The National Court confirms a fine to Endesa for transferring three contracts of a deceased elderly man to the free market

The National Court has confirmed a fine from the National Markets and Competition Commission (CNMC) to Endesa for transferring three electricity supply contracts at a regulated rate to the free market in the name of an elderly man who had been deceased for almost five months.

The Litigation Chamber has held Endesa Energía responsible for the sanctioned conduct and reproaches it for not acting "more diligently". The good news for Endesa is that the Court drastically lowers the sanction imposed by the CNMC, which has been left in half, 150,000 euros, after partially estimating the electricity company's appeal. Endesa, which does not comment on this matter when asked by, will not appeal the resolution.

In March 2020, a few days before the confinement, the CNMC Regulatory Supervision Chamber determined that Endesa was responsible for three serious infractions of the Law of the Electricity Sector (LSE) for these facts, a "repeated non-compliance with the contracting requirements with clients". It imposed a fine of 300,000 euros, compared to the 1.8 million that the Agency's Energy Directorate had proposed in the investigation of the file.

On March 19, 2018, the two heirs of the holder of three electricity supply contracts in Barcelona, ​​who died a year earlier at the age of 87, reported to the CNMC a series of changes "without consent" by Endesa that "affected the marketer, the applicable rate, the power and the voltage of the supply," according to the resolution.

The changes entailed transferring these three contracts, hosted by the Endesa marketer for the voluntary price to the small consumer (PVPC), to the "Tempo 24 hours" option, in the free market.

Traditionally (until last year's price crisis) those offers advertised by electricity companies are more expensive for users and more profitable for companies than the PVPC, which is the market that is going to benefit first from the cap on gas that has just been approve the government. This rate has been in decline for years (at the end of 2021 it had just under 10 million users) and is indexed to the hourly price of the wholesale market. Brussels has forced the Government to reform it, introducing less volatile references, in exchange for authorizing this extraordinary measure which opens this Tuesday.

The changes in those three contracts occurred in August 2017, almost five months after the death of the holder, on March 31 of that year. In April 2018, after the complaint by the deceased's heirs, the CNMC asked Endesa for various documentation, such as proof of the consumer's consent and the history of communications, without obtaining a response. After a new request, Endesa indicated that the owner of the supply "contracted with Endesa Energía, SA, in person, with a power of 9.20 kW and a voltage of 230 V, the three supplies subject to discrepancy."

After the claim of the heirs, in the company "no irregularity was noticed". Later, with the file already opened, "he proceeded to process the return of the supplies to his previous company."

The CNMC determined that Endesa incurred in "a fault by way of gross negligence, by not having observed the minimum diligence required in order to obtain and verify the identity of the consumer who is the holder of the three supply contracts": "It has not even been irrefutably accredited that there was a signature of the contract" and Endesa's allegations lacked "credibility and probative force, as only screen prints were provided that show nothing more than the marking of a date in a box", according to the resolution of the regulatory body.

As explained by the CNMC, "the manipulation of the signature by Endesa Energía, SA not being recorded as a proven fact, it can be attributed to the aforementioned company the absence of a diligent verification of the identity of the alleged signatory, whose signature did not coincide with that of the DNI": an "alleged impersonator" who had formalized the contract changes in an Endesa commercial office in the town of Santa Coloma de Gramanet in August 2017.

In a judgment dictated a few weeks ago, the Court shares a good part of the arguments of the CNMC and questions that Endesa "used all the diligence that was required of it in order to verify the identity of the consumer at the time of contracting, taking into account that said consumer had died months before, so it is evident that he was not the one who went to the Endesa offices to sign the contracts".

And this "should have been warned by the marketer": "Not only when contrasting the signature on the contracts with that of the DNI, but also in terms of the physiognomy of the person who would have signed the contracts, which could not be the same as that of the owner", says the ruling, "regardless of whether the DNI had been issued 14 years earlier", as Endesa alleged.

"It does not preclude the fact that he would have been aware of the death later, since greater diligence in verifying the coincidence between the person who went to sign the contracts and his signature with the DNI would have allowed to notice" this circumstance, according to the Court .

"Despite the internal control protocols, the marketer did not use all the diligence that was required of it in the fulfillment of its obligations, among which is precisely that of verifying the identity and the voluntary provision of consent by the consumer in the exercise of their right to choose the supplier; the breach of said obligation being the infringing conduct.

"It is pointed out in the lawsuit that Endesa Energía acted in the objectively founded belief that the person who signed and perfected the contract was who he claimed to be, since there is no indication that this was not the case, but the truth is that this belief cannot be considered founded when the person who supposedly signed the contracts had died months before".

"The marketer is not required to believe, but rather an irrefutable verification of the true identity of the consumers with whom they sign the corresponding contracts," reasoned the Court.

The sentence recognizes that Endesa, "once it had knowledge of the facts, proceeded to return the supply points and the invoiced amounts, but it is also true that it was perfectly able to acquire the conviction of the lack of said consent, before proceeding to the activation of the service, if he had acted more diligently, for example, by means of a subsequent verification by telephone, as he has done on other occasions in which the contracting has been carried out through a third party", a practice that the Court "has recognized full validity when it has been done with adequate guarantees".

The electricity company, which in its appeal against the CNMC resolution had denounced "lack of objectivity" of the instructor of the file, an aspect that the Court rejects, asked to annul the resolution or, failing that, "graduate the amount of the sanctions to the minimum legally provided for minor infringements" of the LSE.

And in this the Court agrees with him. He does not share the reasoning of the CNMC that there were three serious breaches of the LSE, "as a consequence of the individuality of each of the three breaches in each of the three contracts" and as it was a repeated conduct. For this reason, the Contentious Chamber has ruled that "a single continuous serious infraction should have been assessed, which must be reflected in the quantification of the sanction", which is set at 150,000 euros. It is half of what the CNMC determined, and twelve times less than what the instructor of the file proposed.

The CNMC has repeatedly denounced some commercial practices of the electricity companies, with the corresponding sanctions, which led the Government to prohibit through a Royal Decree-Law in October 2018 known as "door to door", home visits without the user's knowledge.

Those "bad practices", which continued to be produced afteras the 'super regulator' later determined, were often carried out with subcontracted personnel, with cases of false self-employed that the Labor Inspectorate forced to register.

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