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Genesis acknowledges misleading customers

Media Release

Issued 22 January 2002/005

Genesis Power and Source Distribution acknowledges misleading customers over the price of electricity

In a settlement with the Commerce Commission, both Genesis Power Limited and its contractor, Source Distribution Limited, have acknowledged breaching the Fair Trading Act by making claims liable to mislead customers over the price of electricity in the Wellsford area.

In addition, Genesis has undertaken to compensate all customers affected by the incorrectly quoted prices, irrespective of whether they have complained or not.

A Commerce Commission investigation revealed that Source had quoted incorrect prices to customers it was trying to entice to switch from their incumbent electricity supplier to Genesis.

In January 2000, Genesis contracted Source to acquire new customers for Genesis in the Whangarei/Northland area. As part of that contract, Source also visited potential customers in Wellsford, which is outside the Whangarei/Northland area.

Source quoted Genesis prices to the Wellsford residents based on prices for the Whangarei/Northland region. Wellsford was in fact part of the greater Waitemata region, and the Waitemata prices were higher than those quoted.

The Commission investigation found that 141 Wellsford residents switched their electricity supplier to Genesis Power, and that the prices charged to those customers were higher than those quoted by the Source staff. Customers complained to Genesis who was unaware of the error.

Commerce Commission's Director of Fair Trading Deborah Battell explained that both parties were culpable for consumers being misled over the electricity prices.

"Making incorrect claims, either by Genesis or its contractor, Source, that are liable to mislead the public is a breach of sections 10 and 13 of the Fair Trading Act," said Ms Battell.

"Customers should be able to assume information presented to them is correct, particularly when they are approached by a trader trying to entice them to switch services."

At the time of the investigation, Genesis Energy was a wholly owned subsidiary of Genesis Power. Genesis Energy amalgamated with Genesis Power in June 2000.

As part of the settlement, Genesis and Source have both agreed to make a written apology to each of the 141 Wellsford consumers who switched to Genesis. The two companies will also publish individual corrective advertising in the Rodney Times newspaper.


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