Capacity to pay not assessed — wrongful disconnection payment made (C/2005/1958)

Ms B’s electricity supply was disconnected for non-payment of arrears of around $1,000. She’d been on several payment plans which had been cancelled by the retailer due to missed payments.

EWOV arranged for Ms B’s supply to be reconnected, and a new payment arrangement was negotiated in line with her capacity to pay. EWOV’s investigation also needed to consider whether, in disconnecting her supply, Ms B’s retailer had complied with the terms and conditions of her contract. We found that the retailer may not have complied with clause 11.2 of the Energy Retail Code, as it hadn’t adequately assessed Ms B’s capacity to pay prior to disconnecting her electricity. Ms B had three payment plans cancelled over an eight month period in 2004, due to missed or partial payments. In addition, her supply had been disconnected at her previous address for non-payment of arrears.

Despite this history of failed and partial payments, Ms B’s retailer hadn’t provided her with telephone information about energy efficiency or advice on the availability of an independent financial counsellor. It was also noted that Ms B had contacted the retailer four times in the months preceding the disconnection, either to negotiate a new payment arrangement or advise of a payment she’d made. The retailer, therefore, had ample opportunity to undertake a systematic assessment of Ms B’s capacity to pay and to offer her appropriate advice and assistance.

The retailer agreed that it hadn’t adequately assessed Ms B’s capacity to pay in line with Energy Retail Code requirements and a wrongful disconnection payment was credited to Ms B’s account. The retailer also offered Ms B an incentive plan, whereby it would match every third electricity payment she made.

This case highlights the requirement for energy retailers to adequately assess a customer’s capacity to pay prior to disconnecting supply, in accordance with the terms and conditions of the customer’s contract and the provisions of the Energy Retail Code. Failure to do so may trigger the wrongful disconnection payment obligation.