Commentary to the articles of Paragraph 5 Energy Supply of Chapter 25 of the Civil Code of the Republic of Kazakhstan

The legal form that mediates the processes of energy consumption is the energy supply contract. From the point of view of the classification of objects of civil rights, energy is a movable, simple, divisible, consumable thing, determined by generic characteristics. The natural specificity of this product determines a number of significant features of its turnover. These are the continuity (continuity) of the processes of production, transportation and consumption of energy, the limited possibility of its storage (warehousing), the impact of consumer activity on the quality of goods, the availability of unified energy and gas supply systems across the country. Usually, energy transfer to the consumer is impossible without the use of special technical means and appropriate infrastructure: power lines, gas and water pipes, transformer and pumping stations, etc. Energy consumption also requires special equipment: engineering communications, control and measuring devices, and security equipment. A system of technical devices that ensure the receipt and safe use of energy by the consumer is called an attached network. The possibility of transmitting and consuming energy only through the connected network is one of the main features of the energy supply contract. It allows you to distinguish it from similar obligations, such as deliveries. Thus, the contract under which the sale of natural gas in cylinders is carried out will be formalized as a supply or purchase and sale. If the gas is transferred to the consumer through the connected network, there is an energy supply contract. This contract is a type of purchase and sale and is governed by the rules of Section 5 of Chapter 25 of the Civil Code. In the part that does not contradict the Code, there are special regulatory acts on energy supply: the Law of the Republic of Kazakhstan "On Energy Conservation" dated December 25, 1997, Decree of the President of the Republic of Kazakhstan, having the force of Law, dated December 23, 1995 No. 2724 "On Electric Power Industry".  

The remaining unresolved issues can be resolved on the basis of the general provisions of the Civil Code on purchase and sale (but not the rules on supply).  

The energy supply contract is consensual, reimbursable, and mutual.  

According to Article 14 of the Decree "On Electric Power Industry" of 1995, the supply of electric energy (capacity) to the unified electric power system is formalized by a supply contract concluded in accordance with the Civil Code of the Republic of Kazakhstan (paragraph 1 of Article 14 of the Decree). The sale of electric and thermal energy (capacity) to consumers is also carried out on the basis of a supply agreement concluded in accordance with the Civil Code of the Republic of Kazakhstan (paragraph 2 of Article 14 of the Decree).  

387 of the Civil Code, this is a public contract, however, the subscriber has the right to demand its conclusion only if he has the necessary power receiving equipment connected to the networks of the energy supply organization (GC). Depending on the subject matter and the composition of the parties to the energy supply agreement, its varieties are distinguished as: an electric power supply agreement, an agreement on reverse electricity flows, an agreement on mutual redundancy of electricity supply, a gas supply agreement, contracts for the supply of thermal energy, water, oil and petroleum products, and others. The allocation of special types of energy supply, determined only by the personality of consumers (industrial, agricultural enterprises, government agencies, other non-profit organizations, etc.), is impractical, since these features mainly affect only the price of the contract. However, the specifics of energy supply to citizen subscribers are also reflected in the special nature of the rights and obligations of the parties to the contract, which makes it possible to distinguish it into a special type of energy supply contract.  

Citizens and legal entities may act as parties to the energy supply contract. The seller under the contract is usually an entrepreneur - an energy supply organization (a power plant, manufacturer, or reseller). In order to promote competition in certain commodity markets (for example, electricity), the government sets special requirements for the subject matter of energy supply contracts. Thus, the sale and purchase of electric energy on the republican wholesale electric energy market is carried out on the basis of contracts with the National Electric Power System (art. 8 of the Decree of the Republic of Kazakhstan "On Electric Power Industry")1 The functions of the organizer of the wholesale electricity market in accordance with the Program of further development of the electricity market for 1997-2000 are performed by the Joint-stock company "Kazakhstan Electric Grid Management Company "KEGOC".  

The parties to this agreement are two energy supply organizations (power plants), which undertake to make up for each other's energy or capacity shortages during peak loads or declines in energy consumption. As a result, there is a consistent flow of energy in opposite directions - reverse. Its parties are two industrial subscribers (consumers of energy), mutually guaranteeing uninterrupted supply of energy to each other. If one of the subscribers is unable to receive energy through its connected network, it will be supplied by another subscriber. The terms of this agreement vary significantly depending on who the consumer is: the intermediary sales organization or the end user.  

Almatinsky GRES acts either as a buyer or as a seller of electricity. In some cases, the seller under the energy supply contract may be the primary consumer, who transfers the energy received by him to another person (sub-subscriber) with the consent of the energy supply organization. The buyer (subscriber) under the contract can be either a legal entity (including a reseller) or a citizen.  

