Contact fined $30,000 for misleading customers

Contact Energy has admitted its Empower subsidiary misled customers and broke the law trying to sign up new business.

The stock exchange's second biggest company has been fined $30,000 in the Auckland District Court after pleading guilty to breaching the Fair Trading Act.

It is the latest example of electricity retailers running foul of the Commerce Commission, which says the industry has been "slow to understand" its obligations. The charges relate to the behaviour of contracted sales agents.

Commission chairwoman Paula Rebstock said the case served as a "valuable reminder to all businesses that they are responsible for representations made by their staff, including agents or contractors".

Contact bought Empower in 2000 but the former owners managed the company until 2003.

The commission said several complainants said the first they were aware of being switched to Empower was when they got a "welcome" letter in the mail, and/or their first power bill.

They said they had never agreed to the switch, or had cancelled an earlier agreement to do so, when they became aware of the misleading claims made by sales agents.

The sales agents had said Empower rates were cheaper than rivals and other customers had been told a rival retailer had gone bust. Both claims were untrue.

Last year, Contact paid a $30,000 donation to the Citizens Advice Bureau and ran public apologies in newspapers after admitting it broke the law when it misled customers about the real reasons for price rises.

It had implied that charges from the lines companies had increased, when it was actually Contact raising its prices.

It later claimed this had been a "mistake" and not deliberate.

The commission is also looking into two cases of alleged anti-competitive behaviour involving Vector and Contact.