compliance with the balance of economic interests of the parties to a contract (Clause 1 of Article 6 of the Electric Power Industry Law).
12 In this regard, it is necessary to search for legal mechanisms to resolve such situations in view of the specifics of the turnover in electric power supply.
13 2. Private Law Qualification of Error Correction Procedure
14 The energy supply contract by its legal nature refers to a type of contract of sale and purchase, which is supported by both the legislator (including through the including of energy supply contracts in the Contract of Sale and Purchase section of the Russian Civil Code) and the doctrine. [3]
15 In the classical buyer-seller relationship, the Russian Civil Code determines the procedure for the parties to a contract in identifying deviations in the volume of obligations fulfilled.

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1. Modern Market Electric Power Industry of the Russian Federation, 3rd edition / Edited by Barkina O.G., Moscow : Pervo Publishing House, 2017, p. 449–450.
2. Energy Markets: Problems and Objectives of Legal Regulatio n: Monograph / Edited by Romanova V.V., LL.D., Moscow : Yurist Publishing House, 2018. p. 74.
3. For example, Braginsky M.I., Vitryansky V.V. Contract Law. Property Transfer Agreement. 4th edition, stereotyped. Moscow : Statut, 2002, Book 2, p. 800 (Section 2 of Chapter IV).
4. For example, Award of the Ural District Commercial Court No. Ф09-9014/21 dated February 1, 2022, in Case No. A60-2102/2021. Award of the West Siberian District Commercial Court No. Ф04-3286/2022 dated July 20, 2022, in Case No. A03-11070/2021. https://ras.arbitr.ru  /
5. For example, Ruling of the Supreme Court of the Russian Federation No. 307-ЭС19-26651 dated April 22, 2021, in Case No. A21-1502/2018, Award of the North Caucasian District Commercial Court No. Ф08-12335/2020 dated February 5, 2021, in Case No. A32-12984/2019. https://ras.arbitr.ru  /
6. Award of the Moscow District Commercial Court No. Ф05-13180/2020 dated October 26, 2020, in Case No. A40-259984/2019. https://ras.arbitr.ru  /
7. Award of the Moscow District Commercial Court No. Ф05-22028/2020 dated February 16, 2021, Award of the Moscow District Commercial Court No. Ф05-523/2021 dated April 7, 2021. https://ras.arbitr.ru  /
8. For example, Award of the Tenth Commercial Court of Appeal No. 10АП-8411/2021 dated July 5, 2021, in Case No. A41-51621/2020, Award of the Moscow District Commercial Court No. Ф05-35482/2022 dated February 1, 2023. https://ras.arbitr.ru  /
9. For more information about the specifics and legal regime of contractual relationship between the provider and the LGO, see, e.g., Maksimenko P.N. Warranty Obligations under the Energy Supply Contract in Electric Power Industry and Liability for Their Violation // Law and Economy, 2020, No. 7, p 45–51.
10. For more information, see Maksimenko P.N. Legal Arrangements for Technological Sovereignty in Electric Power Industry in the Context of Sanctions Pressure. Energy Law Forum, 2022, No. 4, p. 39–47.
11. See, for example, Maksimenko P.N. Legal Risks and Opportunities of Using Blockchain Technology in Electric Power Industry // Energy Law Forum, 2019, No. 1, p. 52–58.
12. Topical Issues of Energy Law. Textbook edited by V.V. Romanova. Moscow : Yurist Publishing House, 2015. p. 325.

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