EnergoReket

Gela Mtivlishvili, Information Center of Kakheti

80-year-old Sultan Usupashvili lives in Magaro village in Signagi district. The lonely old man has been without electricity for 8 months already. The Electricity Distribution Company EDC charged him with 1 047 GEL. The old man does not have electronic technique at home. He is blind and used the electricity only to recharge the radio-set with the support of his neighbor. The debt was imposed on him according to the communal electricity meter.

In Magaro village five more families have not had electricity supply for eight months. The EDC requests each family to pay debts ranging from 850 to 2 000 GEL.

Tengiz Kadagishvili, resident of Magaro village: “12 subscribers are adjoined to one communal meter. The Company charged me with 850 GEL. I had to buy a new, individual meter for my family. However, I do not know what happened later and my debt increased from 1 000 GEL to 2 000 GEL. They demanded me to pay the debt but I could not afford it. Consequently, they cut off electricity supply and we have been in darkness for 8 months already.”

Darejan Kadagishvili: “I have one 12-kwTV-set and how could I use so much electricity? I do not have a fridge and washing machine. 988 GEL was imposed on Guraspashvili, 976 GEL was imposed on Shaishmelashvilis, 1005 GEL was imposed on Varsimashvilis. Unless they pay the debt, the Company representatives said they would not see electricity.”

Monopolist on License

JSC Kakheti EnergoDistribution is the only license-holding company in Kakheti region to distribute electricity; the Company serves 117 058 subscribers.

Since 2005 to 2008 Kakheti EnergoDistribution Company worked in bankruptcy regime. The privatization process started in 2006. Throughout two years 4 competitions and 1 auction were held but the company was not sold. Meanwhile, the monthly salary of the company manager and other administration members was several thousands of GEL.

The state sold the Kakheti EnergoDistribution Company to Energo Pro-Georgia in 2008 though soon the Ministry of Economic Development annulled the agreement. The reason was mistakes in the document. More precisely, 883 electricity transformers were written instead real 947 transformers in the announcement of the distribution company. The announcement did not include the land owned by the Kakheti EnergoDistribution either. The former bankruptcy manager of the Company Zurab Digmelashvili said the shortcomings in the announcement were mechanical mistakes. After the agreement with the Energo Pro-Georgia was annulled, the governmental officials said the members of the company administration should be punished for having hidden actives from the state though nobody has been punished or fired yet.

In December of 2008, Lithuanian Company “Akhema Group” purchased the Kakheti EnergoDistribution Company for 9, 150 million GEL at the auction. According to the Ministry of Energetics of Georgia, according to the agreement conditions, the Lithuanian Company shall invest 15 million GEL in the company in 2009-2013. In the framework of the investment program, the installment of individual meters shall finish before 2014 in the region.

The installation schedule was breached several times. According to the information provided by the Kakheti EnergoDistribution Company on August 25, 2011 only 20 393 subscribers have individual meters in the region. The rest 96 665 subscribers pay electricity bills according to communal meters.

Communal Electricity Meters

Georgian National Energy and Water Supply Regulatory Commission (GNERC) clarified the communal electricity meter calculate the total amount of electricity used by group of subscribers including the wastage.

During the journalistic investigation we interviewed subscribers in 16 villages of the Kakheti region. In every village, the bills imposed according to the communal meters are higher than the subscribers spend in fact. For example, according to the communal meter of the Kakheti EnergoDistribution Company in Gavazi village of Kvareli district, each family had to pay additional 70 GEL per month. In the villages of Vazisubani, Chandari, Chumlaki, Kolagi, Shakriani and Apeni each family has to pay extra 3-18 GEL per month. Since March of 2011 we have observed that the EDC used to suspend electricity supply for entire districts in those villages if at least one family had not paid the bill.

Two years ago, former Minister of Corrections and Legal Aid Dimitry Shashkin assessed the activities of the Kakheti Energo-Distribution Company as “acting according to the principles of Chingiz Khan”. “Our interviews with the population exposed the main problem. The EDC compels people to pay unfairly imposed bills. Besides, if at least one subscriber does no pay the bill, the entire district is left without electricity. So, the Company treats subscribers according to the principles of Chingiz Khan. We will not allow it. I have already instructed our lawyers to prepare a complaint and appeal to the court to defend the subscribers’ rights,” said the Minister in August of 2009 during his meeting with the population of Kakabeti village in Sagarejo district. Nevertheless, nobody has filed complaint to the court against the Company.

