A case initiated with respect to norms that defined the compensation, which an energy user paid in the case of violating the regulations on the use of natural gas
On 7 May 2020, the 2nd Panel of the Constitutional Court initiated the case “On Compliance of Section 423 (1) of Energy Law (in the wording that was in force until 7 March 2016) with Article 64 and Article 105 of the Satversme of the Republic of Latvia, and Para 98 and Para 100 of the Cabinet Regulation of 9 February 2016 No. 85 “Regulation on the Supply and Use of Natural Gas” with Article 64 and Article 105 od the Satversme of the Republic of Latvia and 423 (1) of Energy Law (in the wording that was in force until 7 March 2016)”.
The Contested Norm
Section 423 (1) of Energy Law (here and hereafter – in the wording that was in force until 7 March 2016):
“If the energy supply merchant detects that the user of energy has violated the Cabinet Regulation on the supply and use of natural gas or the agreement on the supply of natural gas and as the result the amount of consumed natural gas reading has been decreased or the possibility has been created to consume natural gas free of charge the user of energy shall pay to the energy supply operator for the natural gas consumed and compensation. The procedure, in which the energy supply merchant determines the amount of actually consumed natural gas as well as the amount of compensation, shall be established by the Cabinet.”
Para 98 of the Cabinet Regulation of 9 February 2016 No. 85 “Regulation on the Supply and Use of Natural Gas” (hereafter – Regulation No. 85):
“If the system operator detects and proves to the degree of credible legal evidence a violation of this Regulation, an agreement on supplying natural gas or agreement on system services that has occurred due to the user’s actions or failure to act and due to which the amount of consumed natural gas reading has been decreased or the possibility has been created to use natural gas free of charge, the user shall pay compensation for the used natural gas to the system operator as well as compensation in accordance with a claim issued by the system operation regarding fulfilment of the contractual obligations. The user shall have the obligation to settle the accounts with the system operator timely and in full.”
Para 100 of Regulation No. 85:
“The system operator shall determine the compensation referred to in Para 98 of this Regulation by multiplying the amount of used natural gas, calculated in the procedure established in Para 99 of this Regulation, by the trade tariff of natural gas in double amount”.
The Norm of Higher Legal Force
Article 64 of the Satversme of the Republic of Latvia (hereafter – the Satversme): “The Saeima, and also the people, have the right to legislate, in accordance with the procedures, and to the extent, provided for by this Constitution.”
Article 105 of the Satversme: “105. Everyone has the right to own property. Property shall not be used contrary to the interests of the public. Property rights may be restricted only in accordance with law. Expropriation of property for public purposes shall be allowed only in exceptional cases on the basis of a specific law and in return for fair compensation.”
Section 423 (1) of Energy Law (quoted above)
The Facts
The case has been initiated on the basis of an application by the Riga Regional Court. The Court is reviewing a civil case, in which a claim has been brought regarding debt collection against legal persons – users of natural gas, which are not household users. It follows from the application that the contested norms are applicable in the case examined by the Applicant.
The Applicant notes that the authorisation to the Cabinet, included in Section 423 (1) of the Energy Law has not been defined with sufficient clarity. Whereas in issuing the contested norms of Regulation No. 85, this authorisation has been exceeded. Moreover, the restriction on the right to property, included in it, is said to be disproportional. I.e., the obligation of the energy users, prescribed in these norms, to pay compensation, which is calculated by multiplying the consumed amount of natural gas with double trade tariff of natural gas, is said to be obviously excessive and failing to meet the aims of civil law liability.
Legal Proceedings
The Constitutional Court has requested the institutions, which issued the contested acts, the Saeima of the Republic of Latvia and the Cabinet, to provide a reply on the facts of the case and legal reasoning by 7 July 2020.
The term for preparing the case is 7 October 2020. The Court shall decide upon the procedure and the date for hearing the case after the case has been prepared.
Open in PDF: 2020-25-0103_PR_par_ierosinasanu_ENG
Linked case: 2020-25-0103