Contact admits lying to its customers about price rise

Contact Energy admits it has broken the law by not telling its customers the truth about power price rises. The power company lied to 8250 customers in the Thames Valley, Tauranga, Eastland Networks and Central Otago this year when it sent out notices saying price rises were due to a jump in charges levied by local lines companies.

Network prices had actually dropped.

The Commerce Commission yesterday said Contact would make a public apology for its breach of the Fair Trading Act and pay a donation of $30,000 to the Citizens Advice Bureau.

Commission chair Paula Rebstock said customers may have been discouraged from switching to another power company by believing a lines company was behind the price rise.

"The commission considers that any breach of the Fair Trading Act by a major corporate is serious," she said.

"In this case, Contact Energy's behaviour has the potential to be harmful to competition in the electricity sector."

For competition to be effective, consumers needed reliable information about charges in case they wanted to switch.

Lines companies, which have a monopoly over electricity transmission in their areas, are often upset at being blamed for increases in power bills. They are regulated by new Commerce Commission rules which cover annual price rises and quality thresholds.