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Consumers urged to check discounts:

Some electricity retailers are using semantics to trick consumers into paying more for their electricity.
By Motherpedia
Date: October 23 2013
Tags: money,
Editor Rating:

Electricity consumers who shop around for a discounted rate on their power bill could be missing out on huge savings after the first year, a QUT law academic has found.

Alastair MacAdam, a visiting fellow at QUT's School of Law, says electricity consumers should check that their discounted rate continues into the years following the first year after sign-up as some electricity retailers were using tricky semantics to avoid automatically continuing the negotiated discount.

"Consumers don't realise that they are losing the negotiated discount after one year. Electricity retailers are being half-smart by making a distinction between a 'contract' and a 'plan' and claiming a 'plan' doesn't require them to inform customers of the step-up in price.

"Retailers are supposed to notify consumers of any change in charges but by arguing that the consumer is on a plan rather than a contract they seem to think they can avoid making them aware of the return to the ordinary rate."

Mr MacAdam said that in his own case it meant a difference of $80 over six weeks.

"In effect, retailers could be making tens of millions of dollars out of ordinary consumers with this ploy," he said.

"There is no difference between a 'contract' and a 'plan' and so consumers should be informed of any change."

Mr MacAdam said that householders with solar power would be particularly unlikely to notice that they were being charged at a higher rate than what they had signed up for because their bills were often in credit.

"The discounted rate should continue even when a consumer has installed solar panels, although they may no longer be paying for electricity."

Mr MacAdam discovered the situation after installing solar panels and found that his negotiated discount of 14% had been discontinued three months previously without his knowledge.

"I contacted the water and electricity ombudsmen who then contacted my energy retailer who explained to me why the discount had been discontinued.

"In these days of rising energy prices, all consumers should shop around for the best rate and ensure that rate continues until such time as the contract is formally terminated."

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