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Commission reports on energy retail contracts

30 August 2016

The Commerce Commission has released a report giving its findings on standard form consumer contracts in the energy retail sector.

A review of 30 separate standard form consumer contracts from nine energy companies found 59 terms that were potentially unfair, and that each company continued to rely on potentially unfair terms.

The companies reviewed were Mercury, Contact, Meridian, Powershop, Trustpower, Genesis, Pulse, Nova and The Lines Company.

Unfair contract terms provisions were introduced in March 2015 as part of changes to the Fair Trading Act 1986. The provisions are designed to protect consumers from contract terms that create a significant imbalance of rights or obligations between the company and the consumer.

Most of the nine energy companies included in the review had made real efforts to comply with the provisions before they were introduced.

The Commission says most of the energy companies included in the review had made real efforts to comply with the provisions before they were introduced.

"Many of the terms were common across the contracts, particularly those that limited the liability of the company, allowed the company to unilaterally vary the contract or automatically renewed fixed term contracts unless the customer opted out," Commissioner Anna Rawlings says.

In some instances the companies were able to provide information to the Commission to show that the term was necessary to protect the legitimate business interests of the company. In all other cases, the companies accepted the Commission view and have amended or agreed to amend the terms concerned.

The energy retail sector review followed one on the telecommunications sector (released in February 2016). The Commission says it is also focusing on the credit sector and gyms in relation to unfair contract terms.

Last updated on the 16th September 2019