Contact Energy named and shamed for billing blunder 17 Jun 2011
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Contact Energy Ltd. owes refunds worth $280,000 to almost 25,000 former customers, who were denied final prompt payment discounts when they paid their final bills before switching to another supplier.
Contact has escaped prosecution by cooperating fully with the Commerce Commission on the blunders, which occurred over more than three years, from April 2008 to April 2011.
The NZX-listed electricity generator and retailer, which also sells natural gas, was gaining customers until September 2008, when the company suffered a customer backlash over simultaneous increases in tariffs and directors’ fees, weeks out from the general election and just as the global financial crisis was taking hold.
Since then, Contact has lost 10.8% of its electricity customer base, falling from a high point of 529,106 in September 2008 to 471,736 in May this year, according to the latest figures published by the Electricity Authority.
Contact’s new chief executive, Dennis Barnes, said “the company apologises unreservedly for the breaches and would do all it could to rectify the situation.”
Contact would remedy the mistakes made in the company’s breaches of the Fair Trading Act, and systems had been rectified to ensure that the situation could not arise again.
Some 5,681 electricity customers and 18,673 Dual Energy customers, buying both electricity and gas, were affected by the unintended back-office error, which denied affected customers the “prompt payment discount” on their final bills.
Contact itself reported the latter cases, after it found them while investigating a complaint to the Commerce Commission relating to electricity-only discounts.
The average amount to be returned to affected former customers is around $25 for electricity-only customers and around $8 to Dual Energy customers. Where the former customer is untraceable, the company will donate the amounts owed to the government’s Christchurch earthquake appeal.
The prompt payment discount was 10% early in the period, but has subsequently risen to 12%. The discount effectively works as a penalty levied on late-paying customers.
“Our actions were not in any way deliberate or malicious,” said Barnes. However, they had “still cost our customers and compromised their trust. I wholeheartedly apologise for that.”
The Commerce Commission acknowledged Contact’s cooperation and admission of liability “at the first opportunity.”
Contact shares were trading 0.7% lower at $5.75 on the NZX this morning.
(BusinessDesk)
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