Contact Energy has admitted breaching the Fair Trading Act in relation to misleading some customers about the amount payable for final bills. Customers who closed their account with the energy supplier between 1 April 2008 and 15 April 2011 did not receive their prompt payment discount or Dual Fuel discount on their final bill.

Contact Energy failed to carry over a customer's prompt payment discount from their unpaid previous month's invoice to the final bill when the customer closed their account. While helping the Commission with the investigation, Contact Energy uncovered a similar breach of the Act in relation to those customers on the Dual Energy service also not receiving the relevant discount on their final bill.

Contact Energy has identified around 25,000 customers who have been affected by this overcharging during this period, who will be refunded over $280,000 in total. Contact Energy will be contacting those customers affected by mail in the coming weeks to arrange for the refund. Customers who are unable to be contacted after six months will have their refund donated to the Christchurch Earthquake Relief Fund.

"We're pleased to have reached a settlement with Contact Energy that addresses both misleading practices but also makes direct payment back to the affected customers. Contact Energy co-operated fully with our investigation and admitted liability at the first opportunity," said Greg Allan, Commerce Commission Enforcement Branch Manager.

In response to the Commission's concerns, Contact Energy has also adopted a compliance programme to ensure future compliance with the Fair Trading Act. Contact Energy will provide the Commission with a report in three months on how the compliance programme is working.

"When we contact a company about a potential breach of the Fair Trading Act, a quick admission of the breach, followed by a remedy, as in this case, avoids a lengthy and costly investigation and potential court hearings, and produces a win-win for consumers and ultimately the taxpayers of New Zealand," said Mr Allan.

"This case is also a reminder to consumers that it can be worth taking the time to check that the relevant discounts have been applied accurately to their bill, rather than assuming the company has got it right," said Mr Allan.

A copy of the settlement can be found on the Commission's website at:

www.comcom.govt.nz/fair-trading-enforcement-outcomes

 

Background

Fair Trading Act 1986

Under the Fair Trading Act, it is an offence to make a false or misleading representation. Section 13 (g) of the Fair Trading Act states:

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

Only the courts can decide if the Fair Trading Act has been breached and set appropriate penalties.