There's somebody at the door

05 Feb 10 04:09PM EST
Post by Alan Dooley
Last year an official looking man called to my house and said that due to deregulation of the electricity industry in NSW, he needed to check my energy meter and bill. Of course, something about this introductory spiel wasn't quite right. In fact, I was under no obligation to show my electricity bill to the complete stranger standing on my doorstep. Particularly as he was a sales rep from a major electricity retailer, and his job was to encourage me to switch from my present supplier. I told him I wasn't interested, and he left.

Energy companies say door-to-door selling is one of the most effective ways to market to consumers. And the figures don't lie. A 2008 report by the NSW Independent Pricing and Regulatory Tribunal (IPART) surveyed a sample of households in the Hunter-Gosford-Wyong region and found that 60% of those approached by their present retailer had switched to a different contract, and over 50% of people approached by another retailer had switched company.

But does switching save money? Our survey 18 months ago found many people are compulsive switchers, lured more by the freebies and incentives offered, than any genuine savings in the longer term. And in the UK, where electricity competition has been present for some time and millions of consumers have changed provider, there's evidence that switching can leave people worse off than they were before. 2007 research by the University of East Anglia found that 20% of consumers who switched to save money ended up with higher bills.

Back home, concern around dodgy sales practices is growing. The NSW Energy & Water Ombudsman's latest annual report, for example, recorded 768 complaints about electricity marketing, including 500 complaints about misleading marketing and 124 in relation to being pressured into signing or agreeing to a contract. The Consumer Action Law Centre has had numerous complaints of very aggressive and inappropriate marketing, including cases that were clearly the result of retailers' staff dishonesty. And of course, door knockers work on commissions, so their interest is closing the deal and earning a buck, even though switching may not be in your best interests.

Looking back on my personal experience, the salesman's conduct was probably misleading and deceptive under the Trade Practices Act. If it happens again I'll lodge an official complaint with the energy company and the Department of Fair Trading.

In the meantime, watch out for my upcoming CHOICE report on switching. And if you've experienced door-to-door electricity sales, why not add your comments below?

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