Turkey: The Regulation On Subscription Agreements And Its Application To The Electricity Sales Agreements

The Regulation on Subscription Agreements ("Regulation") prepared by the Ministry of Customs and Trade and was published in the Official Gazette on 24 January 2015. The Regulation entered into force on 24 April 2015, i.e., 3 months after its publication in the Official Gazette.

The scope of the Regulation mainly covers subscription agreements executed in the electricity, water, natural gas and electronic communications sectors. Only certain provisions of this Regulation are applicable to subscription agreements executed in other sectors. Also it should be noted that the application of this Regulation is limited to subscription agreements executed with customers who are qualified as consumers under the consumer protection legislation.

The Regulation stipulates the form and mandatory content of subscription agreements, the content of payment notifications, subscriptions with undertaking, termination of subscription agreements, the results of termination and the liabilities of the seller/provider.

Subscription agreements can be concluded in writing or through distant methods. However in either case, a copy of the agreement must be delivered to the consumer on paper or as a permanent electronic copy. The font size of the agreement must be at least 12 points. There is a long list in the Regulation with respect to the mandatory content of those agreements. Some of the important provisions are as follows:

• the total fee of the goods or services including the all applicable taxes;
• in case the fee of the goods or services is to be calculated based on a tariff, the name and content of the chosen tariff and the unit consumption fee on the date of the agreement together with the consumption period;
• information regarding how the services will be suspended in the event the invoice is not paid within due time and how will the services be re-provided once the outstanding invoice is paid and how long these procedures will take;
• information on force majeure events that may result in suspension of the services (if any);
• information on how the amount of the consumption will be determined in case of a deficiency of the meter or the similar measuring device;
• if there are additional fees to be collected from the consumer as per the relevant legislation, a list of those additional fees, their sum on the date of the agreement and information on how new sums will be notified to the consumer in case of an amendment;
• information on the consequences of a consumer's default;
• the amount of the security deposit to be collected from the consumer (if any) and information on how and when such amount will be returned to the consumer upon the expiry or termination of the agreement;
• information on termination events and the consequences of termination; and
• information on the consumers' right to apply to the consumer courts or the arbitration committee for consumer claims in case of a dispute.

Consumers may terminate indefinite term and definite term subscription agreements with a term of 1 year or more, at any time, without showing any reason or being subject to a penalty. The only exemption to this rule is related to the subscription agreements with an undertaking, as explained below. With regard to definite term subscription agreements with terms of less than 1 year, consumers are entitled to terminate the agreement if the conditions of the agreement are changed by the seller or the provider. Also, consumers may terminate subscription agreements under any circumstances, provided that there is a valid reason restricting the consumer from benefiting from the services. Save for the more favourable periods stated in the other legislations, the seller/provider is required to honour the consumer's termination within 7 days following the receipt of the termination notice. If the subscription agreement is not terminated by the seller/provider within the periods stated in the Regulation, no payment can be requested from the consumer after that period even if the consumer benefits from the relevant services or goods. Within 15 days following the termination, the seller/provider is required to return the remaining part of the payment made by the consumer and the deposit or security payments, if any, without any deduction.

The Regulation also describes subscription agreements with undertaking and sets forth the mandatory content of the undertaking to be obtained from the consumer, as well as the termination of those subscription agreements and consequences of termination. A written letter of undertaking comprising the conditions and validity period of such undertaking must be submitted to the consumer as an integral part of the subscription agreement. The letter of undertaking must state the validity period of the undertaking, the qualifications of the goods or services to be provided, the total price of the goods or services including all taxes, the price of the tariff without undertaking, the monthly discount amount and the calculation method of the amount to be paid by the consumer in case of early termination of the subscription agreement with an undertaking. The price of the goods or services to be provided based on an undertaking cannot be higher than the prices applicable to customers who do not provide an undertaking.

In case of an early termination of a subscription agreement with an undertaking by the consumer, only the discounts that have been made as per the undertaking and the unpaid installments of the goods or the services (if additional goods or services are provided within the scope of the undertaking) (collectively "Discount Amount") may be requested from the consumer. However, if the total amount that would have been paid by the consumer if the agreement had not been terminated is less than the Discount Amount, the limit of the amount to be requested by the consumer must be the lesser amount. It should be noted that the Regulation has an explicit provision with regard to the change of address of the consumer during the undertaking period. As per Article 16/2 of the Regulation, if the place of residence of the consumer changes and providing the relevant service to the new place of residence under the same conditions is not possible, the consumer may terminate the subscription agreement with undertaking without paying any penalty. The seller or the provider is obligated to notify the consumer in writing (or via a permanent electronic mean) with regard to the expiration of the undertaking, within one invoice term, at the latest prior to the end of the undertaking.

The seller/provider is required to send a payment notification to the consumer at the end of each consumption period indicating the service fee to be paid by the consumer for the relevant period. The payment notification must, inter alia, include the first and last indexes grounding the consumption (if any) and the reading dates; the consumption or usage amount; the unit price and pricing period and similar issues; the content and the price of the tariff in case of application of a tariff; and explicit and clear information regarding each item constituting the total price to be paid by the consumer, including the tax types. Also, in case of subscriptions with an undertaking, information regarding the remaining undertaking term and installment amount of the good if an additional good has been provided within the scope of the undertaking must be included in the payment notifications.

As can be seen, there are many requirements that should be taken into account by electricity supply companies when executing subscription agreements with their customers who qualify as consumers under the consumer protection legislation. In fact there are several additional requirements they must consider when concluding those agreements via a distance sale method arising from the Distant Agreements Regulation.2 However, although it is clearly stated in the Regulation that the subscription agreements can be concluded distantly, we are aware that EMRA is of the opinion that electricity subscription agreements (i.e., bilateral agreements) cannot be concluded via distant sale method due to the requirements of the electricity legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.