Times are tough in the energy sector. But who knew just how tough?

Energy utility AGL has been fined at least twice this year for billing misconduct: in May, for failing to pass on energy rebates to Queensland pensioners, and earlier this month for overcharging up to 60,000 customers through a “billing error”. But recent events suggest AGL may have taken “creative accounting” to a new plane.

Here’s the scenario I’m imagining. The AGL marketing department is brainstorming, and the boss exhorts his charges to “think outside the (fuse) box”.

“Guys, this global warming thing is killing us. People are switching off their lights, turning their heating down a degree or two. Can anyone identify any new revenue opportunities? C’mon guys, no idea is too wild or crazy!”

Suddenly, one young marketing hot-shot’s eyes glaze over and, looking into the middle distance, he speaks: “I see… dead people.”

Fanciful, perhaps, but however it happened, AGL appears to have begun to charge customers extra for being dead.

Bereaved relatives notifying the utility of the death of a loved one have found themselves being billed — and chased for — a significant financial penalty because the dearly departed broke some kind of contract.

Following the death of one of my own relatives more than five years ago, the home — and the energy account — remained in her name and the bills were paid by her next of kin. But late last year, when a relative phoned AGL to notify it of a change of name on the (continuing) account at that address, that call appears to have set some wheels in motion.

Although no invoice was ever received, in June this year a letter arrived from a debt collector — addressed to the deceased — referring to “previous correspondence” and demanding $74.13 plus “costs in the sum of $49.50”, but giving no other explanation.

A call to the debt collector revealed only that this was some kind of “early termination fee”. This seemed highly improbable, given that the deceased’s arrangements were in the form of a classic “evergreen” account, dating back many years and certainly with no fixed term.

Even had some kind of contract been in place, a $75 early termination fee seems hard to justify, unless the customer had been given a substantial sweetener to sign up. The Essential Services Commission in Victoria determined in 2006 that the amount of an ETF for a single energy account should be no more than $20 in administrative and hedge book costs plus the unamortised portion of any inducement received by the customer.

In the case of my relative, patient explanations and requests for a copy of the bill or supposed “contract” were initially acceded to, but no documents arrived. The phone calls from the debt collector’s call centre – still asking to speak to the deceased — simply continued. And, having been told yet again that the person was dead, one caller bluntly asked to be sent a copy of the death certificate! A call centre supervisor said that “because of the Privacy Act” she couldn’t deal with anyone else — even the executor of the estate — unless a death certificate was provided.

But apparently this isn’t an isolated case. Last week, The Age carried a letter from another consumer reporting an almost identical experience:

When advised that an account holder was deceased, AGL charged a fee for early cancellation of contract! Despite the original phone call… an email and several letters, AGL has continued to harass with the threat of further action. The distress this has caused cannot be expressed.

A staff member at the Energy and Water Ombudsman (Victoria) last week sighed audibly when she heard the story and agreed that “Yes, we’ve had a number like that”.

Consumers might be appalled but you have to agree that, as a revenue-raiser, AGL might really be onto something here.

Stephen Downes lectures in the postgraduate advertising program at RMIT University and is a market researcher with QBrand Consulting

Peter Fray

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Peter Fray
Editor-in-chief of Crikey