The subject of an energy supply contract, which is its only essential condition, is usually energy (in various forms) and energy carriers, i.e. substances that release energy during their use (steam, gas). 492 of the Civil Code, the subject of this agreement may also be other goods: oil, petroleum products, water, and this list is open. If the transfer and use of products by the recipient is possible only through a special connected network, their turnover will be carried out in the form of an energy supply contract.  

In most cases, the contract price is determined not by the parties themselves, but by government-approved tariffs. Prices (tariffs) for electric and thermal energy due to the natural monopoly of energy supply organizations and social significance, as reflected in the law (art. 6 of the Decree of the Republic of Kazakhstan "On Electric Power Industry") must be subject to state regulation. State regulation of prices (tariffs) for electric and thermal energy (capacity) should be carried out by an authorized state body.  

The following types of energy prices (tariffs) are established:  

- purchase price (tariff) for electricity;  

- wholesale price (tariff) for electricity supplied by the National Electric Power System;  

- the price (tariff) for electricity purchased or sold for import and export;  

- price (tariff) for electric and thermal energy supplied to consumers The central body of state regulation of prices (tariffs) in the electric power industry is the State Regulatory Commission in the Electric Power Industry, currently its functions are performed by the Antimonopoly Committee of the Republic of Kazakhstan.  

Zonal (territorial) tariffs are provided for thermal power plants. For certain groups of consumers (citizens, agricultural enterprises, industrial enterprises with different levels of energy consumption), tariff correction coefficients or special methods of calculating prices are established (based on the principle of "cost plus a certain profit margin"). Thus, individual tariffs are set for electricity supplied by nuclear power plants.  

The legislation is very concise in defining the content of sub-subscription agreements (art. 489 of the Civil Code). There is a plurality of persons on the seller's side (the energy supply company and the primary consumer). Some of the seller's rights and obligations belong either to the energy supply company or to the subscriber, while others are carried out jointly by them.  

Subjects for the production, transmission and consumption of electricity are:  

- Republican State Enterprise - National Electric Power System (currently its functions are performed by KEGOC);  

- regional energy supply organizations;  

- independent energy-producing organizations, that is, organizations with the rights of a legal entity that are organizationally and technologically connected to the Unified Electric Power System;  

- energy consumers are citizens and legal entities.  

With the adoption of the Special Part of the Civil Code, the ability of a citizen to act as a subscriber in an energy supply contract has become indisputable. The relevant provisions of the Rules for the Use of Electric and Thermal Energy should be applied insofar as they do not contradict the Civil Code.  

An energy supply contract, as a general rule, is considered concluded for an indefinite period (Clause 2, Article 490 of the Civil Code). However, contracts involving legal entities usually contain a time limit, the duration of which is determined by the parties themselves. Paragraphs 1 and 2 of Article 483 of the Civil Code establish special rules on deadlines aimed at ensuring uninterrupted supply of energy to consumers. Thus, a contract concluded for a period of time is considered extended for the same period, unless either party declares otherwise before its end. If a party makes a proposal to conclude a new agreement, the previous agreement remains in force until it is replaced by a new one (paragraph 4 of Article 483 of the Civil Code). At the same time, in accordance with the Program of further development of the electricity Market for 1997-2000 dated July 31, 1997.  No. 1193 producing stations have stopped selling electricity according to the existing scheme (invoice application) since September 1998 and sell electricity exclusively on the basis of fixed-term contracts, which are structured into contracts for the supply of constant power (forwards) and contracts for the right to receive instant power (options). The trading system and the accounting system (depository) of fixed-term contracts are functioning. The form and procedure for concluding a contract vary depending on the identity of the subscriber and the purpose of using the product. Thus, an energy supply contract for legal entities or individual entrepreneurs is always concluded in writing. If the subscriber is a citizen who uses energy for domestic consumption, the contract is considered concluded from the moment of the subscriber's first actual connection to the connected network in accordance with the established procedure (paragraphs 1, 2 of art.483 of the Civil Code). This rule has a twofold meaning. Firstly, a citizen's energy supply contract can be concluded by connecting to the grid (without putting it in writing). Secondly, such an agreement, made in writing, will enter into force only from the moment of actual connection to the network.  

The content of the energy supply contract.

