Energy company used climate change to justify price hikes, ACCC alleges
Sumo Power allegedly signed up customers on cut-rate plans, knowing prices would be raised dramatically.
The competition regulator has instituted proceedings against retail energy provider Sumo Power, alleging the company made “false or misleading representations” about its energy plans to Victorian consumers, using climate change as an excuse for large price increases.
The ACCC says that between June and November 2018, Sumo promoted 12-month plans with low rates and “pay on time” discounts of up to 43 per cent to residential customers, while knowing it would, or might, increase prices after a couple of months.
Sumo also allegedly represented to consumers that it would either maintain or not materially increase the rates, and that the “pay on time” discount would be available for 12 months – but in November 2018 the underlying rates for some customers increased by 30 to 46 per cent.
The ACCC alleges these price increases were part of a non-disclosed, predetermined strategy.
The ACCC also alleges that the price increases substantially eroded or eliminated consumers’ pay on time discount.
“We allege Sumo enticed consumers to enter into electricity plans with the promise of low cost electricity prices, while planning a significant rate increase which meant consumers were charged significantly more for their electricity than they were led to expect,” ACCC chair Rod Sims said on Wednesday.
In addition to allegations of false representations, the ACCC in its filing to the Federal Court alleges that Sumo went on to mislead customers by telling them the price increases were related to “increases to generation costs caused by factors such as climate change, the closure of Hazelwood power station, the cost of upgrading networks and the fees Sumo must pay to distributors”.
The ACCC also claims that Sumo misled consumers by contracting telemarketers to cold-call potential customers and promote the plan while purporting to be independent agents simply performing a comparison of plans across retailers.
In its filing, the ACCC says telemarketers would read off scripts approved by Sumo that instruct the marketer to greet the consumer with: “We are an energy consultancy … I am calling to offer you a free, no obligation product comparison on your energy bill”, among other opening lines.
Mr Sims said that Sumo used this tactic to the detriment of its customers.
“Electricity bills are a major household expense for many consumers,” Mr Sims said.
“We allege that consumers were likely to have been convinced to switch to Sumo, acting on recommendations from purported independent consultants when in fact they came from Sumo telemarketing agents.”
Sumo Power is part of the Sumo group, a retail utilities provider that has over 70,000 customers and $100m in revenue.
Last year, Sumo Power the group was hit with a $46,200 fine by the ACMA for allowing telemarketers to contact individuals on the do not call registry without their prior consent.
