16aug unfair terms in energy contracts hero
30 August 2016

Unfair terms in energy contracts

More than 50 potentially unfair terms identified.

A Commerce Commission review identified more than 50 potentially unfair terms in contracts used by electricity companies.

The commission reviewed consumer contracts used by nine companies. Seventeen potentially unfair terms were identified in Trustpower’s contracts, nine in Nova Energy’s and the same number in Pulse Energy’s.

Potentially unfair terms were also identified in contracts used by Genesis (7), Mercury (6), Meridian (6), Contact (2), Powershop (2) and The Lines Company (1).

Commissioner Anna Rawlings says many terms were common across all contracts including clauses that attempted to limit the company’s liability; allowed it to unilaterally vary the agreement; or automatically renew fixed-term contracts.

In 2015, we made a complaint to the commission about automatic renewal clauses used by Mercury and Meridian that allowed the companies to roll-over fixed term contracts without the customer’s express consent. Customers also faced fees if they subsequently wanted to end the contract.

The commission says companies have amended or agreed to amend their terms as a result of its review.

In some cases, it accepted the terms were legitimate. These included terms that limited the liability of lines companies for loss arising from the supply of electricity. The commission accepted this liability rests with the retailer.

Since 2015, the Fair Trading Act has banned unfair terms in standard form consumer contracts. The Act defines a term as unfair if it:

  • would cause a significant imbalance between the rights of the company and the consumer
  • is not reasonably necessary to protect the legitimate interests of the company, and
  • would cause detriment, whether financial or otherwise, to the consumer if it were to be applied or relied on.

Through our Play Fair campaign, we’ve been highlighting terms we believe breach the ban.

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Play Fair campaign

You don’t have to put up with unfair contract terms. Join our Play Fair campaign to get rid of them.

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