Can you opt out of a contract – energy companies can in AU

Recent articles said energy retailers have all the power when it comes to contracts. Our friend the chook farmer tackled that notion and won. But the really disappointing thing was the retailer was reluctant to apologise, instead they said ‘as a Customer Service gesture xxxxxx have reversed…”. That said another retailer that was caught up in to saga was very generous in the way they handled the matter. You might feel as we do – the later can be recommended to our friends for future Business! The energy user also deserves special praise for the courage to stand up to what we saw as bullying.

Published on 31 July 2014 by the Canberra Times http://www.canberratimes.com.au/business/all-power-to-the-energy-companies-when-it-comes-to-adjusting-prices-20140731-zyvp9.html , it was a story that expressly said Electricity companies appear to be able to opt out of contracts. This does fly in the face of what a student might remember as Contract Law 101 – reasonable man, offer acceptance that sort of thing. Well it does seem the energy contract also known as an Energy Supply Agreement (ESA) or Retail Supply Agreement (RSA) is a one way contract – user can be used sort of thing. If the user has limited rights how did chook farmer win when it was stacked against him. It actually had nothing to do with the interference of National Electricity Law (NSW), pressure from the ombudsman or common sense. It was the greed of the energy company itself in that they cooked up a scheme and sent out a letter a couple of years ago saying if you do not reply you will be deemed on contract for 3 years – You better check your agreements chappies, you might be contracted and don’t know it!

The answer to the ‘win’ was the energy company relied on a deemed contract. But, they failed to ensure they had an executed original contract in place. The timeline was in 2012 they said by their conduct they had a contract duly executed from 2009. In 2014 they decided they no longer wanted the customer and allowed the customer to transfer to another retailer. Then retrospectively they wanted a $10k plus penalty payment for an early exit. Where the sneaky weasel went wrong was the energy company did not have an executed 2009 ESA to prove a contract existed in the first place.

Well it seems in Australia and NSW in particular an energy company can write into the contract a clause that overrides contract law. That is a price can be varied at any time the supplier wishes. The example above also highlights another problem – the retailer ignored the pleas for justifying the attempted charges. That is correct they refused to be transparent, and the claimed they had no need to show how they arrived at the numbers. Previously co2land org has written of Rule 72. It does seem the same principle is used in this instance.

We mentioned Ombudsman also, do you know they are member funded by the people you might complain about? This means they do not operate to instigate, they mediate within rules. If the rules are stacked against you, well – use your imagination! Better still read the direct quotes on the industry behaviours from the Canberra Times article: “The industry’s regulator has decided that your power supplier can raise charges whenever it decides, rejecting a plan from a consumer group to force utilities to comply with the terms of a contract.

Electricity suppliers have been accused of seeking to entice new customers by offering attractive deals on two- or even three-year contracts – except the small print gives the supplier an opt-out, the ability to raise prices when it wants.

As a result, a consumer who has shopped around to find a plan that suits them can find the prices have changed even before they receive their first bill.

This prompted the Consumer Action Law Centre, through its arm the Consumer Utilities Advocacy Centre, to seek to have power companies blocked from being able to unilaterally change fees and charges. It went to the industry’s regulator, the Australian Energy Market Commission, asking it to act.

But the regulator decided not to, preferring instead to ask retailers to be upfront about any changes.”

Co2land org would have hoped for increased certainty around the market. The advocate tones of what is needed clearly show the Australian situation needs to change. It seem the strong are protected and the less well prepared to be exploited. How does this fair with the rest of the world? Again quoting the Canberra Times: ”Retailers can manage those risks better than households….They know the market. Instead, all of the risk lies with the household.” The Consumer Action Law Centre spokesperson then said: “The regulator’s decision is at odds with that of regulators in other countries, such as the UK regulator Ofgem, which last year blocked power retailers from raising prices on fixed-term contracts, which are disadvantageous to the customer. Similarly, power companies are prevented from levying termination charges when their fixed-term contracts expire.”

Our final word: If we want so much to copy others good legislation, this UK example is a good place to start and make a difference too!

 

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