Because of the additionally allocated funds, 430 citizens applied to the Kakheti office of the non-governmental organization Human Rights Center in 2010; 386 citizens have applied to the Center with the same problem from January 10 to August 20 of 2011. Lawyer of the Human Rights Center Nino Andriashvili clarified that they send discontent subscribers to the Energo Ombudsman and GNERC. The offices of the Energo Ombudsman and GNERC are located in Kutaisi and due to long distance subscribers cannot apply to them.

Energo-Verdict of the GNERC

Lawyer of the Kakheti Energo-Distribution Company Tea Chilindrishvili said the Company, who are not supplied with the electricity, do not have new individual meters, have to pay debts based on the temporary regulations of the resolution # 17 issued on October 15, 2009 by the GNERC.

The GNERC allowed the JSC Kakheti EnergoDistribution Company to collect bills according to communal bills initially on November 29, 2005. The resolution time expired on July 1, 2008. On October 3, 2008 the GNERC prolonged the deadline till June 1, 2009 for the second time and then, finally the deadline was made January 1, 2014.

The Georgian National Energy and Water Supply Regulatory Commission was established in 1996 in accordance to the international practice to protect subscribers from monopolist prices. The recent decisions of the Commission breach the consumers’ rights.

The lawyers clarify that charging people according to communal electricity meters violates the human rights because subscribers have to pay others’ debts. “The communal calculation rule contradicts the Law of Georgia on the Protection of Subscribers’ Rights. Article 2 and 6 of the law state that subscriber has right to demand corresponding information about the amount of product and to get information from the service-provider about the amount of the product; however, people mostly cannot enjoy these right,” said Lawyer Lia Khuroshvili.

The service of the Energo-Ombudsman also works within the GNERC. EnergoOmbudsman Varlam Pkhakadze clarified the resolution of the GNERC by avoiding financial problems of the Company. “Subscriber shall pay the bill. Otherwise, the quality of the service will worsen and the Company might get bankrupted. After that, the Company will not be able to serve subscribers and we will not be able to protect either obedient or disobedient tax-payers. We should not evaluate the situation only in the view of human rights,” said Pkhakadze.

Violations

According to the GNERC’s Resolution # 17 issued on October 15, 2009 several requirements for the protection of subscribers’ rights were worked out but the Kakheti EnergoDistribution Company violates those requirements.

In accordance to the Article 8 Part I of the Resolution, in case of subscriber’s request, the Company shall check the individual meter of the subscriber within one month and draw up corresponding protocol on the conditions of the meter.”

Several people applied to the Company with the request, including Guguli Rakviashvili and Tamar Nikolashvili from Gurjaani village. “Even lawyers of the Human Rights Center assisted us to write application to the Company. We delivered the application at the Gurjaani service office of the Company in March of 2011 but nobody has come yet to check the meter,” said Tamar Nikolashvili.

The same resolution states that unless the Company checks the meter and draws up corresponding protocol within one month time, the individual meter is considered to be in order and consequently, the subscriber stops using the communal meter. Relatively, the Company is entitled to calculate kilowatts according to individual meters. In April of 2011, Guguli Rakviashvili refused to pay the bills according to communal meter. “I told them at the service center that my meter is considered to be in order since they had not checked it within one month. So, I told them I would pay bills only in accordance to the individual meter. They suggested me not to be so categorical in my demands; although I paid only my current bill that evening they suspended electricity supply,” said Guguli Rakviashvili. After being in darkness during several days, she had to pay the additional 23 GEL and then the Company renewed the electricity supply.

According to the Article 3 Part II of the Resolution, the figures from communal meters shall be calculated once a month, preferably on the same date by authoritative representative of the Company in presence of subscribers or their representative.

“Kakheti Energo-Distribution Company breaches this requirement too. We asked the subscribers whether any of them attended the calculation process but they refused; they do not know who and how calculates the figures from communal meter.

According to Article 6 Part III of the Resolution, subscriber shall pay bill before the estimated deadline which is written on the bill-paper and it shall not be less than 15 days after delivery. If the deadline date coincides with the day-off or a week-end, the following working day shall be considered a deadline.

“Kakheti EnergoDistribution” Company breaches its own requirement too. The Company is entitled to deliver the bills in the houses but they never do it. On August 25 Correspondents of the Information Center of Kakheti interviewed 60 subscribers in the villages of Gurjaani and Dedoplistskaro district. 56 of them said the Company does not send bills to them; 3 of them said the bills were left in the shop for them; only one subscriber had received the bill at home.

Paragraph 4 of the same article states, that in case of unpaid bill, the Company shall individually switch off the subscriber. However, mostly the Company switches off the entire district.

