KEY POINTS:
The onus will be firmly on electricity retailers to find out whether their customers are "vulnerable" before disconnecting their power, under tough new measures the Government is promoting to protect consumers who struggle to pay their bills.
The Beehive's response to the death of Folole Muliaga, who died
last week just hours after the electricity to her home and oxygen machine was cut off, has been swift. Yesterday the Cabinet discussed how it could clamp down on disconnections by power companies.
Prime Minister Helen Clark emerged from the meeting with a message that electricity companies - either state-owned or private - can expect a stricter regime governing disconnection of what she termed "vulnerable" people.
"I'm not expecting Mercury Energy to be making profits for the taxpayer at the expense of vulnerable people put in the sort of position the Muliaga family was in," she said.
The Government has not yet decided if it will implement the stricter measures by strengthening existing guidelines for how power companies should deal with low-income customers, or through a more heavy-handed regulatory approach.
The Cabinet is seeking more advice on that over the coming week and further decisions could be made as early as next week.
The Prime Minister yesterday revealed more detail of additional correspondence between Mercury Energy and State Owned Enterprises Minister Trevor Mallard since the death of Mrs Muliaga.
She said that, in a letter, Mercury Energy had admitted it did not contact Mrs Muliaga to suggest that she go to Work and Income New Zealand or other social agencies for help.
Guidelines published by the Electricity Commission last year explicitly recommend that where a consumer faces disconnection for non-payment, the electricity company should make reasonable attempts to contact the customer by telephone first, and advise the person of available assistance from Government and social agencies.
But the guidelines are not mandatory.
"Mercury Energy did not do that with respect to the Muliagas," Helen Clark said, "despite the fact that over a seven-year period they had had many warnings for overdue bills, albeit for relatively small amounts."
The company told Mr Mallard's office that it didn't advise Mrs Muliaga because it was not required to.
"This clearly points to where the guidelines need to be strengthened," the Prime Minister said.
Among the measures being brought forward is a requirement for power retailers to proactively find out whether their customers are vulnerable or not before they disconnect power.
Asked how she expected companies to do this, Helen Clark bluntly stated that "Well, it helps to talk to people doesn't it? It may well be that it costs the companies a bit more to have staff who do that."
The Ministry of Social Development deals with around 32,000 cases a year of people who come to it either facing power disconnection or having been disconnected already.
The Government's desire to move towards a more sensitive regime for disconnections is being compared to the practices that used to be seen under the Auckland Electric Power Board.
Government minister and former board member Judith Tizard said last night that when she was involved with the board it had two fulltime staff whose job it was to talk to customers who weren't paying.
The people who were genuinely having difficulty were helped with budgeting and payment advice.
The National Party yesterday told the Government it should be holding Mercury Energy to account for not abiding by the existing guidelines, rather than rushing to regulate.
"Mercury Energy and its board should not be let off the hook so easily," the party's state-owned enterprises spokesman Gerry Brownlee said.
Proposals:
* Electricity retailers be required to advise consumers of available assistance from Government and social agencies before disconnecting a household.
* Electricity retailers be required to actively find out whether there is a "vulnerable" person in a household facing disconnection.
* A vulnerable person will likely be deemed to be someone with an illness, a disability, a frail older person, or a person with young children.
* Where there is a vulnerable person, the electricity retailer will be required to consult the Ministry of Social Development before any disconnection takes place.
* People will then be put on a payment or budgeting scheme. Emergency grants, recoverable grants, non-recoverable grants and unclaimed assistance could be provided.
* Disconnections will not be allowed to happen on Fridays or during a weekend, because on these days it is difficult to get reconnected.
* Disconnections will also not be allowed to take place during adverse weather events or a civil emergency.
* Electricity retailers will be required to agree on protocols with the ministry setting out how the referral and assessment process will operate.
* The new system will apply to both state-owned and private electricity retailers.
Disconnection processes
Mercury Energy: The bill is due 21 days after it is mailed. Ten to 14 days after this households receive an automated phone call. Ten days later they receive their next bill with a message for payment and disconnection notice is also sent. A final disconnection notice is sent 10 days after this and a telegram is delivered by courier. The telegram states that they have 48 hours to make payment. Disconnection will then take place.
Notwithstanding this process we provide limited opportunities to make other arrangements (in the event of extreme hardship and or where medical conditions make it appropriate) to exercise managerial discretion.
Contact Energy: Disconnection cycle generally takes at least 6 1/2 weeks. Reminder letters are sent and phone calls are made to the customer warning them of an impending disconnection if payment is not made, as well as a couriered telegram.
Meridian Energy: Disconnection process takes from four to six weeks. If a payment isn't received, two reminder letters are sent, followed by a phone call.
Trustpower: The only company that offered its disconnection numbers. Over the past 12 months it has sent about 600 disconnection notices a month. It has disconnected an average of 230 customers a month. It makes about 5500 arrangements a month to help people make payments.
A spokesman said power is disconnected about 40 days after the bill is due. A reminder is sent, followed by two disconnection warnings.
Genesis: Process takes about 37 days after a bill is due. Two reminder letters are sent, followed by a phone call. Genesis says millions of dollars in unpaid bills are written off every year.
