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Consumer protection
Systemic issues
EWON believes that working with providers to identify and resolve systemic issues can improve service to customers and help prevent or reduce complaints.
Systemic issues typically affect a number or a particular group of customers so it is in the interests of companies and customers to recognise and address such problems early on.
EWON’s Policy and Research team is responsible for coordinating our response to systemic issues and, by reporting to and working with the energy and water providers, government, regulators and community groups, we are able to encourage improvements that will benefit consumers.
Some of the systemic issues we examined this year were:
- Marketing misconduct: a significant increase in complaints about misconduct by marketers representing energy retailers, particularly complaints about misinformation to vulnerable elderly consumers
- Lack of consent: concerns from customers that retailers have set up or cancelled their account without their explicit informed consent
- Opening and closing accounts: problems for both customers and providers with the regulations about how an account is set up when a customer moves into or out of a property
- Customers in financial hardship: despite significant improvements in the approach to customers in financial hardship by energy providers, there were still customers in need who were asked to agree to unreasonable and unmanageable payment arrangements, or not referred to customer assistance programs
- Compensation claims: inconsistency across utilities in their approach to customer claims for loss or damage
- Disputed ownership of poles and wires: regional complaints about the ownership and maintenance responsibility for power poles and wires on private land
Affordability and disconnection
Scott's story: disconnected for 8 months
Judy called EWON on behalf of her cousin Scott, an
Indigenous man who had been living without hot water
since his gas was disconnected 8 months ago. Judy said
that Scott was permanently in a wheelchair.
He wasn’t
comfortable talking on the phone so she was calling for
him. She said he couldn’t go on without hot water – he
had been using cold water but winter was approaching.
Scott had made part payments towards his bill and only
had $20 arrears outstanding. His bills were usually less
than $100 but having been disconnected four times
in the past two years his debt was mostly made up of
reconnection fees.
The disconnections happened when he
was in and out of hospital and couldn’t get to pay his bills.
EWON contacted the company who said they would
reconnect and waive the fee if Scott set up a Centrepay
arrangement.
We explained to Judy that Centrepay meant
there were regular payments going towards his bills. Scott
agreed and Judy helped him set up Centrepay to cover
future usage and avoid disconnection. |
According to figures published by IPART there were 26,931 residential customers disconnected in 2004–2005, which amounts to nearly one in every 100 customers.
Due to the increasing number of disconnections compared with previous years, in September 2005 the Minister for Energy established a working group to advise the government on how to reduce this unacceptably high figure.
EWON actively participated in this group and in July 2006 the Minister accepted the group’s report and announced a plan of action. Under the plan, energy companies will be asked to develop and implement a code of practice for managing bill payment problems. Reporting of disconnections by retailers will be stepped up to provide early warning of trends.
Prior to the new guidelines being implemented retailers have put many of the measures of the plan in place with positive outcomes
for disadvantaged customers.
While payment plans have always been available, often what is needed in the company is a dedicated team which understands the issues facing disadvantaged customers and can assist them to establish an affordable and realistic payment option. A proactive approach by retailers has positive outcomes for both parties.
The introduction of customer assistance programs and Centrepay arrangements by all the major retailers has contributed to a significant decline in disconnection matters being dealt with by EWON and we hope to see a similar decline in the official IPART statistics for 2005–2006.
| Snapshot of credit issues |
1,728 |
people had difficulty affording their bill |
1,476 |
people had a utility debt |
589 |
people had a payment arrangement declined by their retailer |
180 |
people were contacted by debt collectors |
| Complaints involving disconnection |
842 |
complaints from customers facing disconnection |
640 |
complaints from customers who had been disconnected |
1,482 |
total complaints involving disconnection/restriction |
Retail competition
Marketing issues raised by customers
The following cases indicate the types of complaints we received about retail competition. In all instances, the customer wanted to cancel the contract and return to their original supplier.
EWON was able to negotiate for the termination fees to be waived and for the customer to be returned to their previous retailer. Apparent breaches of the Marketing Code were reported to the regulator.
Alex’s story Alex rang on behalf of her aunt, who had been visited by a door-to-door marketer. Her aunt doesn’t speak English very well so when the marketer visited them her young daughter translated into Greek.
