Prize too late, says watchdog

Thousands of electricity customers in the Bay of Plenty and King Country missed out on the promise of being in a draw for a year's free power, the Auckland District Court heard yesterday.

In a case brought by the Commerce Commission, marketing company David Barrowclough Direct admitted five charges of making representations that were misleading because the draws were not held within a reasonable time.

Charges against Royal & SunAlliance Insurance (NZ), Bay of Plenty Electricity, King Country Energy and Todd Energy will be heard by Judge Barbara Morris tomorrow.

The charges relate to the promotion of "Powerplus" insurance policies.

For a premium of between $1.30 a month for residential customers and $79.95 for a commercial account-holder and spouse, policy-holders were covered for electricity bills in the event of death, disablement, hospitalisation, surge damage or bankruptcy.

As part of the promotion, residential customers were to go into a prize draw for a year's free power and commercial customers could win $1000 worth of power.

Many thousands of customers took out the insurance policies between February 2000 and December 2001.

But according to the commission, no draws were held until July 2002 - after the commission started its investigation.

Even then, it says, there were only combined draws for residential and commercial customers, instead of two separate draws.

Royal & SunAlliance underwrote the policies marketed by David Barrowclough Direct on behalf of BOP Electricity, King Country Energy and their parent company, Todd Energy.

According to the commission, the marketing firm received 10 per cent of the premium, the power companies 15 per cent and Royal & SunAlliance 75 per cent.

The commission began to investigate after a telemarketer employed by David Barrowclough Direct complained that there had been no prize draws for power in the nearly three years she was with the firm.

David Barrowclough will be sentenced on Friday.