Complaints spike as energy prices soar

High costs the number one reason, followed by errors in billing

a woman

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Complaints over energy bills have soared, following the rapid rise of energy prices.

According to the NSW Energy and Water Ombudsman’s (EWON) annual report, complaints rose 43% compared to last year. Electricity was the main subject of complaints, with the key issues being billing disputes, affordability of bills, debt collection and credit default listing, solar feed-in tariffs and customer service.

Related: Electricity users overcharged by $3 billion

EWON said it was disconcerting to find that while they could help a customer in many cases, there was clearly an underlying issue that many consumers would struggle to meet future bills. EWON also said that it were concerned about the rising number of credit default listings for amounts of less than $300.

Victoria’s Energy and Water Ombudsman (EWOV) has yet to release its annual report for 2012, but in 2011, it saw a 33% rise in complaints over electricity, with high billing being the main issue for customers. EWOV stated in its report that it was clear to them that the energy companies could have been doing much more to resolve billing concerns of their customers. Here’s some examples:

  • 10,000 bills were sent out with the wrong BPAY reference
  • 3,000 customers were affected when their provider couldn’t enter their details into a new billing system
  • Energy bills were often wrong, and errors in billing represented the second highest complaint
  • One energy retailer said its billing system couldn’t process manual changes (for adjustments or credits)

Other states have reported similar rises and issues.

Energy retailers such as Origin Energy (ASX: ORG), AGL Energy (ASX: AGK), ERM Power (ASX: EPW) and Australian Power and Gas Company (ASX: APK) are amongst the energy suppliers that have raised their prices. AGL Energy has stated that the main issue is capital expenditure on electricity infrastructure, which was neglected for many years by state governments. Changing consumer patterns, such as increased use of electricity at peak periods meant some infrastructure had to be built which would be used for just a few hours each year – during peak periods. Governments have responded by accusing the retailers of building too much infrastructure.

Of course the introduction of the carbon tax hasn’t helped either.

A rush by consumers to install solar panels to take advantage of government rebates has also caused energy prices to be pushed up. The Federal government is now scrapping its solar credits scheme, which should reduce the pressure on electricity prices.

AGL Energy has suggested that a solution would be to fully deregulate electricity prices and allow energy retailers to offer ‘time of use’ energy pricing, with consumers encouraged to use less electricity during peak times.

The Foolish bottom line

It seems the privatisation of energy companies, once owned by the state, has led to more headaches than governments expected. One wonders whether the privatisation of the energy sector has actually delivered the benefits originally envisaged.

If you only invest in one company this year, make it our “Top Stock for 2012-13”. Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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