3. Consumer protection
Domestic consumer contracts
38. The Commission should ensure that the terms and conditions of contracts between domestic consumers and electricity retailers (and where applicable, contracts between domestic consumers and electricity distributors) reflect the reasonable expectations of consumers.
39. The Commission should ensure the following matters are addressed in contracts:
- transparency of charge components
- frequency of billing
- company-specific arrangements for dispute resolution
- arrangements for informing consumers about planned outages
- arrangements for the benefit of low-income domestic consumers as described below.
40. The Commission should have regard to any provision by the Commerce Commission requiring distribution businesses to engage with local communities on the trade-offs they wish to make concerning price, quality and reliability of supply.
41. The Commission should, in consultation with the Ministry of Consumer Affairs and other relevant interested parties, ensure that terms and conditions remain effective and up-to-date with current market issues.
Low fixed charges
42. The Low Fixed Charge regulations were introduced in 2004 with the purpose of assisting low-use domestic consumers and encouraging energy efficiency. Prior to their introduction, low-use consumers in many areas faced unreasonably high fixed daily charges for their electricity usage. The introduction of the regulations provided these low-use consumers with a tariff option that was more equitable for low energy usage and compatible with the Government's energy efficiency objectives.
43. The Commission is charged with monitoring compliance and enforcing the Electricity (Low Fixed Charge Tariff Option for Domestic Consumers) Regulations 2004 and any subsequent amendments.
Arrangements for the benefit of low income and vulnerable domestic consumers
44. The Commission should monitor compliance with the Guideline on arrangements to assist low income and vulnerable consumers1 issued in July 2007, to ensure that:
- consumers who may have difficulty paying their bills on time are advised by retailers of the budgeting and other advice and assistance available from Government agencies and community service organisations
- retailers are required to consult with the Ministry of Social Development about possible assistance for vulnerable consumers where, in spite of the retailer's assistance, the consumer is unable to pay, and that there is no disconnection while that consultation is occurring
- any consumer who is dependent on electricity for critical medical support will not be disconnected for reasons of non-payment
- clear guidelines or standards exist for disconnections following non-payment in order to avoid the costs of frequent disconnections and reconnections
- there is regular communication with all consumers on their payment options
- debt recovery is arranged in a time-frame that avoids an adverse credit situation for the retailer and minimises hardship for the consumer
- consumers enter into the most appropriate contracts for their needs
- consumers are given the opportunity to identify themselves as potentially vulnerable
- where the consumer has not responded to any of the notices sent by the retailer, and the retailer has been unable to contact the consumer, there is a visit to a consumer's home before disconnection for non-payment takes place.
45. The Commission should consider options such as pre-payment meters, alternative payment options (such as advance payments, more frequent payments or smoothed payments) and bonds. The Government considers that, in principle, bonds should not exceed the value of one month's electricity consumption by an average household.
Arrangements in the event of retailer insolvency
46. The Commission should establish arrangements to ensure an orderly transition for consumers in the event that a retail company becomes insolvent.
Consumer complaints resolution system
47. Section 158G(1) of the Electricity Act requires that every electricity distributor and every electricity retailer must participate in a complaints resolution system, provided that the Commission has approved one or more complaints resolution systems under that section.
48. The Government expects everyone (including potential consumers and owners and occupiers of land), in their capacity as producers or consumers of electricity, to have access to an independent and cost-effective system for resolving complaints about electricity distributors (including Transpower) and electricity retailers without charge to the user/applicant, whether or not they have a consumer contract with the retailer or distribution company.
49. The Commission should, in consultation with the Ministry of Consumer Affairs, ensure that any approved system adequately addresses consumers' interests.
50. The Government believes that consumers' best interests are more likely to be served by a single independent complaints resolution scheme that includes both electricity and gas. The reason for this is that a single dual-fuel scheme provides benefits such as ease of access, consistency of outcomes and efficiencies of scale. The size of the gas market does not justify a separate scheme and many of the same companies are involved in both sectors. Many customers buy electricity and gas from the same retailer.
51. The Commission should work closely with the Gas Industry Company and coordinate approaches to approval and governance of an electricity and gas consumer complaints scheme.
52. If the industry is unable to provide an acceptable scheme supported by membership from all retailers and all distributors (including Transpower) within a reasonable time, the Commission should recommend regulations to introduce a statutory scheme. Again, the Government expects the Commission to work closely with the Gas Industry Company in this regard.
53. The Government expects any approved complaints resolution system to include the following features:
- an independent complaints resolution scheme that is consistent with international best practice in the field of consumer complaints resolution systems (for example the Australian Benchmarks for Industry based Consumer Dispute Resolution Schemes2 which were developed in consultation with the New Zealand Ministry of Consumer Affairs)
- a decision-making process and administration of the scheme that is independent of scheme members
- membership by all distributors (including Transpower) and retailers
- robust internal complaints-handling processes within all member companies
- a document that sets out the minimum standards of conduct for scheme members
- self-funding by the industry
- compensation for consumers where appropriate
- is practical and resolves disputes quickly and cost-effectively without unduly protracted or costly processes.
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