In the Auckland District Court today, Enerco New Zealand Limited admitted its "Buy Smart" and "Home Smart" gas promotions were misleading, pleaded guilty and was ordered to pay fines and costs totalling $14,535.

The Commerce Commission prosecuted Enerco.

Commission Chairman Dr Alan Bollard said that Enerco promoted the two schemes as cheap ways of having gas connected and appliances installed, but did not disclose extra fees of up to $2,520.

Dr Bollard said that the Act prohibits false or misleading claims about prices, and this includes any extra fees that might be involved.

"All extra costs and conditions must be clearly disclosed, or a promotion risks breaching the Fair Trading Act," he said. "It is not enough to be factually correct about up-front costs and conditions. What happens later in a contract must also be accurately disclosed."

In this case, Enerco did not disclose extra costs to some customers, and inaccurately disclosed them to others.

The "Buy Smart" and "Home Smart" promotions involved customers paying up-front fees to have gas connected and appliances installed, and then contracting to buy gas at particular rates for three or five years.

Enerco did not disclose, or inaccurately disclosed, that there was an extra cost if the house was sold before the gas contract expired. The gas contracts could not legally be passed onto the new owners, and Enerco's customers had to pay the extra costs.

The extra cost for ending a "Home Smart" contract early was between $2,520 and $42. The extra cost for ending a "Buy Smart" contract early was between $2,275 and $65.

The Commission is aware of customers who have received unexpected final accounts of up to $2,551.50, being the extra cost for ending the contract early.

"Buy Smart" was promoted at Auckland and Wellington Home Shows and by direct mail to 25,223 addresses. "Home Smart" was promoted at the Auckland Home Show, by direct mail and in newspaper advertising in Levin and Palmerston North.

Dr Bollard said it is disappointing that a large company like Enerco made such a fundamental mistake.

"For customers, price is always an issue in making a buying decision, and often it is the key issue. It is vital that information about prices is accurate and complete," he said.

"There is no excuse for such a mistake. The Fair Trading Act is not new legislation. It has been in force for more than 10 years. And the issue with Enerco's promotions was not complicated. All that was required was that all the costs be disclosed accurately.

"More than half of the enforcement action taken by the Commission is about pricing issues. We pay particular attention to them, and will continue to do so."

Media contact: Fair Trading Manager Rachel Leamy

Phone work (04) 498 0908

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz