Tag: rule 72

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

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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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Financial Oppression

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As happens, we are seeing 2010 warnings reignited it was said: Give me an example. Try Real Power Systems v’s Wannon Water (2011). So what was the point? Financial Oppression was said.

That said, we looked for straightforward examples and it was not hard. However, Financial Repression also strung up at us at the same time. The difference? The later is the act of Governments to deliberately bring hardship provisions forward – but lets leave that for the politicians to argue why and why not. Is it happening? Have you done your tax returns yet? Read the 2014-15 budget provisions?

What is the bigger issue disturbs us more: That people want to give up, give in and forget there is a galaxy much bigger than us and is more amazing. Yeah OK it sounds really ‘Monty Python’ but why do we let it happen? Money, it is good and it is bad if not managed well. Then comes the argument it is about the resources. Corporations have almost infinitive resources, individuals tend to just despair and accept they do not have sufficient resources to fight.

Then comes another story, written as an enlightening and explanatory of how some we trust let us down:

“While sitting in Church this morning, I heard some very disturbing news that motivated me to write this article.

I am sure that the numbers are close to being the same all over the country. But, the disturbing thing about the news in church was the fact that the suicide rate was up to 15% and that was a dramatic jump from previous years.

The pastor talked about the reasons why. The bottom line to these “tsunami” of our society’s ills is credit and the economy. The majority of these people had credit issues and didn’t have the resources to pay their bills.

Let’s go way back in history. In the old world, I believe it was one of the great generals of history that eliminated debtor’s prison. His reasoning was that most of the debtors were farmers. If, they stayed in prison, then who would grow the crops to feed his army? Hmm. Well, that was a couple of hundred years ago and before the emergence of credit as we know it.

But, nevertheless, it was still credit. You borrowed, you owed, you couldn’t pay therefore you were punished. Have we come so far that we have become to retreat back to that same situation that prevailed hundreds of years ago?

I don’t think our politicians nor do our bankers realize the havoc, pain and hardship that the average person is under because of one issue alone. That, my friend is the cost of credit. If, you don’t think that your neighbor is worried about not having enough money to pay his bills, then you are living in “la la” land.

Lets take a look. I had written a previous article about the rule of “72” and how it impacts everyone. Time to explain it just a little more in depth. Lets just say that your, Mum has $10,000 and puts it into the bank. She is very happy because the bank represents security. In fact, if you tell her that she can make more by buying municipal bonds, she gets the “broom” out and comes at you.

So, here is Mum with her secured savings. Now, lets say that her friendly banker, with that “snaky” grin gives her a passbook for her to keep track of more money she puts into his bank. He offers her a (04%) interest on her money. Now, divide that (04%) into 72 and see what the number is. It is exactly (18).

Yes, that mean it takes (18) years for her ($10,000) to double.

Amazing that this is not taught in the higher universities in our county but everyone that has gotten his “masters in street finance” knows this.

Ask any bookmaker what the rule of “72” is and he will spit it out like “fire from a dragon”.

Now, lets just go into a different room. Lets say that you got a credit card. Now, lets say that because you were late on a payment, they jumped the interest rate to (36%). Yeah, it happens. But, here are some real shocking numbers. Listen up.

I am going to start with a basic small amount of ($300.00). This seems to be the amount that the average family started out with. Now, lets just say that you for some reason was either late or went over the limit. When you combine both of those problems, you incur a penalty of ($78.00) per month. Go ahead and add up both of the penalties.

Now, here is where the “hidden gun” comes into your life and virtually “steals your hard earned money” and they never pulled the trigger. If, you think that some petty thief that held up the local gas station to feed his family is a bad guy, and he only got ($50.00) lets put this in your pipe and smoke it.

Lets add up those late fees and the over limit fees for twelve months.

Hmmm. According to my calculator that comes out to be ($938.00) and when you add that on too the initial ($300,00) you now have a total owed of ($1,238.00)

Worried? You should be. This is what is happening and has happened to hundreds of thousands of Australians – and millions in my country of America. Now you owe at the end of one year ($1,238.00) and when you multiply (36%) annually, you now owe the credit card company ($1,682.98) at the end of only twelve months and you haven’t bought anything.

Here is where the tears turn into blood. Let’s jump ahead to the end of year two. Now, you might have gotten some phone calls but nothing that broke any dishes. But, at the end of two years, here is what you owe the company that gave you a ($300.00) credit card and never put up any money. They collateralized your signature. Anyway at the end of two years you owe ($2,288.85)

This my friends is the main reason why people commit suicide, politicians turn the other cheek because of the strength and influence of the lobbyists, the banking industry wants you to believe they want to help you, but when you fully grasp the mechanics of the “rule of 72” you either throw up your lunch, kick the dog, argue with the wife or get drunk.

But will this problem go away? Not unless you grab the bull by the horns and learn what to do.” Source – http://www.money-tips.com.au/articles/228/1/Financial-Oppression/Page1.html

Why write this? We started talking about Energy Retailers and how at least one does seem to practice ‘rule 72’ regardless of the morals. With relief we did not mention which bank but we all know their behaviour by recent publicity.