Arrears from underestimation of monthly payments (F/2005/295)

Ms K received a backbill and a letter from her energy retailer advising that her dual fuel account had been cancelled for arrears of $261.55. When the account was set up, Ms K was told that payments of $70 a month would cover both her electricity and gas usage, so the arrears came as a surprise to her.

In investigating Ms K’s concerns, we found that the retailer had underquoted her monthly payments and hadn’t notified her that the amounts she was paying weren’t covering the cost of the electricity and gas she was using. The retailer acknowledged that Ms K’s arrears had accrued due to its underquoting and its lack of notification to her, and credited her electricity account with $131.65. Ms K was satisfied with this outcome.

Because arrears can accumulate quickly, accounts (particularly those based on usage estimates and instalment amounts) should be monitored regularly to make sure the agreed payments are covering usage. If this is found not to be the case, the customer needs to be informed and given the opportunity to adjust either their payments or their usage accordingly.