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Major Spanish Electricity Providers Reported For Illegal Billing

Source:   FACUA - Sat 12th Sep 2015
Major Spanish Electricity Providers Reported For Illegal Billing

Spanish Consumer Association FACUA has reported the main electricity suppliers to court over illegal tariffs being applied for the rental of digital meters.

The companies are reportedly applying a tariff that is only allowed to be charged if the digital meters have been integrated in a remote reading system - something that does not happen in most of the new meters installed.

FACUA will see the companies in court in the coming days as a consequence of the indifference of the Ministry of Industry regarding this massive fraud and the refusal of the regional consumer protection agencies and the Spanish Agency for Consumer Affairs, Food Safety and Nutrition (Aecosan, according to its initials in Spanish) to act, despite the Association' formal complaints.

The irresponsible behaviour of the authorities is forcing FACUA to take a massive fraud to consumers to court once more. And this, despite that the National Commission on Markets and Competition (CNMC, according to its initials in Spanish) has urged the Ministry of Industry to guarantee that the companies bill users the tariff set by the law, but the Ministry is turning a blind eye to it.

In November 2014, FACUA submitted a series of complaints to the corresponding authorities against the five major electricity suppliers operating in Spain: Iberdrola Distribución Eléctrica, Endesa Distribución, Unión Fenosa Distribución (Gas Natural Fenosa), Hidrocantábrico Distribución (EDP HC Energía) and E.On Distribución.

In its reports, the association requested that the companies were forced to refund the tens of millions overcharged to users when they are billed tariffs that the law limits to reading meters integrated in a remote management system.

Millions of families have been paying a wrong tariff for years due to the rental of meters that do not have the necessary requirements to be integrated in the remote management system, that should allow consumers to access features such as time restrictions, remote reading and consumption information. This data is meant to facilitate a more efficient consumption and would result in a reduction of consumers' bills.

For renting the new meters, suppliers are charging users a monthly fee of 0.9801 Euros (0.81 Euros plus VAT) that, according to the law, can only be applied if the equipment offers the remote reading features. The fee is 50% higher than the one set for the meters without such features, 0.6534 Euros (054 plus VAT). Each affected is overcharged 3.92 Euros every year (0.3267 Euros per month) for the rental of the smart meters that are not smart at all.

The Ministry of Industry ignores CNMC

CNMC warned the Ministry of Industry for the first time about the irregularities last November. It did so in a report, requested by the Secretary of State of Energy, about the proposal of proceedings to check, validate, close and put at public disposal the information about the electricity reading meters integrated into a remote management system. The Competence authority stated that users were being applied a wrong tariff, and they "were not being benefit of the features of the new reading equipment".

The report states, on page 31, that "those consumers who have reading meters integrated in a remote management system without real hourly information of electricity use, should be charged for the rental of the measuring equipment as it was done for the old single-phase meters (0.54 Euros per month, in accordance with Order ITC/3860/2007), since those consumers are not being benefited of the functions of the new measuring equipment".

Last June, on its Report about the fulfilment of the first event of the substitution of reading meters (here, in Spanish), CNMC has insisted more explicitly: "for those consumers who have single-phase reading meters with the capacity of distance reading but which are not integrated in the corresponding remote management system, it is considered that they should be charged for the rental of the measuring equipment as it was done for the old single-phase meters (0.54 Euros per month, in accordance with Order ITC/3860/2007), since those consumers are not being benefited of the functions of the new measuring equipment".

The legislation for the energy sector forces the companies to replace all reading meters with contracted electric load of up to 15 kW with meters which "will have to be integrated in a remote management system, set up by those in charge of the corresponding reading" (article 9.8 of Royal Decree 1110/2007, of August 24).

Discrimination and unfair terms

FACUA warns that in those homes where the new measuring equipment has been installed, users are being discriminated when compared to those still with the old meters, since they pay a much higher tariff without having access to additional services.

The association argues that these practices breach the principle of non-discrimination set in Directive 2009/72/CE, of 13 July 2009, concerning common rules for the internal market in electricity. The European legislation has been transposed into the Spanish legal system by the Law 24/2013, of December 26, of electricity sector, whose article 44.i states the right of users to "being supplied electricity with prices which are easily and clearly comparable, transparent and non-discriminatory".

When charging a more expensive rental for the new installed equipment even though they are not integrated in a remote management system by electricity distributors, FACUA considers that these companies fall into unfair term practices. The association reminds that article 87.5 of Consumer and User Protection Act (Royal Decree that approves the consolidated text of the General Law for Consumer and User Defence), that considers as unfair any stipulation that "foresees charging for products or services that have not been consumed."

Recommended Reading :

* Spain's fake discounts raise Electricity bills by 12%

* EU to investigate Spain's illegal energy bills

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