Consumer vs. company
30 September, 2010
Consumer vs. company

Georgian regulatory body for electricity, gas and water is authorized to bring misappropriation lawsuits. Only court was responsible for settling the questioned suits before.

Government believes the initiative will discharge the court that abounds with the cases of energy misuse, as well as ensure better protection of consumers’ rights. Some experts think the new protection mechanism can achieve its goal only if it is well-advertized, otherwise uninformed consumers can miss their chances. 
Georgian courts swarm with the lawsuits between consumers and

companies that provide communal service such as supplying gas, water and electricity. According to Valeri Pkhakadze, Ombudsman with Georgian National Energy, Gas and Water Regulatory Commission (GNERC), headquartered in Kutaisi, in this city alone court studies litigation disputes between consumers and companies 2-3 times per week and each court session includes about 8-12 cases of consumers vs. companies. Statistics is much bigger in Tbilisi where over million people live. The point is that a gas, electricity and water distribution company had an obligation to write a protocol on each suspicious misappropriation case and send it to court for final approval. And only after court’s decision companies had a right to impose a penalty on delinquent consumers. And as much as high penalty rates fixed for misappropriation cases enticed monopolist distribution companies to accuse as much people as possible in misuse of gas, electricity and water they do not miss a chance to write a protocol of administrative felony on each petty misdemeanor. As a result number of litigation procedures [between consumers and companies] only increases each year bespeaking that situation needs better regulation, Pkakadze said.
Georgian government found courts encumbered by company-vs.-consumer case. To discharge courts from piling files and discourage companies to file lawsuits on each insignificant issue, government decided to cut down penalty rates and enlarge the role of GNERC as of an impartial referee.


Georgian parliament initiated an amendment in this past July according to which, starting September 1st, 2010 companies are mandated to make protocols on administrative felonies and impose penalties at their own discretion. However penalties imposed for the first misappropriation cases [amounting to GEL 600 and GEL 5 thousand for physical and legal entities respectively] are revoked and distribution companies have to warn suspects initially. Culprits can be fined only for repeated crime and by much reduced penalty rates: the earlier active GEL 1200 and GEL 15 thousand [imposed on physical and legal entities respectively for repeated crime] are cut down to GEL 100 and GEL 5 thousand.
To insure protection of consumers’ rights [companies still interested in yielding financial tolls can misuse of their authority] government allows consumers to appeal to court and GNERC alike if they disagree with the company’s claim. And all claims and penalties are suspended till the final court/GNERC verdict is drawn up.
New amendment apparently makes consumers more vulnerable as leaves them tete-a-tete to companies that are enticed to abuse their power so as to enjoy higher tolls, and replaces court from the central position to the end of the chain that complicates litigation procedures, but mandating GNERC with the court functions guarantees protection of consumers rights better than before, Pkhakadze believes.

Malkhaz Dzidzikashvili, ex-Ombudsman at GNERC and active Head of Legal Department at GNERC at the moment, shuns commenting whether or not the amendment complicates or eases the situation from consumers’ rights protection point of view.
“I prefer to refrain from expressing my private opinion respective to this issue,” He told Georgian Journal.
Davit Ebralidze, another ex-ombudsman at GNERC, believes the new amendment cuts much ice with companies rather than consumers’ interests.

“This amendment was initiated to woo companies’ interests in fact and not to discharge courts. There is a huge difference. According to old regulation, companies could not practice any fine till the protocol was not approved by court. Now companies can act at their own discretion and their action can be prohibited only if a consumer lodges a complaint against its protocol. That obviously complicates the situation for consumers the more so that bigger part of population is not informed of their rights to appeal to court/GNERC,” He explained to Georgian Journal.  
Pkakadze counters that companies have an obligation to inform the suspected consumers on their rights that they can lodge a complaint against company at court/GNERC. If they do not provide the pursued consumers by full information on their rights, companies will get a warning paper for the first time, and will be fined by GEL 5 thousand for repeated misdemeanor. The penalty increases to GEL 15 thousand and GEL 45 thousand afterwards, and if the company does not observe the demanded regulations it can lose a license ultimately.
“Besides courts are related with extra payment imposed on filing lawsuits and frequently have been drawing unfair decisions, whilst empowering the GNERC with court rights can spare consumers from extra outlays and insure impartial judgment,” Pkhakadze said.

Ebralidze thumbs up that the GNERC is equalized with the court that really can guarantee better protection of consumers’ rights and draw impartial verdicts, but he believes that this novelty can work only if awareness in population will be raised.
“It is one thing when companies are obliged to inform their consumers of their rights that bigger part of consumers cannot or will not use as far as GNERC is not available to entire Georgian population from distance point of view. On the other hand consumers were automatically informed and involved in the litigation procedures when the court was positioned between company and consumer. Court [when discussing a protocol approval case] is responsible to inform the consumer to attend the court session and keeps them in course of affairs,” Ebralidze said. 

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