What hurts more – dealing with energy contracts.

Measures or impacts – what hurts you more when you are dealing with energy contracts as a small, but described as large in National Electricity law, business? What factors affect your decision to enter into the contract? How do you stand up for your rights?

The first rule is do not expect consumer legislation to protect you! You may be surprised that energy regulations even circumvent your rights. For instance: The deemed provisions, and price during the contract period. Then consider the extraordinary fact the Australian Energy Market Commission (AEMC) is on record as saying the equivalent of ‘caveat emptor’ – buyer beware is sufficient protection.

In the case of Energy Service Agreement, Retail Energy Agreement or simply Contract for Sale of Electricity (the description referred to by your retailer) you should realise you are without ‘warranty’. You see without a warranty the buyer takes the risk. The supplier or energy retailer takes no risk. In most cases this is true if you are a small (large business).

A series of recent brokering agreements by WIntelboff has highlighted to the client that this risk is critical. Even intervention strategies can be protracted and lack a feeling of satisfaction for the client. Most might even be frustrated because it is costly to fight, and if they qualified for the Ombudsman to investigate there is the risk they will be told ‘no, too difficult’, or the equivalent!

One client has penned her concerns in trying to get a fair contract, and we feel compelled to air them for her:

“On receipt of XXXXXX offer of renewal of electricity supply to the XXXXXXX XXX, the Manager, passed it on to me to “check out” as I had (and am still) involved with researching the power industry and finding ways and means of reducing our power bills.

The initial offer for three years from a numbers point of view looked like a vast improvement on what we are paying for Power from XXXXXX at present.

However on wading through the thirty odd pages of contractual agreement I realised that it was one of the most complex legal documents I had ever had to consider.

I recommended to XXXXX we ask the advice of the ‘crew’ who had been guiding us through installing Solar Power for the Business for two reasons….

They had a greater understanding of the Industry and what affected the retail electricity market…and I was concerned about the solar panel installation and other power reduction strategies affecting the tariff adversely with the 160Mwh factor

My concern that the fine print was mostly one way…to XXXXXX with no real guarantees built in to protect us from penalties..

Bottom line is…

In my personal opinion, XXXXXX’s business methods with this are appalling and amount to business bullying. Expecting a XXXXXXXX (requiring managerial and/or Board Approval) to make a decision with 2 weeks of receiving their renewal…AND…stating that the time could be extended…but didn’t when I requested it …. is tantamount to fraudulent behaviour.”

CO2Land org feels that a truly competitive industry would have adequate consumer protection, and you would expect where it was possible to lose customers you would be concerned about adverse behaviour. You would even expect a civil response to your queries – more than just the family phone message of ‘why we are great people’. Actually, when asking one retailer if it was possible to change a threshold provision – The actual response might surprise you – the 300 MWh pa + customer was told “you are too small a customer to influence us to adjust or amend our contract”!

It gets really scary at this point. They don’t care? Why you might ask. Some speculation could be: They might be selling short in the market. As such they can make more money from ‘double dipping’ than dealing with you. For the long sell retailer they might just offer fantastic prices to fill the books and just raise the prices later. The really scary thing is it is not just the raw energy prices at play here. It can also be environmental charges and some government fee liabilities.  

If you do not believe us – just read your contract very carefully. Some terms and conditions might be expressly stated, and some overtly say you are screwed.

CO2Land org is aware of only one retailer, at this time, that includes an undertaking to not rise prices for the contract with the exception of those mandated by government. Even then, you might be a little nervous when you realise the retailer is government owned! What if they mandate a change? What if they sell to a private company and the condition of sale says you can charge what you like – eh, you are deregulated? But better the bird in the hand as they say. At least if done wrong by Government you can vote them out eventually. Unfortunately, retailers in the mean time might just laugh and say how can you hurt me!

It is disappointing that tactics and marketing are used to make you believe they are doing it for you, when the deal is something else it is their insurance – not yours, and you are the one paying.

Stop Press – small *described as small, should ask for up to 17 % Discount on their bill. But what penalties take it all back again + more – that is for another post. In the mean time just remember to look at what you give up for the illusion of more!

 

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Inappropriate electricity tariffs – it will cost you!

Inappropriate electricity tariffs have the potential to cost excessive amounts of money for the unwary. In NSW for instance, the National Electricity Law (NSW) has gaps in it you can drive a truck through. Consider this: Energy Retailers might know you are paying too much for your network charges, and they take no action. The Energy Retailer can request a review of your charges, but apart from a newly introduced mandatory review period, may not provide this service. One retailer even provided proof in saying the do not have the systems in place to be proactive on behalf of the Customer. In other words it may be immoral, but it is not illegal to withhold the service. CO2Land org has written evidence that one NSW small business has claims of having been on an inappropriate network tariff and it costing them as much as 72% more than needed to pay – how much? Almost a quarter of a million dollars ($250,000)!

Another issue is that a deemed contract can exist whether you are aware or not, and it may be a simple communication error that costs you dearly. As a residential customer it may cost you up to $220 because you entered into a new Energy Service Agreement (ESA) and were not aware you were already contracted to another retailer. The charge is a break contract fee. It will not be transparent and a St Vincent De Paul commissioned report suggests it is also unreasonable.

A similar break fee event, that CO2Land org is aware of, involves a Commercial and Industrial (C&I) customer with an annual energy spends of approximately $50,000 pa. This small business was invoiced in excess of $10,000 (including government fees and charges) for breaking a deemed contract. In that invoice no attempt was made to show how the number was arrived at other than the words ‘to cover costs’ and a list of the government charges. The source of these two examples here is Wintelboff – www.wintelboff.com .

Possibly you should contact your favourite energy advisory and have them look at your bills?

Co2Land org is also aware that through the Office of Environment and Heritage (OEH) and in conjunction with Carbon Training International (CTi) ‘Energy Management Basics Training for Business’ is available. The ‘plug’ is because they also offer to review your billing as part of the class exercise, and provide up to 15 hours of technical advice as part of the course.

We are also aware the NSW Business Chamber is offering discounts to its members of up to 19% if they use Energetics to participate in the Business Chamber’s ‘Better Energy Manager Program’.

Which of these groups is better? It really gets down to cost. The benefits are obvious if you are paying too much.

If we go back to the National Electricity Law (NSW) and the way it is framed – sounds like a Roger Rabbit episode! A quick read will make it clear the consumer advocacy part is weak. A large business must engage through a complex process for its matter to be heard. [As an aside a business can be classified as large if it has energy consumption greater than 160MWh pa. However, it may not be large under taxation and corporate laws]. If you need to go to court over your energy bills, the dispute resolution it will be classified along corporate laws. You could be excused for being confused! A course of dispute resolution is to go to the Energy and Water Ombudsman NSW (EWON). What you should know is EWON is not a government-sponsored body – it is industry member sponsored. The body can also make the choice to be involved in disputes? They will make legally binding judgements, but they decide whether to be involved and you must have your wants clearly made and they must be for more than moral issues. They also have guidelines in the use of the body. Currently, you need to have an annual turnover of less than $2million, employ less that 20 people and be a family run business. Some variation to these guidelines are possible, but you might need to contact them if you have questions www.ewon.com.au .

If you did not know there is ‘spin’ that all this be fixed when the assets are sold? As it happens the poles and wires – the network companies in NSW are state government businesses. If the process is flawed you could expect a reasonable person asking why is it not fixed? The answer may be it is an inconvenient truth right now, we are trying to sell the companies!