The Australian Competition and Consumer Commission has welcomed the opportunity to establish consumers rights in relation to power supplies.
This follows a move by the Electricity Supply Association of Australia to seek Federal Court declarations that electricity supply companies are not liable to consumers for defective electricity supplies after power surges and brown-outs under the Trade Practices Act 1974.
The Act provides contractual protection for consumers in relation to the supply of goods - and electricity is defined as a good. It provides that:
- the goods must be of merchantable quality, that is fit for the purpose for which they are commonly bought and
- the goods must be fit for any particular purpose that the consumer makes known to the supplier.
"These are standard contractual rights of consumers and can't be overridden or ousted," ACCC Chairman, Professor Allan Fels, said today. "Power surges and brown-outs can damage appliances and cause loss. The ACCC has received numerous complaints about damage to household appliances and other losses due to power surges and brown-outs.
"The ESAA says electricity companies are not caught by this legal obligation because electricity is not covered by the trade practices warranties. But the ACCC has strong legal opinion that electricity is covered.
"The ACCC is puzzled that some of the counsel engaged by the ESAA claim that electricity is not covered this part of the Act when there is a specific definition of electricity as a good in the definitions part of the Act.
"It is important that when suppliers supply goods to consumers those goods are fit for use and don't damage consumer equipment. This is particularly important in electricity because consumers can't choose their supplier. Consumers shouldn't have to bear the cost of protecting for defective electricity.
"In the past, some electricity supply companies have claimed that they are not liable for power surges and brown-outs except where they are negligent. But the ACCC believes this is incorrect because the companies can be liable under the trade practices warranties where the electricity is defective, even if they are not negligent.
"Additionally, the ESAA claims that companies are not liable for consumer damage from power surges and brown-outs when that damage is beyond the reasonable control of the company. But the ACCC considers that companies are obliged to provide quality supply and that power surges and brown outs should generally be considered to be defective. This ultimately needs to be assessed on a case by case basis.