For example, Kakha Mamardashvili lives in Vazisubani village in Gurjaani district. He and his three neighbors have one meter. On November 27, 2010 electricity supply was suspended for all four families. “We did not have debt and tried to find out the reason. I went to the village fitter who gave me the phone number of the head of Gurjaani service center Avto Zarnadze. I called him and Zarnadze said he was in our village clearing up the situation with the gathered people. I went there and told him I had no debt but they had suspended the supply for the entire district. He agreed I did not have debt. At that moment police officers grabbed me and took away. They accused me of participating in the protest rally, of resisting the police officers and detained me,” said Kakha Mamardashvili. Based on the judgment of the Telavi district court, Kakha Mamardashvili spent 7 days in prison.

Raids before Holidays

The employees of energy Distribution Company are especially active during pre-holiday season. On April 21-22 of 2011, the employees of Kakheti Energy Distribution checked the districts and turned off not just the subscribers who had arrears but the whole districts.

“I was dying eggs for Easter April 21st. They came and said that if I do not pay debt they would turn off electricity. I just had 50 GEL in that moment and could not pay it. Some other families could not pay either. The whole district was turned off. I was forced to earn some money. We had to borrow some. One employee was collecting all the money. He took money, wrote it down in the notebook and asked us to come to the service center on Tuesday and take the receipt. The electricity came back on on the same night,” – states the resident Tamar Natsvlishvili from the village Chandari.

On April 22nd it was big Friday, on April 23rd – big Saturday, on April 24th – Easter, on April 25th – day for the remembrance of the deceased. According to article 20 of the Labor Code, Easter days, starting from Friday to Monday are holiday.

The paragraph 5th of article 6 of decree #17 of Georgian National Energy and Water Supply Regulatory Commission (GNERC)  adopted on October 15th of 2009 prohibits to turn off electricity to the subscriber during night hours, weekends, on holidays envisaged by Georgian Labor Code or on the day previous to holiday. The employees of Energy Distribution Company also violated this request.

Decree #20

The decree #20 Modalities on Electricity Provision and Consumption of September 18th of 2008 of GNERC regulates the decree #17. Basically, it addressed the subscribers who have individual numerators.

According to paragraph C of part II of article 2 of the decree, Kakheti Energy Distribution should ensure 24-hour hot line service for the subscribers. According to paragraph D, the company is obligated to react properly and immediately to the notification of turning of the electricity or deviation of voltage. Kakheti Energy Distribution Company indicates the hot line numbers: 8 350 27 12 32; 8 350 27 42 92. Nobody answers these numbers after 6 pm and fax signals turn on. The same happens on weekends.

According the same decree, the Energy Distribution Company is obligated to sign the written agreement with the subscriber in case of her/his request. The citizen Ana Mtivlishvili, whose highly valued fridge was burned due the voltage chance, addressed Kakheti Energy Distribution with the request to sign the agreement twice in November of 2010 and April of 2011. The subscriber did not receive reply from the Energy Distribution Company. However, according to paragraph 6 of article 4 of the decree, both the Energy Distribution Company and the subscriber have right to request the second party to confirm the agreement in the written form at any stage of the legal communication.

The article 10 of the decree determines the mechanisms for determining the debt and ways of sanction. If the subscriber pays the electricity fee on late three of more times during 12-month period, Energy Distribution Company has right to request the subscriber to put money on its deposit. The money returns to the subscriber if the subscriber willfully refuses the service and fully pays the debt at final payment; during 12-month period, the subscriber conscientiously fulfilled the obligations and paid the debt fully and on time. Kakheti Energy Distribution requested the subscriber Ana Mtivlishvili to pay deposit 20.50 GEL despite the fact that the subscriber failed to pay the fee only twice and not three times. Moreover, the subscriber does not receive receipt from the company. Among numerous subscribers at service centers every day, we could not find one who received money back from the deposit.

Zautashvili Case

Ramaz Zautashvili lives in Kvareli, at Dodashvili St. with his wife and two little children. On April 15th of 2009, when Ramaz Zautashvili and his wife were not at home, the representatives of Kakheti Energy Distribution changed the numerator without checking the old numerator or composing protocol. Since April 15th till the whole month of May, Ramaz Zuatashvili was charged with arrear of 388 GEL. However, his family was on vacation in Surami during May 3-28 which is confirmed by his neighbors and employees. On May 29th Ramaz Zautashvili addressed the Energy Distribution and requested checking of his numerator. On June 13th the numerator was checked. Afterwards, the employees of Energy Distribution Company stated to Ramaz Zautashvili that the numerator is working well and he had to pay the arrear fully and on time. Before the payment, his electricity was turned off. Considering that Zautashvilis had a child who needed inhalation several times a day which was impossible without the electricity, the subscriber was forced to pay put some 10 GEL on deposit. The electricity was turned on as a result. Ramaz Zautashvili addressed Kvareli Municipality City Council. The member of City Council Vazha Varadashvili requested to found the temporary working group. The deputy explains in his speech note that Kakheti Energy Distribution charged another subscriber with big amount of money as well and this issue needed complex approach. The City Council did not satisfy the deputy’s request.

