The legal construction of public utilities
Public utilities — the supply of electricity and natural gas to final consumers — are determined by five norms of the Law on Energy: public service, the supply activity, the supply rules, natural gas supply as a public service, and consumer rights. This page explains how the five work together.
Public service and public gas supply
Deriving from the general economic interest, for the purposes of supply security, continuity, appropriate quality and price, environmental protection and energy efficiency, an energy undertaking may be charged with a public-service obligation. It is imposed by the government after consultation with the competent authorities, the commission and the Energy Community Secretariat. It is a temporary measure, subject to regular review, and must be transparent, non-discriminatory and proportionate. Compensation or an exclusive right must not exceed the corresponding costs, and the commission is authorized to set the tariff.
The concrete instance of public service in the gas sector is the following:
Supply activity and rules
Supply to final consumers is carried out at an unregulated, market price, on the basis of a supply contract; household consumers and small enterprises have the right to enjoy supply. The rights and duties of the supplier and the consumer are determined by the contract, whose conclusion and content are regulated by the supply rules approved by the commission. The rules determine the procedure for changing terms, the consumer's right to terminate, the procedure for informing before a price increase, and the provision of pricing information.
A household consumer, a small enterprise and a thermal power plant that is a source of guaranteed capacity have the right to receive natural gas from a public-service supplier in the established manner. Within one distribution area, such consumers may be served by only one supplier charged with the public supply obligation. The commission elaborates and approves the rules of activity of this supplier, including its rights and duties and the termination of the obligation.
Consumer rights
The protection of the final consumer is carried out in accordance with the law, acts issued on its basis and other normative acts on consumer rights. The consumer pays the fee according to the supply rules and contractual terms. The consumer has the right freely to choose and change the supplier; to receive free of charge all necessary information on consumption and metering data; and to make these data accessible, without charge, to any registered supplier.
The system in practice
The system of public utilities looks like this: the market is free and works at a market price; where necessary the government introduces a regulated tariff and guaranteed supply through the public-service obligation; the supply rules and standard terms ensure transparency; and the consumer has the rights of changing supplier and receiving information. This balance is precisely the utility architecture of the law. Legal.ge.
The rule of separated accounting is also part of this architecture: a supplier charged with a public-service obligation may continue trading only if it keeps separate accounting for supply as a public service and for other supply or trading activity. This rule separates public and commercial activity, reduces the risk of cross-subsidization and ensures transparent tariff calculation. For the consumer it means that the price of the public service is visible separately and comparable with competitive offers; for business it means that the structure of reporting must be planned in advance.
The purpose of the supply rules also completes this architecture: they determine not only the procedures for changing and terminating contract terms but also the procedure for providing pricing and service-related information — including the consumer's duty, upon request, to make information related to the contract, billing or the invoice accessible to the supplier. Thus the supply rules form the legal bridge between the consumer's informedness and the supplier's transparency. The rules of natural gas public supply, together with the commission, create that special contour in which guaranteed supply becomes accessible to the consumer.
A practical conclusion for the consumer: if you are a household consumer or a small enterprise, find out whether you have the right of public supply in your area in the gas sector; compare offers and remember the right to change supplier free of charge. For business: the supply contract is not the only document — it reads in the context of the supply rules and standard terms, and ignorance of this context grows into contractual risk. The law of public utilities therefore first demands study and only then application.
The value of study is confirmed once more when the market changes: new suppliers, new prices and new rules constantly appear, and only the consumer or business that knows its rights stays protected.
Frequently Asked Questions
Below we answer the most frequent questions about public utilities law.
What is the public-service obligation?
A temporary obligation imposed on an energy undertaking for supply security, continuity, quality and price, set by the government after consultations.
Who can use public gas supply?
Household consumers, small enterprises and thermal power plants that are sources of guaranteed capacity; within one distribution area there may be only one supplier.
What rights does the consumer have?
To choose and change the supplier freely, to receive consumption and metering data free of charge, and to make the data accessible to any registered supplier.
How is supply priced?
Primarily at an unregulated market price under a contract; in the case of public service — at a tariff set by the commission.
How We Help on Legal.ge
The law of public utilities demands simultaneous knowledge of the market, tariffs and consumer rights. The lawyers of Legal.ge assist in assessing the supply contract, in the procedure of changing supplier and in disputes connected with public-service obligations. Contact us for a consultation — we serve both consumers and businesses.