Electricity consumers will soon be able to take problems with their electricity company to a new Electricity Complaints Commissioner.

Electricity industry representatives met in Energy Minister Pete Hodgson's office today to sign a memorandum of understanding on the establishment of the complaints scheme, which is required by the Government's Power Package electricity reforms.

"Many consumers have had poor service from power companies and their complaints have not been dealt with effectively," Mr Hodgson said. "That is about to change. The Complaints Commission service will be free, and consumers will be treated fairly because the scheme is independent from the industry."

Consumers will be able to complain to the Commission if they cannot resolve a dispute with their company over things like billing and disconnection. They may be awarded compensation if it is found they have been treated unfairly.

"The Electricity Complaints Commissioner won’t be a remedy for all the problems in the electricity industry, but it is a valuable service for consumers, lines companies and retailers," Mr Hodgson said. "Consumers will get good value from the scheme and it will help to improve industry practice overall."

The Commissioner will refer to a Code of Practice that has been developed to ensure that dealings between companies and consumers are fair and reasonable. This Code will be subject to review after 12 months to ensure that it is working as effectively as possible for consumers.

The Government is committed to monitoring the scheme to ensure that it is working for consumers.

Foundation members of the scheme are Genesis Power, Meridian Energy, Mighty River Power, Delta, Dunedin Electricity, Counties Power, The Lines Company, Vector, Centralines, Scanpower, UnitedNetworks, Orion, Westpower, Electranet, Northpower, TrustPower, Otago Power, The Power Company and Electricity Invercargill. Other companies are in the process of signing up to the scheme and the steering group is optimistic it will achieve full industry coverage, as required by the Government.

Mr Hodgson said the scheme had already had a high level of consumer input during its development. Consumer groups and the Ministry of Consumer Affairs were consulted over its design.

"I'm pleased to see equal representation of consumers and industry on the commission that will oversee the scheme. Making this work will be an important step for the electricity industry in regaining the trust and confidence of consumers."

Mr Hodgson said he expected the scheme to be operational well before Christmas, providing a suitable Commissioner could be found and engaged without undue delay.

Ends

The Electricity Complaints Commission scheme

Free to consumers, independent of the industry, and binding on industry members.

History

In February 2000 Energy Minister Pete Hodgson announced a Ministerial Inquiry to examine New Zealand’s electricity industry. The report on that inquiry was released in June 2000. A key recommendation was that the Government should invite the industry to establish a consumer complaints resolution system to apply to retail and distribution companies.

The Government supported this recommendation, and an industry steering group was formed to design an electricity complaints scheme. The group members are four lines companies (UnitedNetworks, Orion, Vector and Counties Power, representing the smaller lines companies) and three retail companies (Meridian, Mighty River Power, and TransAlta - which became On energy).

The steering group consulted the electricity industry, consumer representatives and the Ministry of Consumer Affairs on the design of the scheme. The Ministers of Energy and Consumer Affairs were kept informed of progress.

The Chief Ombudsman was asked to approve the use of the Ombudsman title, but declined. Although the scheme met all the required criteria for independence, the Chief Ombudsman was unwilling to allow another Ombudsman role to be created. The steering group agreed to change the name to the Electricity Complaints Commissioner.

Structure

The scheme structure is designed to ensure efficiency and independence from the industry. There are three components:

- The Electricity Complaints Commissioner.

- The Commission, which will provide independent oversight of the scheme. The Commission is comprised of an independent chairperson, two representatives of industry members and two consumer representatives.

- The Council, which comprises the members of the scheme. The Council will prove industry oversight and support for the scheme. An elected board with an independent chairperson will exercise the powers of the Council.

Operation

The scheme is designed to be a mechanism for the resolution of disputes between consumers and electricity retail and distribution companies. It has three key operational components:

An industry Code of Practice

The Code of Practice was written following considerable consultation with the Ministry of Consumer Affairs and consumer groups. It is designed to set minimum standards for electricity consumer contracts, binding on all members of the scheme and applying to all consumers. The code prevails over consumer contracts. It will be reviewed regularly, to ensure that it is up to date and reflective of industry best practice.

