Private Governance of Electricity Supply to End Users: The Range and Limitations of Unilateral Variation Clauses and Contractual Discretion in Commercial Electricity Supply Contracts

Abstract

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 article 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. Electricity, supply contracts, private governance, variations, authority, discretion, unfairness, interpretation, liberalization