EWON Annual Report 2006 | 2007

• Systemic issues
• Green energy
• Energy marketing and customer transfers
  • Move to national regulation
  • Case studies (see case studies section)
• Affordability
  • Customer assistance programs
  • Electricity price increases and vulnerable customers
  • Credit reporting
  • Case studies (see case studies section)
• Statistics
  • Retail competition issues
  • Complaints about marketing and/or marketers
  • Decrease in credit-related issues (larger providers)
  • Snapshot of credit issues
  • Complaints involving disconnection/restriction

Systemic issues

Systemic issues typically affect a number or a particular group of customers. Our Policy and Research team is responsible for coordinating EWON's response to the systemic issues identified through customer complaints.

The Policy and Research team works with providers, government, regulators and community groups to address systemic issues. In doing so EWON encourages improvements to benefit consumers and prevent or reduce further complaints of the same nature.

Systemic issues identified this year include:

• Misleading conduct of energy marketers: We continue to receive complaints about pressure marketing (especially to vulnerable customers) and lack of explicit informed consent when establishing energy contracts. Customers also complained of subsequent billing problems and poor service when their accounts were transferred as a result of misleading marketing.

• Green energy issues: Customers complained they were misled when they found their green energy contract was for an unaccredited product.

• Market contract limitations: Customers complained about the limited payment options of some market contracts.

• Time of Use (TOU) metering: Customers complained about delays in billing or that their provider changed the terms of their contract when their systems were not compatible with TOU data. Some customers said they were refused energy offers or found their contract terminated when their meter was changed to TOU.

• Delayed billing: Customers complained about billing delays caused by metering data problems between distributors and retailers.

• Financial hardship: While overall credit issues have decreased this year, complaints indicate some providers are not always offering or accepting payment plans, and failing to refer customers in hardship to their assistance programs.

Green energy

During the year EWON found there was greater community and media interest about green energy. This is understandable given the increase in the number and range of green energy products.

Many of the complaints involving green energy were in relation to contracts, marketing and general confusion about the product range and tariffs.

Some customers did not fully understand the products or the difference between the companies that give away or install energy-saving devices in the home, and the marketing agents of energy retailers who offer contracts. Some customers thought they were signing up to receive energy-saving light globes then found they had signed a contract to transfer their account to another retailer.

In June 2007 EWON published an information paper titled Consumers, green energy and EWON on our websiteto help consumers better understand their green energy options when setting up a new account.

Energy marketing and customer transfers

This year retail competition was the primary complaint issue for customers. EWON received 2786 complaints involving retail competition issues, up from 1853 last year - this represents a 50% increase in retail competition complaints.

The number of retail competition complaints to EWON are small compared with the number of market transactions in New South Wales. However, the number and type of complaints raised by customers is still a significant signal for retailers. We hope that our work with retailers to address issues raised by customers will result in fewer complaints as the energy market continues to mature.

Of the retail competition complaints, there was an increase in billing-related issues (11% this year, up from 6% last year), with some customers complaining about delayed billing or processes, and limited payment options with their new retailer.

Also, more customers complained that their account had been transferred without their consent - 871 customers this year, up from 442 last year.

We are pleased to report however that complaints about misleading conduct by marketers decreased (36% of retail competition issues, down from 43% the previous year).

Despite this, complaints about misleading and unconscionable marketing conduct remain relatively high overall, with vulnerable consumers still experiencing unscrupulous marketing activity and unwanted retail transfers. For this reason, we are continuing to highlight and discuss these issues with energy retailers and regulators.

The national Do Not Call Register which came into effect this year will assist some customers who do not want to be contacted by telemarketers about energy contracts. Along with advice about the Do Not Call Register, and in response to complaints about door-to-door marketing, EWON will continue to inform customers that according to the Marketing Code of Conduct a marketer must abide by 'no canvassing' or similar notices placed on or near their premises.

Move to national regulation

The last 12 months have seen a rapid transition towards the development of national regulations for energy. Regulations have been established for the economic aspects of transmission and the distribution of electricity and gas. There has also been substantial consultation about the non-economic regulation of retail and distribution. To date the focus has been on setting up a framework into which the laws and regulations can fit.

EWON's experience in handling marketing and account transfer complaints has been a key element in our submissions to the ongoing consultation by the Ministerial Council on Energy's Retail Policy Working Group.

We provided substantial responses to five discussion papers as well as the final consolidated paper. We argued for strong consumer protection and for models of regulation that place the customer at the centre of the process. In particular, we argued for:

• standard contract terms and conditions
• energy-specific regulation, and
• strong enforcement mechanisms if retailers or distributors fail to comply with the laws and regulations.

Affordability

Customer assistance programs

Overall, the number of credit related cases dropped this year. We attribute this to the successful outcomes of the customer assistance programs that major providers have had in place for the past few years.

These programs have been promoted by both the providers and EWON over this time. Consequently, many customers and advocates now contact providers directly, rather than needing to contact EWON for help in negotiating payment plans.

We note however that affordability remains a serious issue for many people with low or fixed incomes and this is reflected in our complaints statistics.

People receiving a pension or benefit, and living in public housing, primarily complained about credit related issues. By comparison, other domestic customers complained more about retail competition, billing and customer service issues and credit rated fourth as an issue.

We are pleased that some of the major recommendations made by a working group in which EWON participated, have now resulted in regulatory amendments. These amendments require all energy retailers to offer payment plans to customers in financial hardship, taking into account a customer's capacity to pay, their consumption needs and their level of debt. Retailers' customer assistance programs must be approved by the Minister for Energy.

Electricity price increases and vulnerable customers

Early in 2007, EWON participated in the consultation process of the Independent Pricing and Regulatory Tribunal about their upcoming electricity retail pricing determination.

EWON raised with the Tribunal the impact of significant price increases on vulnerable customers. We were concerned that proposed increases in regulated tariffs combined with potential network price rises and other costs (eg carbon costs), would negatively impact on vulnerable customers.

Credit reporting

This year the number of complaints involving credit reporting and debt collection increased by 47% (264 complaints this year, up from 180 last year).

During the year EWON made a submission to the Australian Law Reform Commission's (ALRC) review of the credit reporting provisions in the Privacy Act 1988. We were able to draw on our experiences in handling complaints about credit, customer utility debt and debt recovery practices in the energy and water industries.

We have found that providers do not always make reasonable attempts to notify customers of an outstanding bill before referring debts to a credit listing agency.
Some customers have complained that they only learned their former provider had listed them with a credit agency when they applied for credit or a loan. In some cases customers have been listed with a credit agency for owing a small amount or their debt consisted of fees rather than consumption costs.

In our submission to the ALRC, we recommended that the reporting provisions of the Privacy Act be revised to require credit providers such as energy retailers to:

• make concerted and reasonable attempts to notify a customer of the existence of an unpaid bill (or bills) before referring a customer for credit default listing
• record these attempts at contact to enable the efficient resolution of disputes
• ensure that any unpaid bill or bills are checked for accuracy before being referred for credit default listing
• make customers aware of their options to have a dispute reviewed or investigated by an external dispute resolution scheme

Statistics

*Issues do not represent complaint numbers. There may be more than one issue raised per complaint.