Internal complaints handling processes

The scheme requires its members to have effective internal complaints systems. The Commissioner will encourage the resolution of complaints as early as possible to minimise the number of complaints that must be dealt with by the Commissioner.

The scheme contains a protocol that sets out the minimum requirements for companies’ complaint handling procedures and the relative responsibilities between companies.

The Electricity Complaints Commissioner

The Commissioner’s principal powers and duties are to consider complaints by a consumer about the provision of services to the consumer, or anything else under the scheme, and facilitate resolution in accordance with the terms of reference, the code of practice and the protocol.

The complaint must have been considered by the in-house complaints handling service of the member concerned and reached deadlock. The Commissioner’s primary objective will be to facilitate the resolution of the complaint.

In those cases where no agreement can be reached the Commissioner may make an award up to a maximum value of $10,000. In respect of complaints over $10,000 the Commissioner may, if requested by the member concerned make a recommendation for settlement of the complaint (including an appropriate award) of up to $25,000.

The Commissioner may, in addition to an award, specify a sum to be paid to the complainant to reimburse the complainant for incidental expenses or as compensation for inconvenience. The maximum for this purpose is $2000.

Review

The scheme will be independently reviewed three years after its adoption and subsequently every 5 years. Recommendations to amend the scheme are approved by a committee with equal consumer and industry representation.

Costs

The scheme’s entire budget will be paid by the industry. The operational budget has been based on the budgets of the two industry Ombudsman schemes currently operating in New Zealand, weighted to take account of the level of consumer interest in the industry and the number of complaints currently received by retailers.

Next steps

The interim board of the Council will meet on Tuesday (28 August) and ask the Minister of Consumer Affairs to appoint his two representatives to the Commission. It will also begin the process of finding an independent chair for the Commission, and tell industry members how much they have to pay to fund the scheme for the first year. Once the Commission meets, it will start the process of appointing the Commissioner.

THE ELECTRICITY CONSUMER CODE OF PRACTICE

C1 WHAT IS THE ELECTRICITY CODE?

C1.1 The Code contains undertakings by Members of the Electricity Complaints Commission to their Consumers under the Scheme for fair and reasonable dealings with Consumers.

C2 WHO IS COVERED BY THE CODE?

C2.1 Every Retailer and Lines Company, who is a Member of the Electricity Complaints Commission Council is covered by this Code.

C2.2 This means that they must follow the provisions set out in the Code.

C3 WHAT IS A CONSUMER CONTRACT?

C3.1 A Consumer Contract is an agreement between a Consumer and a Company for the supply of electricity and/or line function services.

C4 WHAT IS THE CONNECTION BETWEEN THE CODE AND A CONSUMER CONTRACT?

C4.1 The Code explains to Consumers what they can expect in their dealings with a Retailer or Lines Company.

C4.2 A Consumer Contract may include terms or conditions additional to or more favourable to the Consumer than those set out in the Code but these terms or conditions must not be inconsistent with the undertakings of the Code.

C5 WHO DEALS WITH COMPLAINTS RELATING TO THE CODE?

C5.1 Only the Company and the Electricity Complaints Commissioner can deal with complaints relating to the Code.

C6 WHAT CAN THE CONSUMER EXPECT FROM A CONSUMER CONTRACT?

C6.1 A Consumer Contract must:

- Be easy to understand;

- Clearly set out the rights and obligations of both the Company and the Consumer;

- Refer to any other information that is part of the terms and conditions of the Consumer Contract;

- Be easy for Consumers to obtain;

- Allow disconnection only as a last resort except for reasons of safety or other reasons authorised under the Electricity Regulations 1997; and

- Provide for free, accessible, fair and effective systems for resolving Complaints within a Company.

C7. CHANGES TO CONSUMER CONTRACTS

C7.1 If a Company changes the terms and conditions of a Consumer Contract, the Company must:

- Give no less than 30 days notice before making any changes to the terms and conditions of the Consumer Contract; and

- Explain the reasons for the changes to the Consumer Contract terms and conditions when it gives the Consumer notice about the change.