The main responsibility of the seller is to supply energy (energy carriers) to the subscriber: a) in a certain quantity; b) in compliance with the agreed delivery regime; c) the established quality. The quantity clause in the energy supply contract is not essential. The amount of energy supplied, as follows from the interpretation of clauses 1 and 2 of art. 484 of the Civil Code, refers to the essential terms of the contract only when the subscriber is a legal entity or a citizen who uses energy for business purposes. One of the features of the quantity clause in the energy supply contract is that it defines the maximum amount of energy that the subscriber is entitled to receive. The actual amount of energy consumed is usually less than the maximum stipulated by the contract and is determined in accordance with accounting data (for example, electricity meter readings). In most cases, the energy supply contract gives the subscriber the right to change the amount of energy received unilaterally (the "about" condition), while reimbursing the additional costs of the seller (Clause 2, art.484 of the Civil Code). A citizen who uses energy for household needs has the right to receive it in any quantity necessary for him (paragraph 3 of art.484 of the Civil Code).  

The peculiarity of the electricity supply contract is in the delivery item. For energy in the physical sense, quantity and quality are interdependent concepts. Therefore, any violation of the quantity condition inevitably entails a change in quality (all other things being equal). Therefore, the supply of less energy by the energy supply organization than the amount agreed upon by the parties means either a break in the supply (i.e., a violation of the regime) or a deterioration in the quality of energy. The consequences of such a violation are determined accordingly. The power supply mode, i.e. The quantity and quality of energy transferred at different times are determined by agreement of the parties. As a general rule, energy supply should be carried out by its continuous supply to the subscriber. However, the contract may also provide for conditions on interruptions (terminations) and supply restrictions (for Units of measurement of the amount of energy are: kilowatt-hour or kilovolt-ampere of electricity, gigacalory of thermal energy, cubic meter of gas or water, etc.). An energy supply company can supply less energy without interrupting the supply, for example, in the following cases: by lowering the gas pressure in the pipeline or its calorific value (by changing the chemical composition); by reducing the power that the consumer of electricity can use (as a result of which the voltage drops); by reducing the temperature and (or) the pressure of hot water in heating systems networks. In these cases, a violation of the quantity condition is simultaneously a violation of the energy quality condition, and vice versa. Also, the energy supply may be interrupted (terminated) or limited by the energy supply organization unilaterally to prevent or eliminate accidents (paragraph 2 of art.490 of the Civil Code). Unlike the conditions on the range of purchase and sale and the frequency of supplies, the energy supply regime (schedule) is an essential condition of the contract (if the subscriber is a legal entity or a citizen entrepreneur). A citizen who uses energy for household needs has the right to consume it in any mode. Violation of the agreed energy supply regime entails the application of civil liability measures to the energy supply organization. However, the grounds for liability depend on the reason for the violation. Thus, the responsibility of the energy supply organization for an interruption in the supply of energy occurs only if it is its fault, if the interruption occurred for reasons permitted by law (for example, due to an accident in the connected network). In all other cases, the energy supply company is responsible on a risk basis. The quality of the supplied energy must comply with the requirements of state standards and other mandatory rules (art. 486 of the Civil Code). Individual qualitative indicators are established by agreement of the parties to the contract (for example, electricity voltage, hot water temperature, gas pressure). Methods for determining energy quality, given their technical complexity, are usually regulated peremptory by special regulations, less often by agreement of the parties. Violation of the quality conditions by the energy supply organization gives the subscriber the right to refuse to pay for such energy, as well as to recover losses in the form of real damage. However, if he nevertheless used substandard energy, the energy supply organization has the right to demand that the subscriber reimburse the cost of what he unreasonably saved as a result of using this energy according to the rules on unjustified enrichment (art. 953 of the Civil Code). The procedure and terms of payments for energy are determined by legislation or by agreement of the parties. The terms of settlements under contracts between legal entities are determined by agreement of the parties. The subscriber's delay in paying for energy beyond a certain period gives the energy supply company the right to stop supplying energy. In addition, it is possible to collect a penalty from the subscriber, the amount of which is determined either by agreement of the parties (in contracts involving legal entities) or by a regulatory act (in energy supply contracts for citizens).  

Additional responsibilities of the energy supply organization are provided for contracts with citizen subscribers who use energy for domestic consumption. In these cases, the energy supply organization must ensure the safety (proper technical condition) of energy networks and energy metering devices (Clause 2 of Article 487 of the Civil Code), and also has other responsibilities.  

The subscriber's obligations under the energy supply contract differ significantly from the buyer's obligations during the purchase and sale and include (clause 1 of art. 487 of the Civil Code):  

a) ensuring the safety of energy consumption;  

b) compliance with the established consumption regime;  

c) payment for the received energy;  

d) informing the energy supply organization about violations that occur during the use of energy.  

