Court confirms lawfulness of gas price adjustments by Stadtwerke Norderstedt

A five-year legal dispute was decided in favour of the municipal utility company Stadtwerke Norderstedt when the Higher Regional Court (Oberlandesgericht - OLG) of Schleswig confirmed that the gas price adjustments in the years from 2005 to 201o were in conformity with the law. The court held that the adjustments reflected the increase in procurement costs, which had to be passed on to the consumers as the municipal utility company had no possibility to recover these costs otherwise. The OLG thus followed the reasoning of BBH, which represented Stadtwerke Norderstedt in the court proceedings.

Courts regularly deal with the question as to the conditions under which price adjustments are permissible in the context of energy supply. As recently as in October 2014, the European Court of Justice (ECJ) decided that the entitlement to price adjustments set out in section 4 AVBGasV (Verordnung über Allgemeine Bedingungen für die Gasversorgung von Tarifkunden - Ordinance on General Terms and Conditions for the Supply of Gas to Tariff Customers) and section 5 GasGVV (Gasgrundversorgungsverordnung - Gas Default Supply Ordinance, i.e. the ordinance replacing AVBGasV) was not in line with European Law. Under these regulations, basic suppliers (Grundversorger) were not legally obliged to give customers adequate notice of the reasons, preconditions and the scope of price adjustments before the adjustments came into effect. The ECJ found this to be in violation of the obligation of transparency enshrined in European Law. The German legislator subsequently revised the Gas Default Supply Ordinance.

However, this led to a regulatory loophole regarding price adjustments governed by AVBGasV and the (previous) GasGVV. The matter was referred to the Federal Court of Justice (Bundesgerichtshof - BGH), which decided in the context of two proceedings (ref.: VIII ZR 158/11 and VIII ZR 13/12) on 28/10/2015 that price adjustments are also possible on the basis of a "completive contract interpretation" (ergänzende Vertragsauslegung). Suppliers are thus principally entitled to pass on to their customers increased procurement costs. This reasoning was also followed by the OLG Schleswig, which held that Stadtwerke Norderstedt acted in line with the law when adjusting its gas prices for basic supply. The court dismissed the action brought against Stadtwerke Norderstedt by a number of consumers challenging the legal effectiveness of the price adjustments. The court stated that the increase in the procurement costs of the municipal utility company was greater than the increase in gas prices, also pointing out that the rise in procurement costs was not brought about by uneconomical measures and that it could not be offset by cost savings.

Becker Büttner Held is a leading provider of advisory services for energy and infrastructure companies and their customers. Energy and supply companies, particularly public utilities, municipalities and local authorities, industrial companies and international groups are among its core clients. BBH advises these and many other companies and organisations in all legal matters and also assists them with business and strategic advice.

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