“They need to be mandatory - 100% - so we have actually some rights to call up and ask why it wasn’t followed” - Financial mentor
In 2007 an Auckland woman died after a retailer disconnected her power over an unpaid bill. She was dependent on electricity for her oxygen machine. After this tragic event, retailers paid far greater attention to consumer care, especially the disconnection process and treatment of medically-dependent customers. But the Electricity Commission (forerunner to the Electricity Authority) did not put mandatory rules in place.
Fast forward to July 2021, the Electricity Authority brought in new ‘Consumer Care Guidelines’, developed with extensive input from retailers. They cover important matters including how to treat people medically-dependent on electricity; minimum steps to prevent disconnections; fair fees and communication. The Electricity Authority made the Guidelines voluntary, with no penalties. Consumer advocates expressed concern, but retailers assured everyone that they would take the Guidelines seriously.
In 2023 the Electricity Authority published a review of whether retailers were following the Guidelines. Half the companies said yes, they did follow them. The other half of companies (48 per cent, serving one in three households) either admitted they did not fully follow the Guidelines, or did not even respond to the Electricity Authority with a self-assessment (which in itself is encouraged in the Guidelines). That meant that one in three New Zealand households was buying power from a retailer that did not follow the accepted minimum standards of consumer care.
Retailers’ failure to follow the Guidelines is causing harm. Some retailers are billing people incorrectly and leaving them out of pocket; failing to tell customers of other cheaper plans or meter configurations; not being transparent about fees; or not helping clients to prevent accumulating debt. Some retailers are disconnecting households without taking steps to find alternatives. While customers can complain to Utilities Disputes (a mediation service) and get some money back, this creates little incentive for retailers to improve their wider practices. It is also unrealistic to expect customers in hardship to have the time and emotional energy for this process.
“I had a very vulnerable client who was in deficit every month ... The company referred her to me [for financial mentoring], for which I give them credit… but they had allowed her to get over $2000 in deficit and they were threatening disconnection. Where was the red flag [sooner]? - Financial Mentor. The Guidelines recommend that retailers take steps to help customers avoid the build-up of debt.
Lives are at risk from retailers ignoring consumer care. As Dr Kimberley O’Sullivan said, “Do we have to wait for another death [from wrongful disconnection] before we’ll get mandatory Guidelines and decent enforcement?”
The Electricity Authority has the mandate to turn the Guidelines into enforceable rules. In 2022 Parliament spelled out their objective to ‘protect the interests of domestic consumers’.To give that effect, the Electricity Authority must make the Guidelines mandatory without delay and impose penalties when companies do not follow the rules. A group of organisations has made this call in an open letter .