A customer sought $38,050 in compensation from his electricity distributor after a fire (October 2014)

Meters, poles, wires and pipes
Case Number 2014/19417
Outcome Conciliation

The Issue

In mid January 2014 a fire caused damaged to several parts of a customer's business premises and workplace equipment. The Country Fire Authority (CFA), who attended the emergency, provided the customer with a report stating the fire was caused by high voltage power lines, owned by the distributor, falling onto vegetation. The customer completed a claim form in the amount of $38,050 and submitted it to the distributor. However, it would not assess the claim until an assessor attended the scene to substantiate the claim. The customer had difficulty arranging the site visit, and contacted EWOV as a result.

An Assisted Referral was raised, and five days later an assessor visited the site and completed an assessment. Afterwards the customer received a letter telling him his claim was unsuccessful as a clear cause for the fire could not be established, but it did offer a $2,500 customer service gesture - without an admission of liability. Dissatisfied, the customer re-contacted EWOV.

Due to the complexity of the complaint the Real Time Resolution stage was bypassed and an Investigation commenced.

The Investigation

To begin with, EWOV asked the customer if he had insurance and had therefore considered making an insurance claim - but the customer said that he did not have insurance because he was unable to afford it.

EWOV then asked the distributor to provide the customer's account history, electricity outage and voltage variation history at the premises, details specifically related to the incident, documents relating to its assessment of the customers claim, and finally its suggestions for resolving the complaint.

The distributor said the origin of the fire was not clear in spite of the CFA report (which also stated that the findings were not intended to be used to attribute liability) because Energy Safe Victoria (ESV) reported that the incident's cause was unknown. According to its records the poll asset in question was only a few months old and was in good order. The distributor also said its own assessor could not establish whether the fallen high voltage power lines caused the fire, or were a result of it - and therefore it was not willing to increase the original $2,500 customer service gesture.

EWOV then began a Fair and Reasonable Assessment which involved an analysis of all compensation claims made, relevant legislation, a Good Industry Practice assessment and the technical advice provided by the CFA.

As the distributor noted, $13,580 of the customer's claim was for consequential losses, such as lost working hours. Given there were no guidelines that dealt with the unique specifics of this case, EWOV consulted the Voltage Variation Compensation (VVC) guidelines for direction on how to deal with similar cases. In relation to consequential losses, the VVC limits compensation to damage directly caused by an event. It also notes a business is expected to take reasonable precautions, such as insurance, to protect against losses, and that like-for-like, not new-for-old, replacement is reasonable.

Next, EWOV looked at the results of the Good Industry Practice assessment. Several other energy distributors were asked to assess the case and advise EWOV of what they would do. All the respondents noted the original cause of the fire could not be confirmed, and that in order to be liable the distributor's asset failure needed to be due to direct action or neglect.

During the Investigation the customer revised his claim to 50% of the original resolution sought, making it $19,025.

The distributor said that while it could not be confirmed, the fire may have started as a result of its asset failure, and therefore was willing to increase its customer service gesture to $12,235. This figure was reached by deducting the $13,580 claim for consequential losses and agreeing to contribute half of the remaining $24,470 claim, due to the uncertainty of the fire's cause and the customer's lack of risk management in not having insurance.  However, the customer was not satisfied with this offer.

Finally, EWOV conducted an internal peer review, looking at - independent advice obtained by EWOV, relevant legislation, regulations, industry codes and guidelines, and good industry practice - and advised the customer that the distributor's offer appeared fair and reasonable considering the full circumstances of the complaint.

The Outcome

In order to resolve the complaint the distributor increased its customer service gesture to $14,000, with the possibility of increasing that figure by a further $2,850.95. This extra amount would be provided if the customer sent appropriate substantiation and would replace 50% of the cost of damaged manufacturing equipment. The customer agreed to provide the substation, was satisfied with the resolution, and the case was closed.

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