KEY POINTS:
In the aftermath of the death of Folole Muliaga, National Party spokesman Gerry Brownlee insisted the Government should be holding Mercury Energy to account for not abiding by existing guidelines, rather than rushing to regulate. He is right on his second point, but lamentably wrong on the first. The salient fact is that existing guidelines did not compel Mercury to proceed along a path that would surely have led to Mrs Muliaga's power remaining connected. As such, there is a need to tighten those guidelines, preferably as part of improved company protocols.
It should never have come to this, of course. Mercury's action was at odds with the spirit of several safeguards. In the first instance, the 1986 State-Owned Enterprises Act instructs organisations such as Mighty River Power, Mercury's parent, to exhibit "a sense of social responsibility by having regard for the interests of the community in which it operates".
More specifically, Electricity Commission guidelines introduced last year recommend that when a consumer faces disconnection, the power company should make reasonable attempts to contact the customer and advise of help available from Work and Income or other social agencies. Then there is the legal principle of prime necessity. This dictates that companies which unfairly cut off electricity can be challenged in court. The doctrine, laid down by the Privy Council in 1919 and confirmed by New Zealand courts in 1932 and 1955, says supply must be maintained unless there is a clear refusal to pay a reasonable price for the service.
Unfortunately, there are snags in each of these. The State-Owned Enterprises Act edict is listed below another instructing such companies to be "as profitable and efficient as comparable businesses that are not owned by the Crown". To at least some degree, this creates conflicting objectives and operational difficulties.
Similarly problematic is the principle of prime necessity. It is difficult to apply, and has been largely disregarded by utility companies and state agencies. Worst of all, the commission guidelines are voluntary. On that basis, Mercury informed the Government it had not advised Mrs Muliaga about help available from social agencies because it was not required to.
All this might not have mattered, given what should have been the ultimate sanction. All businesses know the potential crushing impact of being associated with the likes of the Muliaga tragedy. Nothing, in fact, is more likely to drive customers to a rival.
Nonetheless, Mercury erred. It breached not only sound business practice but the spirit of the safeguards, if not, crucially, the substance of the commission guidelines. Clearly, those guidelines need to be stricter, so Mercury and other power companies are in no doubt about their responsibilities. The Government plans to do this by requiring companies to tell consumers about help that is available if they cannot pay their bills, and by placing the onus on them to find out whether "vulnerable" people are in homes facing disconnection.
It has yet to decide whether this will be reinforced by regulation. That should not be necessary. Power companies should quickly come up with protocols that embrace and satisfy the Government's wishes. Suggestions by a few of privacy issues or of difficulty contacting customers are largely spurious. Nor is there a problem if, as some insist, the guidelines are already enshrined in their practices. It is in their interests to promote the proposed safeguards, and not only to escape the cost of heavy-handed rules. The Muliaga tragedy should have shaken each of them. A repeat is unthinkable.
