Gas supply disconnection - hardship considerations (GD/2001/13)

Case number: GD/2001/13
Date of Decision: 24 May 2002
Decision accepted by the customer: Yes

The customer contacted EWOV in August 2000 following disconnection for her gas supply for account arrears of approximately $1,600. The customer said that she had been experiencing particular difficulties with her budget and that she had recently received a very high gas bill. Her financial counsellor, lodging the case on the customer's behalf, advised that the customer had a large family, and that a pension was her only regular source of income. She had also experienced problems with her direct debit being deducted from her account prior to her income being paid in. The financial counsellor indicated that, in her professional opinion, the customer was not in a position to re-pay this debt as well as maintain regular payments towards her ongoing usage. She suggested that the debt be waived so that the customer could more effectively contribute towards her ongoing usage.

In response, the gas company said that it had previously disconnected the customer's gas service because she had not made regular payments. It did not believe that she had demonstrated that she was in particular hardship, and cited the irregular nature of her payment history as justification for disconnecting her service. It noted that her usage was greater than her apparent ability to pay her accounts. It also noted that it had previously entered into payment arrangements with the customer, but these had not been adhered to.

As part of its investigation, EWOV arranged an independent energy audit. The resulting report noted that one heater was used for heating the entire Ministry of Housing house. The heater was in poor condition as the fan was no longer operative and needed to be replaced. The energy efficiency standards of the house were very poor, however, the customer also contributed to this by leaving doors and windows open. The consultant also recommended ways to reduce the hot water usage, for example, by resetting the thermostat, which had been set higher than recommended.

In making this Binding Decision, the Ombudsman took into account relevant regulations, issues of customer service, and the respective responsibilities of various parties in assisting customers experiencing financial hardship.

In order to inform herself better about the customer's circumstances, the Ombudsman met with the customer at the customer's home. The Ombudsman noted that it was apparent that the customer was experiencing difficulties in paying for all her essential services, including her food. The Ombudsman believed this case to be one of the most difficult and complex examples of hardship and affordability that she had considered.

The Ombudsman made the following observations in relation to the case:

• That Centrelink recipients can experience problems with direct debit systems not coinciding with Centrelink payment cycles and that this service should therefore be well targeted and monitored for suitability to particular customers
• That poorly maintained appliances often affect tenants' energy usage, and this applies equally to private tenants as to Ministry of Housing tenants, such as this customer
• While customers do have the option of applying for a Utility Relief Grant Scheme (URGS), in some circumstances, they need further support. The URGS has strict criteria and is focused on short term rather than long term solutions
• There needs to be better co-ordination between the relevant agencies to ensure that there are holistic solutions to individual problems
• Companies should consider whether previous payment arrangements were realistic when contemplating disconnecting the service due to non-payment.

At the time of the Binding Decision, the customer's gas account was $2,741.69 in arrears (the customer had recently reduced the current amount outstanding from $2,878.74 to $2,741.69, by making ongoing fortnightly payments). Having regard to the circumstances of the case, the Ombudsman determined that a fair and reasonable outcome was that within 21 days of receipt of the signed Release Form from the customer, that the company waive $2,351.69 of the customer's outstanding debt. This would reduce the customer's debt from $2,741.69 to $390.00.

As the customer had demonstrated that she wished to make payments towards her debt, despite her difficulties in doing so, and the financial counsellor advised that small payments were possible, the Ombudsman decided that it would be inappropriate to waive the entire debt.

She therefore directed that the company accept a payment plan from the customer to pay the remaining account arrears of $390 over a period of twelve months. She determined this amount having taken into account advice from the customer's financial counsellor regarding the customer's capacity to pay. Should the customer fail to make these payments, the company was entitled to pursue the debt through its normal procedures. The Ombudsman recommended that the customer contact the company immediately if she was experiencing difficulty in making these payments and that the company allow the customer a period of six months to establish a regular payment pattern.

The Ombudsman also directed the company develop a draft hardship policy in conjunction with its Customer Consultative Committee, and to provide a first draft to EWOV within four months of the date of receipt of the signed Release Form from the customer. The Ombudsman noted that as a result of her consideration of this case, she intended to write to the Ministers for Health, Community Services, Housing, and Energy & Resources, suggesting a more co-ordinated response to cases such as these.