Reports to stakeholders
Jackgreen – the failure of an energy retailer
The report Jackgreen - the failure of an energy retailer. The perspective of the Energy & Water Ombudsman NSW in dealing with Jackgreen customer complaints was presented to stakeholders in September 2010. Download the full report [PDF, 320KB]
An extract from the report follows:
Ombudsman's summary
The Energy & Water Ombudsman NSW (EWON) is in a good position to document issues arising from the failure of Jackgreen as an energy retailer in the national electricity market in Australia. Although Jackgreen operated in NSW, Victoria, and Queensland, most of its customers were in NSW (around 47,000). EWON had extensive experience with Jackgreen through complaints from its customers both before and after the company was suspended from the market by the Australian Energy Market Operator on 18 December 2009.
EWON has documented our perspective on Jackgreen as we believe it highlights important issues for the energy retail industry, energy regulation, and the Retailer of Last Resort (ROLR) provisions.
Factors contributing to Jackgreen’s failure
Contributing factors for Jackgreen’s failure included:
- inappropriate marketing to low income and disadvantaged customers
- initial problems with their ‘smooth pay’ billing system
- ongoing billing issues resulting in significant billing delays for some customers
- an ineffective credit management policy which allowed high arrears to accumulate
- no viable customer hardship policy to identify and assist those customers in difficulty.
Early warning signs
Early warning signs of Jackgreen’s problems included:
- a significant increase in the number of customer complaints to EWON
- community agencies advising of problems in dealing with Jackgreen staff when trying to assist customers in financial hardship and facing disconnection.
EWON’s identification of problems in 2006
Early engagement with Jackgreen to address the increase in complaints:
- March 2006: EWON senior staff met with the Managing Director of Jackgreen to discuss concerns about their marketing and billing issues. EWON kept IPART informed of concerns about the increase in complaint numbers, and at IPART’s request, provided weekly reports on Jackgreen complaints and issues
- April 2006: IPART issued Jackgreen with a Notice of Preliminary Investigation as the first step in a formal compliance process
- July 2006: IPART conducted an investigation and audit of Jackgreen, which resulted in Jackgreen entering into a number of enforceable undertakings
Managing complaints following a ROLR event
The ROLR event presented a number of challenges for EWON in resolving customer complaints:
- Resolution of complaints following the ROLR event
On 18 December 2009 the Australian Energy Market Operator suspended Jackgreen from the national energy market, and existing Jackgreen customers transferred to the appropriate ROLR – either Country Energy, EnergyAustralia or Integral Energy. At this stage EWON was in the process of investigating a number of current customer complaints against Jackgreen. To enable EWON to assist in the resolution of customers complaints, protocols were put in place with the Jackgreen Administrators and Receivers. Jackgreen officers nominated by the Receiver were initially able to provide account and billing information, and settled some matters on a commercial basis. EWON has continued to receive customer complaints on a range of issues that have come to light following the ROLR event, for example incorrect transfers and disputed billing issues relating to the final accounts, and particularly in relation to the debt collection procedures and credit default listing carried out by the Receivers.
- Complex communication process
In the process of investigating customer complaints EWON has continued to communicate with both the Receivers, the various debt collection agencies they have engaged, and the credit default listing agency.
- Obligations were unclear
Jackgreen’s license had not been revoked, so the status of the Receiver with respect to the license (and its accompanying obligations) was not clear.
- Who carries the cost of complaint handling?
The cost of EWON’s assistance to Jackgreen customers was significant, but the Receivers did not agree to meet these costs, leaving EWON as an unsecured creditor.
- Customers continue to complain about being credit default listed
At the end of August 2010, EWON was still working to finalise a number of Jackgreen matters, and can expect to continue to receive complaints on an ongoing basis, for example as customers become aware that they have been credit default listed and wish to dispute this.
Lessons to be learned
EWON is not party to all information about Jackgreen, but we trust this report based on information available to us will assist the energy industry, government, and energy regulators to consider how a failure of a retailer in similar circumstances and the negative impact for customers might be avoided.
Share this page
