Jones' neighbour Paul Gray complained to the provider on Monday after the 93-year-old "was freaking out over the power bill". He was told there had been a "breakdown in communication" between the smart reader and its main system.
The operator then offered to give her a 30 per cent discount - bringing the bill down to $711.
Yesterday afternoon Jones paid the bill to stop her power being cut off - but Gray made it clear it was under protest and they still expected Genesis to respond to the complaint.
Gray was gobsmacked by the bill and felt that because Genesis had made the mistake they should waive the bill. He did not think it was fair to pass such a large bill onto an elderly woman just after Christmas with little explanation.
"Like I say I'm a fairly simple man. In my eyes if they've underestimated it that much then on this one occasion I feel like they need to suck it up.
"I personally believe that everyone in New Zealand needs to be aware of this and looking at their meters and understanding their power bills because if I got a bill like this it would knock me off my seat."
A Genesis spokesman said the company detected a weak signal from her smart meter in May last year.
While the engineers investigated the issue, the company relied on estimates which they later realised were too low so reverted to manual readings. A new bill was then generated to reflect her actual usage.
"Normally when billing discrepancies reach a certain threshold, our system flags them for further investigation. Our customer service representatives then contact the customer directly to discuss. It appears in this instance, that the bill was sent out automatically before that contact process took place - an error on our part," the spokesman said.
"On top of the 30 per cent discount Mrs Jones has already received, we will now also waive the additional charges while we work to resolve the issue. During this time, she will receive manual meter readings to ensure her billing data is accurate. We apologise to Mrs Jones for any inconvenience caused."
Last night on hearing Genesis would waive the bill, Gray said he was pleased Genesis had done the right thing in the end.
"That's a fantastic outcome for Hazel. I think she will be ecstatic."
Meanwhile, a Waikato mum told the Herald she had also been stung by a large back bill from Genesis.
The woman received a $640 power bill in October because there had been an apparent miscommunication with her smart reader since March.
She had been unaware of the fault or that she had been underpaying until she received the bill. A technician was then sent to fix her smart reader which had only been measuring some of their power usage.
Consumer head of research Jessica Wilson said back bills for electricity - sometimes for several thousand dollars - were a common complaint and were often due to readings being skipped or meter errors.
If there was a problem with the reading then the company needed to take into account whether it should have known about the issue and whether it was responsible for the meter - whatever type - not being read accurately, she said.
"If it has caused the problem or should have known then in our view the retailer needs to wear the cost."
Wilson said she would be very surprised if the electricity provider would send an estimated bill for an entire year before doing something about it and if it was due to a faulty meter then the customer should not be liable.
Wilson said when there was a legitimate case for the customer being back billed the retailer should give the customer reasonable time to pay.
Utilities Disputes commissioner Mary Ollivier said she was not aware of any systemic issues with Genesis concerning smart meters not reading or communicating accurately.
She encouraged any customers with issues to firstly work them out directly with their electricity provider and if that failed to contact Utilities Disputes who could look into it free.
