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Meridian Energy Fined $12,000

Issued 22 April 2002

Meridian Energy Fined $12,000 For Fair Trading Act Breaches

Meridian Energy was fined $12,000 plus costs in the Invercargill District Court today. It admitted six breaches of the Fair Trading Act in relation to an offer to Comalco employees in December 1999.

Meridian ran a retail electricity promotion called “Meridian Energy Comalco Family and Friends” inviting Comalco employees to switch from their existing power retailer to Meridian Energy.

Employees were offered a cap on the energy component of their power bill until 31 March 2001, $25 off their first power bill and a loyalty rebate of 1% of their total power bill for the twelve months to 31 March 2001. Meridian Energy charges were set out in detail on a rate card.

Two of the employees who switched to Meridian complained of being charged higher energy rates than those set out in the offer and not receiving the $25 discount. The complainants contacted Meridian Energy and were told their power bills were correct. They continued to dispute their accounts both by telephone and in writing and informed the Commerce Commission in August 2000.

Meridian Energy finally applied the corrected energy rates and discounts for the majority of the qualifying customers in September 2000.

Handing down the penalty, Judge Philip Moran said there were two aggravating features to the offence.

Firstly, that by its nature it was difficult to detect. “Not many people closely inspect their bills and compare them with the original offer. There is great potential for overcharging,” he said.

Secondly, that the complaints made by consumers were not addressed, despite repetition.

“The penalty should have bite,” Judge Moran said. “It should not appear on a corporate balance sheet as an incidental cost. It needs to be seen as a general deterrent, not just to the electricity industry but beyond – to preserve compliance with the Fair Trading Act.”

Commerce Commission Director of Fair Trading, Deborah Battell said that were it not for the vigilance and persistence of one or two customers and the Commission’s investigation, it is likely the promised discounts might never have been honoured.

“Companies making offers to the public must ensure they can deliver on their promises.

“Meridian Energy did not ensure that the advertised offer was actually what customers were charged. It is vital to the development of effective competition in the electricity industry that consumers are able to rely on all pricing promises made by electricity retailers.”

Background
Under section 13(g) of the Fair Trading Act 1986, no person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services make a false or misleading representation with respect to the price of any goods or services.

Ends

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