Commission warns Genesis over business billing errors

The Commerce Commission has issued a warning to Genesis Energy Limited about billing errors concerning electricity line charges to business customers.

Genesis reported the errors to the Commission. The Commission considers that Genesis is likely to have breached the Fair Trading Act when, between February 2014 and July 2020, it issued invoices that displayed inaccurate multipliers applied in respect of some electricity line ‘fixture charges’ (see Background below). As a result, Genesis misrepresented the total price to be paid for the electricity services provided to affected business customers.

Genesis is crediting or refunding the 1,576 customers who overpaid $1,138,943 in total. It will not seek to recover charges from the 1,356 customers who underpaid more than $2,400,000 in total.

“In many cases customers will not be in position to easily identify whether an error has been made when they are invoiced for goods and services and they are entitled to assume that they are being asked to pay what is due to be paid. Businesses must make sure that they have systems in place to ensure that customers are charged accurately, and to identify and correct inaccuracies promptly if they arise,” said Commerce Commission Chair Anna Rawlings.

“Genesis reported this matter to the Commission itself in July 2020. It has confirmed that it has ceased the conduct, has put an audit system in place to minimise the risks of a billing error occurring again, and it is crediting or refunding affected customers,” said Ms Rawlings.

The warning letter has been published on the Commission’s case register.

Background

Fixture charges

To ensure availability and supply of power across the network, Genesis applies “fixture charges” that lines companies charge electricity retailers, who in turn pass on the charges to customers. They vary between companies but include:

  • capacity charges, to ensure electricity is available when needed
  • congestion charges, to ensure electricity can be supplied when the network is under heavy demand
  • distance charges, to recover the costs associated with high voltage lines and cables and sub-transmission lines and cables.

Multipliers

Differing multipliers are applied to the charges including energy usage, distance of connection, and level of network congestion. The multipliers are specific to each customer and changes to them are manually applied to each customer by Genesis.

Between February 2014 and July 2020, Genesis applied incorrect multipliers when calculating fixture charges owed by business customers, as a result of an incorrect multiplier being entered on the customer’s account either at account set up or during a pricing update.

Warning letters

A warning explains the Commission’s view of the conduct and does not constitute a finding of non-compliance with the Fair Trading Act. Only the Courts can decide whether a breach of the law has occurred.

Other relevant cases

The Commission has taken a number of recent cases over billing errors:

  • In February 2020 three telecommunication companies in the CallPlus stable were fined a total of $121,500 for billing customers after contracts finished
  • In May 2019 Vodafone was fined $350,000 for billing customers after contracts finished
  • In April 2019 Spark was fined $675,000 including for misleading consumers in customer invoicing.

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