On October 15th of 2009 Ramaz Zautashvili addressed Telavi Court with a complaint and requested the removal of 278 GEL arrear. According to decision of December 25th of 2009, the court appointed technical expertise of the numerator and the proceedings were stopped. Before the court made decision, Kakheti Energy Distribution employees turned off the electricity for Zautashvili family four times, including the period when their child was severely ill. Kakheti Governor’s administration got involved in the case as a result.

The paragraph II of article 12 of the #20 decree of GNERC determines that it is inadmissible to turn off the electricity for the subscriber during the dispute period between the subscriber and the distribution company without the court request of decision except for the case when the dispute concerns disagreement regarding the current payment when the numerator operates properly. According to the paragraph 6 of article 14, if turning off electricity causes death or health deterioration and this circumstance is known for the distribution company, the company is obligated to consider it and determine the additional reasonable term for the payment of the debt and the turning off electricity which should not be less than a month. Kakheti Energy Distribution violated these requests as well.

Telavi Court made a decision in absentia in the case of Zautashvilis on December 20th of 2010 and did not satisfy the subscriber’s complaint. Ramaz Zautashvili could not attend the session due to his sickness. His lawyer died in the hospital during this time. Zautashvilis could not proceed with the legal dispute and were forced to pay the imposed money.

Case of Bankruptcy

Despite the fact that Kakheti Distribution Company gets money by violating subscribers’ rights, the company has not yet paid for the purchased electricity. The debt amounts to 4 417 544 GEL. According to August 5 decision of Tbilisi City Court, the bankruptcy case was opened up towards Kakheti Energy Distribution.

Ltds Commercial Operator of Electricity System and Georgia’s State Electricity System addressed the City Court with the request of initiating proceedings against the company due to insolvency.

According to Irina Milorava, the general director of Ltd Commercial Operator of Electricity System, joint-stock company Kakheti Energy Distribution has purchased 3 509 921.86 GEL valued electricity from them. “The debtor violated article 6.4 of the agreement thus violated its obligation. Particularly, the debtor paid only small amount of electricity cost. The debt to Commercial Operator of Electricity System amounts to 2 943 375.6 GEL,” – notes Milorava.

On August 14th of 2009, Georgia’s State Electricity System signed direct agreement with Kakheti Energy Distribution. According to this agreement, during months of January-June of 2011, Kakheti Energy Distribution has received 1,506,684.97 GEL valued electricity service from the Electricity System. “The debtor did not fulfill its obligations. Particularly, the debtor paid only small amount of service cost. The debt to electricity system amounts to 1 474 169.31 GEL,” – stated Sulkhan Zumburidze, rehabilitation manager and the head of board of Ltd Georgia’s State Electricity.

Tamar Chuniashvili, judge of Tbilisi City Court, received the complaint of Irina Milorava and Sulkhan Zumburidze on August 5th. According to the court decision, the National Bureau of Enforcement was appointed to be a trustee. Kakheti Energy Distribution was prohibited to sign or cease any kind of agreement without the consent of the trustee. Also, it was prohibited to ensure the debts undertaken before the decision of acceptance of complaint regarding the insolvency. The payment and issuance of debts, percents and liabilities (including tax and excise) was ceased. All compulsory measure mechanisms of forceful payment were ceased. The decision prohibited to start new measures of forceful payment.

The judge explained to National Bureau of Enforcement that it is obligated to keep the trustee property and protect it from damage and destruction, determine all creditors and immediately notify about the start of the case of their insolvency. The first meeting of creditors is appointed for September 22nd of 2011 at 14:00 pm in Tbilisi City Court.

Till 2008, the first bankruptcy of Kakheti Energy Distribution Zurab Dighmelashvili managed the company. He was in charge of it during the sell-out as well. The investor appointed him to the post of director. He still manages the company.

Material was prepared by the support of Danish Association for Investigative Journalism (SCOOP)

Material was first published by Kakheti Information Center

http://www.ick.ge/ka/jinvestigation/7643-2011-08-30-06-43-59.html