Czechs are switching energy suppliers more often this year, while penalties for early termination are also rising

Czechs are increasingly switching energy suppliers this year. In the first two months of the year, Czech households made 115.000 changes of electricity and gas supplier, up by tens of percent year on year. At the same time, however, the number of cases in which suppliers penalize customers for terminating contracts early is also rising. The penalties can reach tens of thousands of crowns. The Czech Energy Regulatory Office (ERÚ) reported this today.

Consumers have been responding more to the revival of the energy market in recent months. According to the ERÚ, suppliers’ offers can differ by tens of thousands of crowns a year. So far, consumers have made more changes in electricity, where the number of switches is up 69 percent year on year. In gas, there have been a quarter more changes than a year ago.

At the same time, the ERÚ warned that switching suppliers, in addition to the potential savings, also carries certain risks. In particular, it highlighted the risk of being required to compensate for damages in the form of so-called lost profit, which some suppliers charge customers.

“We are now seeing more cases in which some suppliers charge not only contractual penalties but also so-called lost profit. In some cases, this amounts to tens of thousands of crowns,” said Markéta Zemanová, a member of the ERÚ Council.

She pointed out that the office is not authorized to rule on whether the amount charged as compensation for damages or lost profit is justified. “In practice, however, we know that some consumers consider lost profit of several thousand crowns a month unreasonably high, and therefore do not pay it to the supplier. The supplier can then take the matter to court and prove that the amount is justified,” Zemanová said. She therefore advises consumers not to sign contracts that include a lost-profit clause.

According to the office, the problem affects customers who try to terminate fixed-term contracts early. These can be terminated free of charge only in situations specified by law. These include a price increase or a change to other contractual terms, although such cases are relatively rare at present. Early termination is also possible when moving house or if the contract was signed remotely or away from the supplier’s business premises; in those cases, the agreement can be canceled up to the 15th day after the start of supply.

In other cases, consumers cannot avoid a penalty. “Contractual penalties for early termination may be fixed, or they may depend on the number of months remaining until the contract expires. The contract should be studied very carefully, with particular attention to whether we could face additional penalties, often described as compensation for damages or lost profit,” Zemanová noted.

Switching suppliers is considerably simpler for customers with an open-ended contract, which they can terminate at any time without giving a reason. The only condition is that they must allow for the notice period, which is typically three months.