$860,000 repay jolt for power company

An electricity company that gained almost a quarter of the Hawke's Bay market with a price-freeze promise it didn't keep, has been fined and ordered to pay customers more than $860,000.
Energy Online told potential customers in Hawke's Bay the "energy portion" of their bill was frozen until June 2005.
In March 2004, more than a year before the "freeze"' was promised to end, the company increased customers' bills, to pass on increased electricity distribution charges, and also increased its own overhead charges to Hawke's Bay customers by 70 percent.
In the Napier District Court, Judge Geoff Rea found Energy Online guilty of 10 charges of breaching the Fair Trading Act, and fined the company $140,000 yesterday. The company will have to repay customers $860,981.
Costs of $6300 bring Energy Online's total payout to just over a million dollars.
The court found that the overall impression created by the price-freeze offer was that prices would not go up at all, and that impression was misleading.
Judge Rea said Energy Online had misrepresented the nature of the offer to try to get as many new customers as possible, and had not properly explained to customers exactly what the price freeze would mean.
Energy Online launched its Hawke's Bay campaign in October 2003, enticing consumers to switch from competitors, particularly Contact Energy, by promising a fixed price until June 2005.
A year after the telemarketers started calling, Energy Online had gained 23 percent of the share of the Hawke's Bay market. Six percent of those customers admitted being lured by the price-freeze promise.
Commerce Commission general manager Geoff Thorn said the price-freeze campaign had achieved its goal of attracting new customers to Energy Online, with the company substantially increasing its customer base as a result.
"The success of the campaign shows that consumers will change their behaviour based on what they are told about prices," Mr Thorn said.
"That is why consumers must be given clear, correct information.
"When consumers have accurate information they will choose the best deals, which in turn drives competition and brings prices down.
"When they are given misleading information they may become cynical about future offers, and less likely to shop around for a good price."
Some customers have already been compensated, others have refunds to come.
Energy Online general manager Nic McCondach was not available to comment.