How SA small businessman won 37pc cut in back-bill after meter failed to record peak electricity

The background: In 2001 Mr K had entered into a five-year
contract with the retailer for the supply of electricity. The Energy
Retail Code applies to customers who consume less than 160MWh per year.
As Mr K’s company consumes more than 160MWh per year it is the terms of
the contract that determine the rights and obligations of both parties
rather than the Code.

Peak consumption not registered: As part of the investigation
EIOSA found that an internal audit process carried out in 2004 by the
retailer identified that the peak register on the business’s meter had
not been registering peak consumption since April 2001.The retailer
raised a service order with the electricity distributor and a faulty
time switch was replaced in July 2004.

Legal advice sought: The distributor also provided the retailer
with the billing adjustments necessary back to April 2001 to charge for
the electricity used. EIOSA obtained independent legal advice as to
whether the company was contractually liable to pay the back-bill.

Retailer had right to charge something: The advice stated that
as a basic principle customers are obliged to pay for electricity
consumed as determined by the metering equipment and at the rate agreed
to in the contract. Furthermore the failure of metering equipment does
not preclude an electricity retailer for billing for electricity
consumed but not recorded as long as the retailer can determine by
reasonable means the quantity of electricity used but not recorded.

Time-to-pay also in dispute: In the previous discussions between
the retailer and Mr K the retailer offered a twelve-month period to pay
the back-bill. Mr K was not satisfied with this.

EIOSA’s concern: Although the independent legal advice confirmed
that the retailer was entitled to payment for this back-bill, EIOSA had
concerns about the length of time it had taken the retailer to identify
the problem and advise Mr K’s company.

Bill cut by more than $10,000: As a result of discussions
between Ombudsman and the retailer, the retailer agreed to reduce the
back-bill by $10,300. In addition, because of the significant impact of
such a debt the retailer agreed to negotiate fair and reasonable
repayment terms taking into account the company’s financial
circumstances and capacity to pay.

Time-to-pay terms agreed: EIOSA advised Mr K that if he was not
satisfied with the repayment terms he could contact this office again.
This was not required as terms were agreed.

Reference: Energy Industry Ombudsman SA Annual Report 2004-05.

Erisk Net, 6/12/2005

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