C7.2 The Consumer Contract must describe how the Company will communicate any changes to the terms and conditions of the Consumer Contract that may be made under the Consumer Contract. However, any change in the variable electricity or daily fixed charge prices, frequency of billing and frequency of meter reading, must be individually communicated to the customer in writing.

C8. SERVICES PROVIDED

C8.1 The Consumer Contract must describe the services provided to the Consumer. This includes any quality standards that the Consumer should expect from the Company in providing these services.

C8.2 A Consumer Contract must set out how the Company will respond to the Consumer where quality of service standards are not met, including any compensation that would be paid to the Consumer if the Company does not meet its obligations.

C8.3 The quality of service standards must:

- Comply with the Electricity Act 1992 and the technical regulations and technical electrical codes of practice;

- Be no less than good industry practice prevailing in New Zealand; and

- Require that equipment used in the provision of line function services will be monitored and maintained in line with good industry practice prevailing in New Zealand.

C8.4 The Consumer Contract must include a warning to Consumers to protect sensitive appliances from voltage spikes.

C9. PRICE INFORMATION

C9.1 The Consumer Contract must refer to the relevant prices or pricing schedule (as may be produced by the Company from time to time) of products and services available to the Consumer.

C10. BILLING

C10.1 Consumer Contracts must set out:

- That the Consumer is liable for the charges for all the services included in the Consumer Contract and is responsible for making sure that the contractual requirements are met;

- That the Consumer will only be liable for charges from the date of occupancy or responsibility unless another date has been agreed between the Consumer and the Company;

- That if the Company makes an error and charges an incorrect amount, the Consumer:

- is entitled to a refund of the difference between the incorrect and correct amounts where the Consumer has paid too much; or

- is only liable to the Company for the correct amount.

This provision does not apply to bills based on estimates.

- The billing period and/or reconciliation period.

C10.2 Where a Consumer has received a bill and that Consumer has chosen a price option offered by a Retailer including fixed charges for electricity and lines function services, the Company’s bill must identify the fixed charge component of the bill separately from the variable charge.

C10.3 If a Company’s bill includes charges for goods and services other than the supply of electricity or lines function services, these should be itemised separately unless the Consumer has agreed otherwise under the Consumer Contract.

C10.4 If a Company’s bill to a Consumer is based on a method of estimating electricity and/or lines functions service usage:

- The Consumer should be given the opportunity of reading their own meter(s) and giving the reading(s) to the Company until the Company arranges for the meter to be read;

- The Company must provide, on request, a simple explanation of how estimates are calculated and amend an estimated bill when the Consumer provides a valid meter reading;

- The Company must make sure that its bills state clearly if an estimate has been used; and

- The Company must state in the Consumer Contract whether the Consumer is required to pay estimated accounts.

C10.5 Meter readings used by a Company for billing a Consumer must comply with electricity industry standards and codes of practice for meter reading. Meter readings should take place a minimum of four times a year unless the Consumer agrees otherwise under the Consumer Contract or does not provide the company with reasonable access to the meter.

C11. PAYMENT OPTIONS

C11.1 A Company with a Consumer Contract (or the person who does that Company’s billing on its behalf) must have policies in place that assist a Consumer who is having difficulty paying the bill.

C11.2 If alternative payment options are offered to Consumers, these should be supported by a simple explanation of how the options operate, either in the Consumer Contract or in a separate publication or notice.

C12. BONDS

C12.1 If a Company requires a bond:

- The Company must give to the Consumer the reason for that decision;

- The bond must not be more than the expected loss if a Consumer doesn’t pay;

- The Consumer Contract should state if interest is payable on the bond;

- The bond must be held on trust in a separate account; and

- The Consumer Contract must state:

- how long the Company will keep the bond and that if the Company keeps the bond for longer than 12 months, it must provide its reasons for doing so to the Consumer; and

- how the bond will be refunded.

C13. DISCONNECTION AND RECONNECTION

C13.1 Where a Company intends to disconnect a Consumer because the Company considers that the Consumer has not paid a bill, disconnection should be the Company’s last course of action. If a Consumer has started using and is pursuing the dispute resolution processes set out in the Consumer Contract (including the Electricity Complaints Commissioner Scheme) in relation to that Consumer not paying the bill, the Company must not disconnect that Consumer until the processes are exhausted.

