A St Vincent de Paul Society New South Wales Energy Report discovers that customers are being enticed to change providers by cheap deals, only to be left out of pocket with excessive fees.

And in a self-fulfilling cycle, those profits are then being used by power companies to fund campaigns to sign up more customers.

The NSW Energy Prices 2009-11 SVDP Report (pdf), commissioned by the St Vincent de Paul Society, said power companies were using short-term specials to sign new customers through switching websites, letter drops and doorknocking tactics.

The strategy aims to lock customers into two to three-year contracts.

But while households could initially expect to save up to $200 a year, there is a sting in the tail if customers are struggling to pay their bills, according to SVDP spokesman Gavin Dufty.

Energy companies are now charging $14 for every late bill while companies such as Australia P&G charge $110 if customers break their contract early. Origin Energy also fills its coffers when customers move home, charging up to $96.80.

The report, due out today, recommends: “Late payment fees and account establishment fees (whether they are enforced or not) are fees that should be immediately abolished.

“They create uncertainty, reduce transparency and comparability, and ultimately create an unnecessary barrier to switching and competition.”

The report highlights a disparity between electricity prices for city and rural customers. Several energy companies have increased prices by up to $430 in Sydney’s inner west and $620 in the country since mid-2009.

(A tip of the hat to the Australian CM site for posting news of this example of being advocates for the poor.)

Reflections on advocacy…

  • In the US there is a slogan “If you see something, say something!” Do we say enough on behalf of the poor?
  • This report probably cost a pretty penny but perhaps it will lead to saving many people for people who can’t to lose any pennies.

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