The power of punc­tu­al­ity

Elec­tric­ity com­pa­nies of­fer great savings for prompt pay­ments, but the dis­count tac­tic is com­ing un­der fire. Rob Stock re­ports.

Sunday News - - FRONT PAGE -

RACHEL Rich left her power com­pany af­ter miss­ing out on prompt pay­ment dis­counts.

She has mul­ti­ple sclero­sis, which has left her par­tially blind on one eye, sub­ject to weak­ness and tired­ness, and with an er­ratic short-term mem­ory.

Rich, who’s rais­ing two school-aged chil­dren on her own, missed a cou­ple of pay­ments dead­lines, and tried to get the power com­pany to re­verse its charges, but it wouldn’t, even when she pro­vided med­i­cal ev­i­dence of her ill­ness.

‘‘Quite a few times I would be a day late, and there would be no prompt pay­ment dis­count,’’ she said.

She doesn’t want to name her former power provider, hav­ing shifted to Flick Elec­tric, but it’s one of the big ones, and al­most ev­ery power provider plays the prompt pay­ment game.

Rich be­lieved prompt pay­ments dis­counts were dis­crim­i­na­tory, and that the Gov­ern­ment should look very care­fully at them in its on­go­ing power price re­view.

Although the dis­counts sound like they re­ward those who pay their bills on time, some be­lieve they are ac­tu­ally a mar­ket­ing de­cep­tion.

So many peo­ple get them now, Steve O’Con­nor from Flick Elec­tric says, that the price of power mi­nus the prompt pay­ment dis­count is the real power price at each of the big com­pa­nies.

For ex­am­ple, 89 per cent of Ge­n­e­sis cus­tomers reg­u­larly get prompt pay­ment dis­counts each month.

‘‘A lot of peo­ple be­lieve they are get­ting great savings and dis­counts,’’ O’Con­nor said.

But he likened the sit­u­a­tion to fake sales by re­tail­ers, which ar­ti­fi­cially mark up prices, only to ‘‘slash’’ them so they can run near-con­stant ‘‘sales’’.

In­stead, O’Con­nor be­lieved the prompt pay­ment dis­count sys­tem should be more prop­erly seen as a dis­guised late pay­ment fee sys­tem which was re­sult­ing in ef­fec­tively 10 to 20 per cent in late fees for peo­ple who strug­gled to pay on time.

North Shore Bud­get Ser­vice ad­viser Sue Dea­son agrees they were ac­tu­ally a late pay­ment in dis­guise.

‘‘Once again, the peo­ple not man­ag­ing their money well, or who don’t have enough com­ing in, are pe­nalised. The peo­ple do­ing well get a bonus.’’

Many were also in cri­sis mode, fail­ing to see their op­tions clearly.

The bud­get­ing ser­vice takes a ‘‘to­tal money man­age­ment’’ ap­proach with many clients, ef­fec­tively pay­ing their bills for them, which means once they get help, they all end up get­ting prompt pay­ment dis­counts.

Power com­pa­nies said they took steps to help cus­tomers get the prompt pay­ment dis­counts, and will lis­ten sym­pa­thet­i­cally in hard-luck cases.

‘‘We do re­mind cus­tomers to pay so they can re­ceive their prompt pay­ment dis­count,’’ Ge­n­e­sis said in a state­ment.

‘‘We send texts if we have their mo­bile num­ber, or we call their land­line if this is their pre­ferred con­tact num­ber.’’

Mer­cury said: ‘‘A bill be­ing paid on-time al­lows us to avoid costly fol­low-up pro­cesses, and we want to share that value with cus­tomers.’’

While there ap­pears to be next to no cost to a power com­pany from get­ting a pay­ment a day late, a lot of staff time ap­pears to be taken up re­vers­ing prompt pay­ment dis­counts.

Ge­n­e­sis said it would re­verse lost prompt pay­ment dis­counts if there was good rea­son. ‘‘In fact, since 2017, Ge­n­e­sis has re­versed over 35,000 missed prompt pay­ment dis­counts.’’

Mer­cury said its staff were also em­pow­ered to re­in­state prompt pay­ment dis­counts.

‘‘If it has hap­pened sev­eral times, we might first work with the cus­tomer to put mea­sures in place that suit them, so that we can make sure they’re get­ting these dis­counts – for ex­am­ple, set­ting up di­rect debit.’’

But O’Con­nor said prompt pay­ment dis­counts were also be­ing used as a tool to sup­press com­pe­ti­tion.

Some big in­cum­bents use the car­rot of higher prompt pay­ment dis­counts to keep cus­tomers from de­fect­ing to ri­vals. ‘‘The re­tailer goes back and says ‘We will give you $300 in cash and deepen our prompt pay­ment dis­count to 22 per cent’.’’

In some cases, that re­sults in deals Flick can’t match, mak­ing O’Con­nor sus­pi­cious.

‘‘The in­cum­bents’ ap­proach is ‘we wait at the beaches and if any­thing ap­proaches we smoke it’,’’ he said.

‘‘The Gov­ern­ment price re­view will prob­a­bly get to the bot­tom of that. They have asked

Rachel Rich with her chil­dren Xavier and Anas­ta­sia. Her power provider re­fused to re­verse a de­ci­sion over a missed prompt pay­ment dis­count de­spite med­i­cal ev­i­dence – some­thing Steve O’Con­nor, chief ex­ec­u­tive of Flick Elec­tric, be­lievesare a mar­ket­ing...

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