Consumer groups oppose power companies creating their own customer care policies

Tuesday, 8 December 2020

Agencies working with households having money problems have criticised a proposal to let power companies create, and monitor, their own customer care policies.

In feedback to the Electricity Authority’s consultation on customer care guidelines, Consumer NZ, Anglican Care, Fincap, and the Citizens’ Advice Bureau all called for an end to self-regulation by power companies when it came to customer care.

The authority’s proposal would allow electricity companies to publish their own customer care policies, which must align with the authority’s guidelines.

But, Consumer NZ chief executive Jon Duffy said: “Voluntary guidelines have proven to be ineffective in delivering necessary consumer protection.”

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Duffy said that was especially true of households forced onto pre-pay electricity contracts, calling them the “second class” consumers of the electricity market.

“Without defined standards, we consider outcomes for consumers will be variable and the poor practices in the market that exist will continue,” Duffy said.

The consultation on customer care was launched after evidence emerged that vulnerable customers, including those medically dependent on continued electricity supply, were at risk of having their electricity cut off.

The Electricity Authority was concerned the 2009 guidelines brought in after the 2008 death of Auckland woman Folole Muliaga, were being applied inconsistently by power companies.

Muliaga, who relied on an electricity-powered oxygen machine, died after power was cut off by Mercury Energy over an unpaid bill.

Her death shocked the country, and prime minister at the time, Helen Clark, was among mourners at her funeral.

Duffy, and other submitters, called for mandatory, national standards covering all electricity companies.

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Binding national standards were recommended by the Electricity Price Review in 2018, which found households struggled to make their voices heard, especially those who spoke English as a second language.

Household advocacy groups also called for recognition from the electricity industry that power was not a normal consumer service, but an “essential service”.

Liz Kilduff from Anglican Care said if the current proposals were to be accepted, the authority should set up a whistleblower service so financial mentors and consumers could dob in electricity retailers who breached their own customer care standards.

Electricity Retailers’ Association chief executive Cameron Burrows said the authority’s decision to make customer care guidelines voluntary provided retailers with “useful flexibility to drive towards positive consumer outcomes without the rigidity of ticking boxes”.

But, he said, some of the proposals went too far, including requiring disconnection notices to be delivered in person.

“We are also concerned that these proposed clauses would lead to significant cost increases without corresponding benefits,” Burrows said.

“Retailers have found through experience that engaging with customers proactively resolves most issues, but for a subset of customers who refuse to engage, knocking on doors is disproportionately expensive without a corresponding increase in resolution rates,” he said.

Among the proposals that met with support was for electricity companies to have formalised relationships with budgeting agencies to make resolving problems easier, though those agencies said that would be much easier with a single set of mandatory national standards than a plethora of customer care plans created by electricity retailers.

Some of the household assistance agencies said power companies sometimes created hardship for customers.

Dr Andrew Hubbard from the Citizens Advice Bureau said the single most common issue identified was clients’ receiving much higher bills than usual.

“This causes considerable stress to many clients. Often this is a result of previous bills being inaccurately estimated,” Hubbard said.

Power companies should be banned from disconnecting households for non-payment of an invoice if the invoice was substantially higher than previous invoices.

The authority was also told it needed to deal with the issue of households unable to get a power company to take them on even as pre-pay customers, something which sometimes happened to bankrupts.