Energy retailers not adequately disclosing additional fees, report by St Vincent de Paul says

Updated

Energy retailers are failing to adequately disclose the additional fees consumers are charged in their power bills before people sign up to contracts, new analysis says.

The analysis, commissioned by St Vincent de Paul, says late-payment penalties and credit card processing fees are among the common charges consumers are not told about before they decide which power company they will choose.

It suggests banning or limiting additional fees and charges.

The report says early termination fees cost as little as $20 in Victoria but as much as $130 in New South Wales.

And it shows some companies charge a credit card processing fee of 0.6 per cent on bills while others charge as much as 1.7 per cent.

"Retailers appear to be unable or unwilling to adequately inform consumers through accessible documents and this makes disclosure regulation ineffective," the report said.

"Broken web links, inaccurate or ambiguous wording, inadequate levels of detail in the information provided ... are the issues the regulator needs to assess in order to ensure compliance."

Gavin Dufty from St Vincent de Paul says there is also a big difference in the fees consumers are charged if they do not have enough money in their account to pay their bill.

Some are obviously passing along their merchant fees, others are passing on the merchant fee and a little bit more to line their pockets. St Vincent de Paul's Gavin Dufty

"Some companies will charge as little as $3, other companies will charge as much as $35," he told the ABC.

"Some are obviously passing along their merchant fees, others are passing on the merchant fee and a little bit more to line their pockets."

Mr Dufty said the class action against the ANZ Bank over the fees it charged customers was one reason why his organisation decided to commission research into the fees energy consumers were charged.

"I think the banking industry provides a really good insight to where this could go unless there's regulatory guidance and some sort of intervention," he said.

"We are dealing with an essential service and it's tricky enough for households to find the right deal, let alone go through the 30-odd pages of fine print to find out whether there are any additional fees and charges they're not aware of.

"Also the discrepancy between states means that different households in different states often end up with a different price, and that shouldn't be happening. So we think the Government and the regulators need to provide some guidance to the industry, if the industry won't sort itself out to get rid of these things, or if they are there, make sure they're a standard charge."

Retailers say extra regulation not the answer

Energy Retailers Association of Australia chief executive Cameron O'Reilly says extra regulation is not the answer.

"For retailers there's still a whole lot of variations in terms of operating in each state and that's why when you try to approach retailing on a national basis you will find that there is inconsistency in many cases because that is the case when it comes to regulation," he told the ABC.

"It is important that people recognise that these are contracts as well, they'll have incentives built into them which are the carrot, but a contract is between two parties and when they are varied and when conditions aren't met from the consumer side, there may be charges and people do need to keep that in mind and be familiar with the conditions.

"The best time to ask about those is the time you are about to sign.

"Energy contracts sometimes scare people because of their thickness and complexity, but it isn't a simple industry.

"Retailers have a lot of interactions with financial institutions and networks so they have charges that are passed on to them.

"At the end of the day some of these conditions put in there are built around the fact that they're being offered an upfront incentive in terms of price, and retailers have factored in their ability to offer that price based on certain conditions.

"If the consumer changes some of those conditions then there will be a cost to the retailer and they'll try to cover some of those, that's common practice in a lot of industries."

Energy regulators 'are on notice'

The Australian Energy Regulator has told the ABC in a statement that it recognises that the "range of information available to consumers when shopping around and comparing offers can be complex and is working to improve customer understanding through changes to our Energy Made Easy website".

"This will simplify the offer search results page and provide less information upfront, with the option for customers to view more detailed information including about fees and charges should they wish.

"This aims to help customers to easily choose the best offer that suits their needs."

Mr Dufty says the energy regulators are on notice.

"We're watching you, and there is a lot of difference here. You need to lift your game and we need to make sure there aren't unnecessary fees and charges being levied on households."

Do you know more? investigations@abc.net.au

Topics: consumer-protection, electricity-energy-and-utilities, australia

First posted