TY - JOUR

T1 - Private Governance of Electricity Supply to End Users

T2 - The Range and Limitations of Unilateral Variation Clauses and Contractual Discretion in Commercial Electricity Supply Contracts

AU - Hansen, Ole

AU - Ritchie, Hamish George

PY - 2021

Y1 - 2021

N2 - Within the boundaries set by public regulation, the drive towards liberalized energy markets in Europe has created space for commercial contracts as a governance tool, aiming to align market activity with fundamental notions of public interest. Concurrently, contractual practice from electricity supply markets show suppliers reserve themselves the authority to change terms and conditions for business customers within the contract period. Such clauses challenge basic principles of contract law, potentially leaving business users in a regulative vacuum, where neither administrative nor contract law doctrines can be relied upon to curtail supplier discretion. Despite this, unilateral variation clauses cannot be assumed to entail an unlimited right for electricity suppliers to dictate the content of the end users obligations. This paper examines the legal effect of unilateral variation clauses in commercial standard terms for electricity supply in England and Denmark. Based upon the complex regulatory patterns, and the resulting hybrid nature of contractual practices, we show how contractual discretion is restricted by standards of interpretation. These standards emerge from public law, but will also be recognized as governance structures in certain purely commercial settings.

AB - Within the boundaries set by public regulation, the drive towards liberalized energy markets in Europe has created space for commercial contracts as a governance tool, aiming to align market activity with fundamental notions of public interest. Concurrently, contractual practice from electricity supply markets show suppliers reserve themselves the authority to change terms and conditions for business customers within the contract period. Such clauses challenge basic principles of contract law, potentially leaving business users in a regulative vacuum, where neither administrative nor contract law doctrines can be relied upon to curtail supplier discretion. Despite this, unilateral variation clauses cannot be assumed to entail an unlimited right for electricity suppliers to dictate the content of the end users obligations. This paper examines the legal effect of unilateral variation clauses in commercial standard terms for electricity supply in England and Denmark. Based upon the complex regulatory patterns, and the resulting hybrid nature of contractual practices, we show how contractual discretion is restricted by standards of interpretation. These standards emerge from public law, but will also be recognized as governance structures in certain purely commercial settings.

KW - Faculty of Law

KW - Electricity; supply contracts; private governance; variations; authority; discretion; unfairness; interpretation; liberalisation

U2 - 10.54648/eelr2021024

DO - 10.54648/eelr2021024

M3 - Journal article

VL - 30

SP - 242

EP - 254

JO - European Energy and Environmental Law Review

JF - European Energy and Environmental Law Review

SN - 1879-3886

IS - 6

ER -