C13.2 A Consumer should not be disconnected for non-payment of part of an account that is the subject of a dispute resolution process.

C13.3 A Consumer should not be disconnected on the basis of an estimated account unless it is fair and reasonable in the circumstances to do so.

C13.4 Consumer Contracts should include the conditions under which Consumers can be disconnected.

C13.5 In cases of disconnection for non-payment, Consumer Contracts must state that this will only happen where the non-payment relates to bills associated with the supply of retail services, lines function services, and/or electrical energy.

C13.6 Except in the case of agreed or emergency disconnections, Consumer Contracts must:

- Provide for at least seven days notice of warning of disconnection and allow an additional three days for the delivery of the notice; and

- Provide for a final warning no less than 24 hours before disconnection.

C13.7 Consumer Contracts must explain when charges for temporary disconnection and/or reconnection apply.

C13.8 Temporary disconnection and/or reconnection charges should not be more than the level required to meet the overall costs of the disconnection and/or reconnection service.

C13.9 Disconnection notices should include:

- Information about the Company’s dispute resolution processes;

- Contact details of the Company’s credit department so that the Consumer can contact that credit department to arrange payment of a bill that has not been paid, and

- the cost of reconnection.

C14. FAULTS

C14.1 Information about 24-hour telephone numbers to call for faults must be provided on every bill to a Consumer.

C15. PLANNED SHUTDOWNS

C15.1 A Consumer Contract must clearly state a minimum notice period before a planned shutdown which should be no less than 4 days unless agreed otherwise in the Consumer Contract.

C15.2 Companies must notify Consumers of a planned shutdown within the notice period.

C16. OBLIGATIONS FROM POINT OF SUPPLY

C16.1 A Company must supply information (on request) to a Consumer about a Consumer’s electricity supply that explains where the Lines Company’s ownership and responsibilities end in relation to the network.

C16.2 A Consumer Contract must set out the responsibilities of the Consumer, the supplier and the Lines Company in relation to ownership of equipment. For example, a Consumer Contract must clearly set out the extent to which the Consumer is responsible for the maintenance of trees and/or other structures on the property where these could affect the supply.

C16.3 A Consumer Contract must explain the Consumer’s responsibilities for compliance with all line function services safety and technical requirements under regulations and codes of practice.

C17. ACCESS TO PREMISES

C17.1 Consumer Contracts must include reasonable access to a Consumer’s premises for the direct purposes of the Retailer or Lines Company and any agent or subcontractor of that Company. The consequences of not granting access should also be set out in the Consumer Contract. Other conditions of access should be in line with the provisions of the Electricity Act 1992.

C17.2 Where a Company is in the possession of keys and/or security information for a Consumer’s premises, the Company should have formal procedures for the secure storage and use of and return of these keys and/or security information.

C18. CONSUMER COMPLAINT RESOLUTION

C18.1 Companies must have a free, accessible, fair and effective, internal Consumer Complaints handling process.

C18.2 Companies must:

- provide information to Consumers about how their Complaint will be dealt with, and by when;

- provide written information about their Consumer Complaints handling processes; and

- treat Consumers courteously, and with respect.

C18.3 Companies will:

- train their staff about their Consumer Complaints handling processes;

- use processes that are easy to understand, easy to use and free to consumers;

- provide adequate resources for their Complaints handling processes;

- tell Consumers that there is an Electricity Complaints Commissioner who they can go to if their complaint is not resolved; and

- review their Consumer Complaints handling process regularly.

C18.4 Companies will provide for appropriate remedies to Consumers

C18.5 Companies will collect and analyse information about Complaints, and use it to adjust business practices as required.

C18.6 For new customers, retailers will have in place an effective process to ensure there has been an offer and acceptance of the Consumer Contract.

C19 LIABILITY

C19.1 Except as permitted under Clauses C19.2 and C19.3, a Consumer Contract must not limit the scope of liability, in contract or tort, of a Company to a Consumer to less than liability for physical damage to property where it can be shown that the Company has been negligent and the amount and nature of the Consumer’s loss was reasonably foreseeable.

