Property damage following interruption to supply (D/97/39)

Case number: D/97/39
Date of Decision: 5 June 1998
Decision accepted by the customer: Yes

A small business customer contacted EIOV claiming damage to equipment following a power interruption. The customer provided repair advice totalling $2,432.25, in which the repairer indicated that a power surge had caused the damage.

The customer's electricity company confirmed that a 3-minute interruption had occurred as alleged, but said that there was no record of any power surges in the area at that time, and it did not anticipate that the incident would have resulted in any surge. The company claimed that the event was beyond its reasonable control as it had been caused by a contractor employed by a third party in the electricity industry (not a member of this scheme). This was confirmed by the third party, however, the third party also denied liability for any damage.

EIOV conducted a lengthy investigation into the customer's issues, including: analysis of reports from the customer's electricity company and the third party. EIOV took advice from an independent engineer, and sought clarification and explanation of repair advice from the appliance repairer and sought advice from the Office of the Regulator-General.

In relation to the repair quotes EIOV noted that there had been subsequent repairs to the original repairs. Independent technical advice provided to EIOV was to the effect that these subsequent repairs may have been due to poor initial repair work.

In determining this case, the Ombudsman took into account what is fair and just, industry practice and relevant law. Relevant law included the Supply and Sale Code, the Trade Practices Act 1974, the Electricity Industry Act 1993, the Office of the Regulator-General's Guideline No 5 on Connection and Use of System Agreements (issued pursuant to section 12 of the Office of the Regulator-General Act 1994) and clauses 4 and 6 of EIOV Constitution.

The Ombudsman found that it was likely that the damage to the customer's equipment was a result of a voltage variation associated with the power interruption. The event itself had resulted from an act of negligence by a third party.

The Ombudsman formed the view that it is the responsibility of the electricity company to ensure that appropriate use of system agreements are put into place. She considered that if the company was able to claim under the contract with the third party, it must also bear responsibility pursuant to its own implied contract under the Supply and Sale Code with the customer to supply power of merchantable quality, taking into account the Australian Competition and Consumer Commission's interpretation of the Trade Practices Act 1974 to the effect that electricity companies are liable for damage resulting from voltage variation events.

The Ombudsman directed the company to compensate the customer for the original equipment repairs only, to an amount totalling $1,007.55 in full and final settlement of the matter.