Unfortunately the daughter’s Greek was not fluent and her aunt ended up signing a contract without realising this meant transferring her energy account to a new retailer. Alex tried to cancel the contract, but was told she would have to pay the termination fee. Alex was quite upset because she felt the marketer was taking advantage of people who don’t speak English as their first language.
Natalia’s story Natalia is a 79 year old Polish pensioner who suffers serious illness and doesn’t speak English well. She was door-knocked by two different energy companies on separate occasions, and ended up signing contracts with both companies.
Her son rang EWON for help when the companies wanted to charge Natalia termination fees to cancel the contracts. He explained that Natalia had felt pressured by one marketer and only signed to get him to leave, and she did not remember signing up with the second company. Natalia wanted to pay the fees and return to her original provider, but her son did not think she should have to pay any fees.
Loukas’ story A phone marketer contacted Loukas and offered him $25 to sign up with a different energy retailer. Loukas said he wouldn’t agree to anything without seeing the information but then received a letter stating his account would be transferred. When he rang the company to query the transfer he was told he would have to request a cancellation in writing.
Loukas wasn’t happy about doing this, as he hadn’t agreed to the transfer in the first place. He then spoke with his neighbour Sam, who also said he’d been contacted by a phone marketer. Sam wasn’t fluent in English and he had accepted the $25 not realising it meant signing a contract. Loukas called EWON about both their complaints. |
This year we saw a 254% increase in the number of complaints regarding energy marketing.
Signing up to an energy contract is still new to many customers so we would expect complaints from people who are unsure of the process or confused about their responsibilities. However, this year there was a significant increase in complaints from customers who said they had been misled, pressured or intimidated by marketers.
EWON received a significant number of complaints that indicated breaches of retailers’ responsibilities under the Marketing Code of Conduct. For this reason, we provided regular reports on these complaints to the licence regulator, the Independent Pricing and Regulatory Tribunal (IPART).
In May 2006 we wrote to the Minister for Energy and IPART, alerting them to the growing number of marketing complaints we were receiving involving elderly consumers, in particular those who could be considered vulnerable because of health issues. We also raised this with energy retailers.
EWON then launched an awareness campaign Make an informed choice about energy contracts to inform seniors about retail competition and marketing. We will continue to consult with seniors and peak bodies, and monitor developments in this area.
In June 2006, following a sharp rise in complaints to EWON about one energy retailer, IPART issued enforceable undertakings requiring the retailer to write to all customers who had been signed up, offering to cancel the contracts at no cost.
| Retail competition issues raised by customers |
Marketing |
43% |
Contract terms |
20% |
Information, site ownership |
18% |
Transfer |
13% |
Billing |
6% |
| Complaints about marketing and/or marketers |
677 |
customers said they had been misled by marketers |
442 |
customers said they had not agreed to a contract |
155 |
customers said they were pressured or coerced into signing a contract |
Policy and research
Monitoring issues
Our Policy and Research team plays an important role in monitoring systemic issues, producing reports and submissions, contributing to interagency working groups and creating resources to help us keep up with industry changes that will affect customers. During this year the team responded to a broad range of issues including: energy affordability, increased marketing, regulatory compliance, debt transfer, contract terms, smart meters, increasingly complex tariffs and bills, credit listing of utility debt, business-to-business arrangements that impact customers, green energy, customer assistance programs, and changes to government rebates.
Residential Parks
This year the Office of Fair Trading introduced new Customer Service Standards for the Supply of Electricity to Permanent Residents of Residential Parks. These new standards specify a role for EWON in resolving disputes between park owners/managers and permanent residents. EWON has consulted with the Office of Fair Trading to assist in the smooth implementation of the new standards. This year EWON received 57 complaints and enquiries relating to residential park operators.
Department of Housing charges for water consumption
In late 2005 changes to the Residential Tenancies Act 1987 introduced new conditions of tenancy for NSW public housing tenants, including charging tenants for water consumption. The legislation specifically provides for EWON to review the Department of Housing guidelines for charging tenants for water consumption. We will continue to monitor this area.
National electricity market
The gradual change to national regulation of the energy industry gathered pace in 2005–2006. Over the year we discussed consumer protection issues with a number of the key stakeholders including ANZEWON (Australia & New Zealand Energy and Water Ombudsman Network) and we will continue to contribute our experience of these issues to the ongoing policy debate.
Submissions
EWON contributes to industry policy and regulatory reviews where we can offer information about the experience of customers. This year we made submissions or comments in response to several issues papers including:
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