New protections for small energy customers
Households and small businesses in South Australia are set to benefit from a new safeguard allowing them to claim up to $15,000 in compensation for property damage caused by failures in electrical infrastructure.
Under the Government’s proposed Small Claims Compensation Scheme, which is now open for consultation, energy consumers who use than less than 160 MWh of electricity per year would be able to claim compensation from SA Power Networks when a failure of SAPN’s electricity infrastructure leads to a voltage variation that causes property damage.
Such incidents would primarily relate to damage to electrical appliances as well as food spoilage and other related losses.
It is designed to address a gap in the wider insurance market, and as such will not apply to damage from Acts of Nature such as storms, fires, floods and interference by animals – events that are commonly covered by insurers.
Critically, customers will not need to establish the energy distributor’s fault or negligence to make these claims.
Under the draft regulations proposed to establish the compensation scheme, the minimum allowable claim amount would be $100, while claims would be capped at a maximum $15,000.
The regulations propose that SAPN administer the scheme, including the investigation and assessment of claims, and compensate successful claimants.
Any disputed claims would go to the Energy and Water Ombudsman SA for resolution.
Under the proposed scheme, consumers can make claims for incidents that have occurred from 1 July 2022 onwards.
Claimants will have two years from an incident occurring to make a claim, while all retrospective claims would need to be submitted within two years of the scheme commencing.
SAPN intends to recover the costs of the scheme through its regulated distribution charges, which is expected to add between $1.30 to $2.30 a year to average residential bills.
The State Government is inviting feedback on the proposed scheme via the YourSay website.
Quotes
Attributable to Tom Koutsantonis
These changes will make a world of difference for householders and small business owners who might find themselves out of pocket through no fault of their own, on the rare occasions that something goes wrong with SAPN’s electrical infrastructure.
Under the current application of national electricity laws, SAPN hasn’t been required to compensate customers unless there was evidence of negligence or of the company having acted in bad faith. This has made it difficult for customers to make claims, and it placed SAPN in a difficult situation whenever its responsibility was uncertain.
This scheme strikes a better balance for customers and our energy distributor, and I’m particularly pleased that SAPN is alongside us in pursuing this change.
The Energy and Water Ombudsman of SA has investigated more than 300 overvoltage or surge damage cases since mid-2016 – the numbers have jumped around each year, with 47 cases recorded in 2022-23 and 32 cases in 2023-24. The number peaked at 69 in 2019-20, when the problem was first raised with the former Marshall Liberal Government – which did nothing to assist affected households.
This change is fundamentally about fairness, and I look forward to implementing it with the community’s input.
Attributable to SA Power Networks Chief Customer and Strategy Officer Jessica Morris
This change will ensure that customers can be compensated for property damage resulting from certain types of events that are outside of SA Power Networks’ control, private insurers generally will not cover, and which without this scheme, are outside SA Power Networks’ responsibility.
It is an initiative which many of our customers have told us they want, particularly at a time when many cannot afford the unexpected cost of damage to their property.