Chris Daniels

Digital business editor for nzherald.co.nz

One man's fight to stay connected

The electricity revolution went too far, too fast, power companies have admitted. Consumer reporter CHRIS DANIELS looks at the impact on the ordinary user.

For 50 years George Shierny got his power bill and posted off the cheque.

He hasn't changed, but he reckons his local power company has.

Now aged 79, the veteran battler who spent decades fighting local councils and central Government over protection of parks and provision of bus shelters has joined the ranks of disgruntled consumers.

Two months ago, he wrote to TransAlta to dispute a $77 power bill for his Forrest Hill home in North Shore City.

TransAlta warned him to pay or his electricity would be cut off. He sent another letter, asking for more information. TransAlta responded by cutting off his power.

After some hurried phone calls and the intervention of the Herald, TransAlta agreed to put the power back on, but said it would still charge the $100 disconnection fee. Mr Shierny said he should not have to pay this, as all he had done was dispute a bill.

Then, two weeks ago, a UnitedNetworks worker arrived to cut off his power again, this time for not paying the disconnection fee. When he learned that Mr Shierny's wife, Agnes, was recovering at home from a brain haemorrhage, the worker decided not to act.

The situation was resolved only when UnitedNetworks, the monopoly lines company on the North Shore, wrote to TransAlta explaining Mr Shierny's situation. TransAlta has now agreed not to pursue him for the disconnection fee.

How did things ever come to this?

Says Mr Shierny: "Their whole philosophy of dealing with customers appears to have changed. The Kiwi attitude has gone. People used to give you a chance."

Mr Shierny accepts that if he owed the company hundreds of dollars, and consistently refused to pay, his power should be cut off.

In the hundreds of e-mails and calls from consumers the Herald has received about the power companies, his story is not unique.

A Herald investigation has found that consumers have not benefited - yet - from the change to an open market for electricity, introduced in April 1999.

According to the textbooks, a competitive market will inevitably deliver savings and better service for the consumer.

But the days of cheap power and good service are still some way off for most.

It is not just the bargain hunters - those who switch to the cheapest power company - who are having a hard time coping with the new breed of electricity suppliers.

Power companies have all established a firm reputation in the public mind as incompetent and providing poor service.

Consumers' Institute chief executive David Russell thinks the potential of a competitive market has yet to be realised.

"Yes, we now have retail competition, people have a choice of suppliers, and there is a difference in price."

But billing, disconnections and simple administration that would be expected of "any competent retailer" were all being handled badly.

This initial shambolic introduction of a competitive retail market for domestic electricity supply had caused serious, long-term damage to the reputation of many companies.

Telecom suffered similar problems when it was first corporatised, then privatised in the 1980s, said Mr Russell.

"It got itself a terrible reputation and that reputation has stuck; and the electricity industry is fast attaining a reputation that is almost as bad, if not as bad, as Telecom had."

Once a company or group of companies got into such a position, it took a lot of hard work, over a long period, to overcome.

Yet it was reputation, or a desire to keep a good reputation, that got many of these power companies, almost all state-owned, into trouble in the first place.

David Caygill, Energy Minister in the fourth Labour Government and chairman of this year's inquiry into the electricity industry, thinks it was fear of getting a bad name that pushed unprepared companies into competing for customers.

"The companies had little choice but to compete. Even if their systems and procedures were not up to the job, the companies were compelled to start competing, because rivals were in the market, going after their customers."

Meridian was one such company, leaping into the market with gusto, offering cheap subscriptions to Sky Digital TV if a customer switched.

Within 10 months, Meridian was forced to face reality. Things were not working, customers were not getting bills and those who did were not happy with the service.

Meridian backed off marketing itself and stopped accepting new customers at the start of this year. Only recently, at the end of last month, with new computers and a billing system installed, did it again start trying to win over households.

The company won the wooden spoon for the least popular power retailer this year, after the Ministry of Consumer Affairs asked for public comments on the success of the industry restructuring.

Consumer Affairs Minister Phillida Bunkle said Meridian scored 720 complaints, of the 1830 calls received. Of the 3218 issues raised by callers, only 38 involved any positive comment about the industry.

Volunteers at Citizens Advice Bureaus across the country have spent the past 20 months helping people to cope with the everyday fallout from this lack of retail experience and knowledge.

Chief executive Nick Toonen said some consumers were now getting cheaper electricity, but these savings were small.

Problems, however, have been big. Those saving money with a cheaper power supply have often had to put up with poor service and long delays in getting bills.

The cost, financially and in terms of customers' time and patience, is often bigger than the savings.

So for George Shierny, things have not improved. If he had switched to a competitor of TransAlta, the chances are he would have faced a long delay in getting his first bill.

The Consumers' Institute's Power Switch website estimates that Mr Shierny, if he changed companies, could save up to $82 a year on his power bills.

By staying, he ran into troubles of a different kind.

Herald Online feature:
Overload - our troubled power companies

Have you had a problem with your power company?

E-mail our reporters: Josie Clarke or Chris Daniels

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