Payment plan estimated and not enough to cover customer usage (F/2004/93 )

In February 2003, Mr P entered into a dual fuel contract. In June 2003, his preferred retailer arranged the transfer of gas and electricity and the dual fuel contract commenced. At signup, Mr P was told he should pay $90 a month to cover his gas and electricity usage, and on this advice he entered into a monthly direct debit plan for this amount. In February 2004, he received a letter from his retailer advising that he owed $700 on his electricity account and $300 on his gas account ($1,000 in all).

Mr P stated that until he received this letter, he was not aware from any information on any of his monthly statements that his monthly payments were not enough to cover his usage. When he contacted his retailer, he was told there had been a mistake on his account, and that he was actually $3,600 in arrears, not $1,000.

Mr P was shocked that he owed his retailer anything, as he had made all relevant payments based on advice from the retailer, and that the amount was so high. He contacted EWOV in frustration, not knowing how much he owed his retailer and how the problem could have been allowed to occur in the first place. He also said that at no time was he advised by the retailer that it estimates usage and payments, and that this could be inaccurate.

The retailer confirmed that the payments of $90 a month Mr P was making towards his gas and electricity accounts were not enough to cover his on-going usage. It said Mr P actually owed only $1,019.87, the $3,000 account being a printing error and he should ignore it.

The retailer apologised for any confusion caused, and for not advising Mr P that the monthly payments had been estimated incorrectly. It said that it had sent quarterly (electricity) and bimonthly (gas) summaries to Mr P during the course of the year and that these showed his monthly payments were not covering his ongoing usage. It apologised for not notifying Mr P at an earlier stage that his monthly payments would have to increase. In recognition of the inconvenience caused, the retailer waived $279.15 from Mr P’s gas account, and $90.72 from his electricity account. A new payment plan was established to adequately cover the arrears and his ongoing usage.

Retailers should be monitoring the payment plans they have agreed with customers, to ensure payment shortfalls are recognised as early as possible, especially when the plan is based on estimates. Early advice to customers that they need to increase their payments, or reduce their usage, will help avoid financial hardship.