Electricity companies pushed to tell customers if they can buy cheaper power

Tuesday, 30 March 2021

The Electricity Authority says new “consumer care” guidelines should foster a positive relationship between electricity companies and consumers.

Power companies will be discouraged by the Electricity Authority from charging some customers more than others for the same service from July.

They will also be asked to jump through more hoops before disconnecting customers who are behind on their bills.

But Consumer NZ research director Jessica Wilson said the “consumer care” guidelines issued by the authority on Tuesday did not go far enough and should be mandatory.

“The Electricity Price Review estimated millions of dollars extra were being paid by customers as a result of them not being on the right plan,” she said.

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Stuff reported in November that Meridian Energy was charging some customers 11 per cent more for electricity than it was quoting other customers for power through price comparison site SwitchMe.

Customers could switch to the cheaper plans if they found about them and requested that.

Fellow majority state-owned gentailer Genesis Energy was also offering a “special” 10 per cent discount to some customers through its call centre and at least one price comparison website, at the time.

Consumer NZ argues that unadvertised discounts make it harder for consumers to quickly shop around and make sure they are getting the best price for electricity.

Power retailers that agree to abide by the Electricity Authority’s new guidelines – including Genesis and Meridian – would appear to need to make every effort to ensure customers were on their best available plans from July.

Consumer NZ says the Electricity Authority’s consumer care guidelines fall short for the “most vulnerable” consumers who are on pre-paid plans.

Signatories should provide their customers with “every opportunity to be on the best pricing plan” to meet their needs, the authority’s guidelines state.

If customers are in hardship or asking about plans, power companies should tell a customer if they had a plan that would provide a lower price than the one they were on, based on the customer’s average consumption over the previous year while taking into consideration their individual circumstances.

More than that, if a customer asks about changing a plan, the guidelines recommend their retailer makes them aware of “any options generally available in the market” they know of that might suit the customer better than the plans they themselves offer, before making any change.

Electricity Retailers Association chief executive Cameron Burrows said it had concerns when a requirement along those lines was first drafted by the authority, but it now understood the obligation to provide information about other options was more general in nature.

The guidelines also state that power companies should only disconnect post-paid customers who are in default as a last resort, once customers have exhausted or refused “without good reason” all relevant assistance to pay down their debt.

Before doing so, power companies would need to make at least five attempts to contact the customer and that would need to include one approach that they could prove the customer was aware of, such as a couriered letter that had been signed for, or a home visit.

Power companies would not be able to intentionally disconnect customers who were registered as being medically dependent on their electricity supply for any reason other than an emergency, but could still attempt to recover any debts those customers incurred through debt collection agencies or the courts.

The Electricity Authority confirmed power companies could not avoid the steps they would be required to go through before disconnecting post-paid customers by requiring customers to switch to a pre-pay service at an earlier stage in the disconnection process.

However, companies could offer that “as an option” if they could not agree on a suitable payment plan.

Burrows said retailers had worked hard to develop systems to help those in hardship manage their debt and avoid disconnection.

“That said, there is always room to do better,' he said.

“We welcomed the constructive, collaborative process run by the Electricity Authority bringing together power companies, regulators and consumer advocates to look at how these processes can be improved further.”

Wilson said Consumer NZ believed households that were on pre-paid plans should be offered cheaper pricing, because they were paying up front.

“These are the most vulnerable consumers and we don’t think the guidelines address their issues, which should be a priority.”

Consumer NZ was not convinced voluntary guidelines were going to deliver the best results, she said.

“The best option for consumers would be a mandatory code and good enforcement, with retailers called to task if they are not meeting their obligations.”

The Electricity Authority said an advantage of making the guidelines voluntary was that they would be easier to update and would give retailers “a period of time to adjust”.

It indicated it was not clear whether the authority could make the guidelines mandatory under existing legislation.

But it said it expected retailers would align their practices with the guidelines “given the amount of collaboration we have had with stakeholders” during their development.

A spokesman for Genesis said it would be reviewing the voluntary guidelines and would “work to align the guidelines and our processes to the benefit of our customers”.

A Meridian spokeswoman said the company was still digesting the new guidelines, “but we intend to comply with them in full”.

This story has been updated to clarify that while electricity retailers would face a general obligation to ensure customers had every opportunity to be on the best pricing plans under the code, the more specific requirement to tell customers if they had a plan that would provide a lower price than the one they were on – based on the customer’s average consumption over the previous year while taking into consideration their individual circumstances – would only apply if customers were asking about plans, or in hardship.