Additional obligations of the subscriber may be established by certain types of the energy supply contract. The consumer is obliged to ensure the safety of energy use, for which it is necessary to maintain the components of the connected network under his jurisdiction in proper technical condition (paragraph 1 of Article 487 of the Civil Code). This obligation does not apply to citizens who use energy for household needs (paragraph 2 of art. 487 of the Civil Code). However, consumer citizens must comply with safety regulations when using energy, including maintaining appropriate devices and appliances (faucets, gas and electric stoves, indoor electrical wiring, etc.) in good condition.  

The subscriber's compliance with the energy consumption regime established by law and the contract is necessary to ensure the interests of other subscribers. Thus, overuse of energy by some subscribers (especially during peak loads of the energy system) may affect the supply of energy to others in the required amount. In addition, due to non-compliance with the consumption regime, the quality of energy may also suffer. With regard to electricity supply, legislation specifically regulates the obligation of an industrial consumer to maintain the quality of electricity at an appropriate level. Violation of the established consumption regime will give the energy supply company the right to recover real damage from the subscriber, and in some cases, penalties. The subscriber must pay for the energy they receive. Since there is no obligation to accept energy under an energy supply agreement, the subscriber pays only for the amount of energy actually received in accordance with accounting data (Clause 1 of Article 488 of the Civil Code). The subscriber is obliged to immediately inform the energy supply company about all accidents, fires, malfunctions of energy metering devices and other violations that occur during the use of energy (paragraph 487 of the Civil Code), regardless of whose fault they occurred. This is a kind of analogue of the condition stipulated in art. 482 of the Civil Code. The law does not establish special consequences for violations of this duty. Consequently, they entail the application of general measures of civil liability in the form of compensation for real damage. In addition to the general rights of the buyer provided for in Section 1 of Chapter 25 of the Civil Code, under the energy supply contract, the subscriber has the rights: first, to accept the amount of energy he needs within the limits provided for in the contract (clause 3 of art. 484 CC), which also means the possibility of the subscriber's unilateral refusal to accept energy; secondly, with the consent of the energy supply organization, transfer the energy received by him to the sub-subscriber (art. 489 CC).  

Responsibility under the energy supply contract. In cases of non-fulfillment or improper fulfillment of obligations under the energy supply agreement, the energy supply organization and the subscriber are obliged to compensate for the actual damage caused in accordance with the rules of the Civil Code (paragraph 4 of Article 9 of the Civil Code), i.e. the costs incurred, as well as the cost of lost or damaged property. Along with the recovery of losses in the form of real damage, liability for violation of the terms of the energy supply contract may also be expressed in the payment of a penalty (usually legal), the main cases of which are considered in relation to individual obligations of the parties. However, one exception has been made for energy supply companies. If the interruption in the supply of energy to the subscriber occurred for reasons permitted by law, the energy supply organization is liable for the losses caused only if it is its fault (paragraph 2 of Article 491 of the Civil Code). Such grounds are, in particular, interruption or interruption of the power supply, which were necessary to take urgent measures to prevent or eliminate accidents in the system of the energy supply organization. In all other cases, the energy supply company is responsible for the losses caused to the subscriber, regardless of fault. Disruption of power supply, as a rule, entails serious consequences. For example, a short interruption in the supply of electricity in a hospital can lead to the death of a serious patient to whom oxygen was supplied, for example.

Termination of the power supply contract.

The energy supply contract does not provide for the obligation of a citizen using energy for domestic consumption to receive energy. This logically implies the right of such a subscriber to terminate the contract unilaterally by notifying the energy supply company (Clause 3, Article 490 of the Civil Code). The law does not provide for a similar opportunity for legal entities and individual entrepreneurs. However, by virtue of the general rules of art. 490 of the Civil Code, subscribers may also request the extension of the contract in cases of a significant violation by the energy supply organization or a significant change in the circumstances from which the parties proceeded when concluding the contract. If the subscriber under the energy supply agreement is a citizen who uses energy for household needs, the energy supply organization has the right to unilaterally cancel the contract in cases of non-payment by the subscriber of the energy used by him, provided that he is notified no later than one month before the suspension of the contract (paragraph 4 of art. 490 of the Civil Code).

 Constitution Law Code Standard Decree Order Decision Resolution Lawyer Almaty Lawyer Legal service Legal advice Civil Criminal Administrative cases Disputes Defense Arbitration Law Company Kazakhstan Law Firm Court Cases 

The commentary was prepared within the framework of the scientific and practical research program of the Scientific Research Center of Private Law of the Kazakh State Law University.  

Head of the working group on the preparation of the draft Civil Code of the Republic of Kazakhstan, Corresponding Member of the Academy of Sciences of the Republic of Kazakhstan, Professor Suleimenov M.K.

Deputy head Professor Basin Yu.G.