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Heat turned up on Power Companies

Hon Phillida Bunkle
Minister of Consumer Affairs

Media release

Strictly Embargoed until 4pm Tuesday, 28 March 2000

Heat turned up on Power Companies

Electricity companies have shown they are not capable of guaranteeing consumer rights without Government involvement, Minister of Consumer Affairs, Hon Phillida Bunkle said today.

"Individual power consumers are demanding fairer treatment and better service from electricity companies and there is now a growing case for Government to have a role in addressing that," the Minister said.

The Ministry of Consumer Affairs today presented its oral submission to the Government's Electricity Inquiry. It detailed specific problems experienced by individual consumers in dealing with electricity companies. Today's submission follows a written one presented to the Inquiry earlier this month.

"People are appalled at increasing bills, inconsistent billing systems, confusing fine-print contracts, poor customer relations, unreasonable repayment options, and harsh disconnection policies," Ms Bunkle said.

"Many people are confused and don't understand the variations between line and supply charges. Much of this confusion and frustration stems from the way line charges are passed on to consumers."

Electricity retailers are charged a fixed amount for electricity lines - the retailer then repackages the line charge and may add to it - before passing on the inflated cost to the consumer.

"The evidence points to gross inefficiencies among power companies. What is happening is that consumers are being billed for excessively high line charges when they have no certainty that it was the same cost to the retailer," Ms Bunkle said.

The Minister said there were tragic stories, especially in rural and provincial areas, of how disadvantaged consumers were under the electricity reforms.

"Take the example of a Wairarapa pensioner who got such a shock at her inexplicable power bill, she has resorted to having shallow baths and cooking her vegetables in one pot in an effort to cut her already frugal power consumption. But her costs have still gone up.

"There are examples of families who have had their power cut off twice – by a company they don't have an account with - and people waiting up to eight months for a bill, only to be given a few days to pay."

The Minister said people were also frustrated that when they rang their retailers for assistance, they either added to the problem or it continued to go unresolved for months.

Ms Bunkle said she also had concerns for consumers who were bearing the increasing costs of a dwindling rural infrastructure.

"Ideally the industry would be able to address these concerns itself. I am seeking a meeting with power companies to look at the problems for consumers and what can be done about them.

"In the meantime, some urgency needs to be given to enacting amendments to the Consumer Guarantees Act 1993, which would provide legal protection for power consumers.

"I also believe a utilities Ombudsman – overseeing essential services such as water and power – is also worth canvassing. There are others who have called for an Ombudsman in the power area. It is vital for consumer protection that any Ombudsman be independent of the industry," Ms Bunkle said.


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