Smooth-pay payment arrangement not covering customer’s usage (F/2004/36)

In signing up to his dual fuel contact, Mr Y was put on a payment plan of $70 a month — $45 towards his electricity and $25 towards his gas. He was under the impression that this would be all he would have to pay towards his gas and electricity accounts. Mr Y received and paid his monthly $70 bills, and, although he also received separate gas and electricity accounts, he believed these were being sent only to indicate how much gas and electricity he was using.

Ahead of his move to a new address, Mr Y contacted his dual fuel retailer. He asked that his contract be transferred to his new address and he was told to continue making the monthly payments of $70. He subsequently received reminder notices for his gas ($826.95) and electricity ($115.66).

Mr Y said that at no stage was he made aware that he should have been paying the other electricity and gas bills he was receiving, in addition to his monthly $70. He was also concerned that there was no monitoring of his account to make sure the $70 was sufficient and further, that when the contract was transferred to his new premises, he was automatically placed on the same plan.

In resolution of the case, the retailer waived Mr Y’s outstanding electricity account and applied a customer service gesture of $626.95 to his gas account, leaving an outstanding balance of $200. It agreed to contact Mr Y to re-calculate his monthly payments and bring them into line with his usage. The outstanding amount on his gas account was incorporated into the monthly payments. The retailer also undertook to re-assess its process for reviewing the accuracy of its dual fuel instalment plans.

It’s important that retailers regularly review smooth-pay arrangements against customers’ actual usage.