What about electricity for companies in 2025? Is it possible to cancel an electricity contract?

The most significant issue in this regard, which was discussed in another article on our blog, is the non-extension of price freeze mechanisms for businesses. From 1 January 2025, businesses – including micro, small and medium-sized enterprises (SMEs) – can expect higher, market-based electricity rates.

The lack of further protective measures for businesses is likely to have far-reaching consequences, including an increase in the running costs of their operations. But does the price increase alone mean it is possible to withdraw from an electricity supply contract?

Is it possible to withdraw from an electricity supply contract?

By way of introduction, I must point out that the solutions adopted by the Polish legislator distinguish between termination of a contract and withdrawal from a contract. The difference lies primarily in the effect of both actions: termination of the contract takes effect from the moment it is served (or, more precisely, from the end of the notice period, if applicable), meaning the contract was concluded, remained in force and was terminated, and the parties retain what they have provided to one another. In the case of withdrawal from a contract, the effect is retroactive ‘from the outset’, as if the contract had never been concluded. The parties return to each other what they have provided. With this in mind, we can move on.

Changing your electricity supplier is a completely standard and common market practice. It is also one of the most effective and quickest ways to reduce the costs associated with using electricity.

The standard procedure involves terminating the electricity supply contract. This is most commonly done when a new supplier with more favourable prices is found, who often represents the customer in dealings with the previous supplier on the basis of a power of attorney.

However, depending on the duration of the contract, the financial consequences vary. For the purposes of this article, it is sufficient to note that in the case of open-ended contracts, the financial consequences fall solely on the supplier (who cannot claim compensation from the customer). In the case of fixed-term contracts, the supplier will be entitled to compensation – limited in accordance with the provisions of the Energy Law.

Withdrawal from an electricity contract by businesses and individuals

Withdrawal from an electricity contract in the market sector occurs in various situations. First and foremost, it is most commonly exercised by individuals, to whom the legislator has granted special status as consumers. As entities with, on average, a weaker bargaining position in the market, individuals are afforded additional protection. In the case of electricity supply contracts, this manifests itself, amongst other things, in the possibility of withdrawing from the contract within 14 days of its conclusion.

The situation is different for businesses. They are not protected by the provisions of the Consumer Rights Act (with certain exceptions, but these are not the subject of this article), and therefore, as a rule, they are not entitled to a 14-day period to withdraw from an energy supply contract. However, a business may withdraw from an electricity supply contract if a relevant clause is included in the contract.

In the situation described above, the parties to the contract rely on Article 395 of the Civil Code, under which it is possible to stipulate in the contract that one or both parties shall have the right to withdraw from the electricity contract within a specified period. This right is exercised by means of a declaration made to the other party.

In what circumstances does the right to withdraw from an electricity contract apply?

Firstly, if the energy supplier is in default of its obligation – e.g. fails to supply energy. In such a situation, the customer may set the supplier a reasonable additional deadline for performance, with the warning that if the deadline passes without result, the customer will be entitled to withdraw from the energy supply contract.

Secondly, the parties may stipulate in the contract that, in the event of a failure to perform an obligation within a strictly defined timeframe, the entitled party may, in the event of the other party’s delay, withdraw from the electricity contract without setting an additional deadline. The same applies where performance of the obligation by one party after the deadline would be of no significance to the other party due to the nature (characteristics) of the obligation or due to the intended purpose of the contract, which is known to the party in default.

As can be seen, withdrawal from an electricity supply contract by a business is not straightforward. It requires an analysis of the business’s situation in each case and a comprehensive review of the signed electricity supply contract.

If you are interested in terminating an electricity contract for businesses, please contact HWW Hewelt Wojnowski Lindner i Wspólnicy. We have extensive experience in advising on energy contracts, analysing legal risks and representing clients in negotiations and dispute proceedings. With our help, terminating an electricity contract will be simpler.