Firms admit to market chaos on power bills

By JOSIE CLARKE consumer reporter

Power companies admit that the open-market competition for householders' wallets has been chaos.

But the industry is promising that the delays and bad service when customers switch supplier are being sorted out.

A Herald investigation into the state of the power industry has found that the sudden change in April 1999 to a free market for electricity, in which power companies could compete for householders' accounts, was too much, too quick.

Even the man who steered the restructuring, former Energy Minister Max Bradford, has admitted things did not go according to plan and consumers were the losers.

"I accept that in the end the responsibility is mine, but I was acting on the best advice at the time and everybody said, 'Look, we'll be okay'."

Figures show that since competition began, 261,590 of the 1.7 million electricity customers have switched retailers - one of the higher rates in the world of what the industry calls "consumer churn."

But many customers have been beset with poor service, lengthy delays, disconnections and bills that are either wrong or non-existent.

Companies are optimistic that they have sorted out the problems of switching customers, but it is too late for some suppliers whose market share has taken a hit.

TransAlta and its parent company, Natural Gas Corporation, were most unpopular, losing 3 per cent of their market share since January.

They now have 35,000 fewer customers, down from 578,000.

TransAlta made itself unpopular immediately after April 1 last year and in July this year by substantially increasing its charges.

Contact has lost 11,000 customers, or 1 per cent of its market share.

Genesis and Meridian both increased their share by 1 per cent.

Each day this week we will analyse what went wrong with the restructuring.

In a Herald survey, five of the 11 electricity retailers in the paper's circulation area said it now took them an average of one month or less to switch customers to their supply.

But each of those retailers - TransAlta, Genesis, Empower, Natural Gas WEL Energy and Bay of Plenty Electricity - said a quick switch relied on the losing retailer handing over customers promptly.

In the Auckland area, Mercury and First Electric, both owned by Mighty River Power, are warning new customers that their switch could still take up to two months.

Contact was the only company that refused to say how long it took to switch customers.

Retail operations manager Jim Barrett admitted that the firm had "quite a large backlog," blaming losing retailers for being slow to hand over customer details.

"We are switching about 1000 customers to us every week. If losing retailers only hand over 300 of those, all of a sudden we have a backlog of 700. The industry is getting there. It is absolutely not the case that any retailer is delaying switching on purpose. The problem is purely the speed at which we were asked to do it, and the processes were not in place."

None of the companies surveyed admitted to a backlog in handing customers to a new retailer.

Mr Bradford said he had expected the restructuring process to take up to 18 months to settle down. In Norway, where something similar was tried, it took about two years for competition to develop.

But one person who is not optimistic the companies have sorted out the switching is Aucklander Matthew Cotton. Two rival firms are refusing to charge him for six months of electricity - worth about $600 - because they cannot decide which is responsible for his power.

Mr Cotton set up an account with Mercury when he moved into a central Auckland flat seven months ago, unaware that Meridian had supplied the previous tenants and was continuing to supply power.

Five months and numerous phone calls later, Mr Cotton was told by Mercury that it could not sign him up because it was having trouble getting details from Meridian.

He phoned Meridian for his account details - a five-minute wait on hold - then phoned Mercury to say he wanted nothing more to do with it. As a result of the confusion, Mr Cotton has had six months of free power. Both firms say they cannot charge him because he was not their customer.

Rush to power reforms a blank cheque for chaos

Have you had a problem with your power company?

E-mail our reporters: Josie Clarke or Chris Daniels