C19.2 A Consumer Contract must not limit the monetary amount of liability, whether in contract or tort, of a Company to a Consumer for an event or a series of closely related events occurring on a network system to any amount less than $10,000. This clause does not prevent or limit any provision in a Consumer Contract stating that liability is subject to any monetary cap contained in the Consumer Contract for an event or series of closely related events in relation to more than one Consumer on a network system.

C19.3 A Consumer Contract must not fix a per annum cap on liability in respect of one or more Consumers on a network system or for events or a series of closely related events occurring on a network system.

C20. FORCE MAJEURE CLAUSES

C20.1 A Consumer Contract must define the situations covered under force majeure clauses and explain how a Company will respond in such circumstances.

C21. PRIVACY

C21.1 A Consumer Contract must adhere to the provisions of the Privacy Act 1993 and accordingly:

- Set out the purposes for which the Company collects information from individuals; and

- Confirm that Consumers will have ready access to information held about them and the opportunity to correct this information.

C22. OVERSIGHT AND REVIEW OF THIS CODE

C22.1 The Electricity Complaints Commission is responsible for overseeing and reviewing this Code.

C23 ENFORCEMENT OF THE CODE

C23.1 The undertakings of a Company in this Code are not intended to create rights enforceable by a Consumer against a Company under the Contracts (Privity) Act 1982.

C24. DEFINITIONS

C24.1 Terms used in this Code have the following meanings:

Bond means the bond or sum of money provided by a Consumer as security for non-payment.

Company means a Member of the Electricity Complaints Commissioner Scheme who is either a Retailer or a Lines Company. “Companies” and Electricity Companies have corresponding meaning.

Consumer means:

A person who is supplied, or who applies to be supplied, with electricity by a Retailer in accordance with a Consumer Contract for consumption of electricity;

A person who is supplied, or who applies to be supplied, with line function services in accordance with a Consumer Contract and who also consumes electricity;

Includes any person using the services supplied under that Consumer Contract or paying part or all of the fees for the services provided under the Consumer Contract.

Consumer Contract means the agreement with a Consumer providing for the supply of electricity and/or line function services to a Consumer and will include any additional publications, which contain information about the service to consumers.

Disconnection means the movement or removal of equipment so that no electricity can flow to a Consumer’s premises.

Electricity Complaints Council means the governing body under the Electricity Complaints Commissioner Scheme.

Electricity Complaints Commissioner Scheme means the Electricity Complaints Commissioner Scheme implemented by the Electricity Complaints Council.

The Electricity Complaints Commissioner is the person appointed to that position by the Electricity Complaints Commission.

The Electricity Complaints Commission means the Commission set up under the Electricity Complaints Commissioner Scheme. It provides an independent overview of the Scheme and comprises an independent chairperson, two representatives of industry members and two consumer representatives appointed by the Minister of Consumer Affairs.

Provide a final warning means that the company must take all reasonable steps to ensure a Consumer receives this warning. This may include making contact to the Consumer’s last known address or phone number.

Force majeure means circumstances beyond the control of the Company, for example failure to supply electricity due to causes beyond the Company’s control such as a storm.

Lines Company means a company which operates a local network for conveying electricity and provides lines function services to Retailers or directly to Consumers. Lines Companies includes lines services businesses, whether incorporated or not.

Line function services has the meaning set out in section 2 of the Electricity Act 1992 and as further provided for in a Consumer Contract and includes metering services where a Lines Company provides these services.

Planned shutdown means the period when electricity is not available due to routine planned maintenance.

Point of supply has the same meaning as given to it in the Electricity Act 1992.

Premises means the site to which electricity is supplied or is to be supplied to a Consumer.

Reconnection means the movement or replacement of equipment so that electricity can flow to a Consumer’s premises which had been disconnected.

Retailer means any supplier of electricity to Consumers.

Retail services mean all services supplied under an interposed consumer contract (except lines function services) and all services supplied under a supply only consumer contract and includes metering services where a Retailer provides these services.

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