Thursday, September 9, 2010

Energy Retailers' Sales Tactics

Two weeks ago, a salesman from an energy retailer knocked on my door and asked for my electricity bill. After looking through my bill, he told me I have a good deal and there will be no advantage for me in switching the provider. I was impressed by his honesty and professional integrity. He would rather forfeit his commission than to deceive potential customers.

Yesterday, an Indian salesman from AGL knocked on my door and I had a completely different experience. First, he claimed my bill would definitely be reduced by switching to AGL. This is because AGL is the distributor of energy to Altona so I am getting my energy supply indirectly through other retailers at a higher price. I told him he got his facts wrong. Powercor is the distributor of electricity to Altona. I later found from Wikipedia that there are five electricity distributors operating in Victoria: Citipower, Powercor, Jemena, United Energy and SP AusNet. AGL is not in the list. Although AGL does distribute natural gas, it only serves NSW. SP AusNet Gas is the gas distributor to Melbourne's western suburbs; the other two Victorian gas distributors are Multinet and Envestra. What is correct is that AGL is involved in energy generation but whether this will imply a better offering from AGL is another story. We know that Telstra is the wholesaler of ADSL services to other ISPs but it does not offer the most competitive, lowest-priced plans.

The salesman tried to convince me that AGL is trustworthy as it is a 170 years company. I told him this is not important to me, that I even know that AGL is an acronym for Australian Gas Light Company and what matters to me at the end of the day is whether I will receive a genuinely lower bill. I volunteered to show him my bills from Simply Energy. I told him I am getting a 10% discount for electricity and a 6% discount for gas from Simply Energy and I am not in any binding contract. He replied that AGL is giving me a 14% discount. I told him that he is misleading me as he cannot simply add the 7% discount AGL is offering on electricity to the 7% discount on its gas to make up 14%. If I incur a $100 electricity bill, I will only receive a $7 discount, not a $14 discount.

I told him that two years ago, my wife was pressurized by an AGL door salesman to sign a contract. I did a thorough research from the internet, compared the rates and supply charges between different energy retailers and came to the conclusion that AGL was not offering a good deal compared to its competitors. I proceeded to ask him whether AGL rates are lower than those offered by Simply Energy. After looking at my bill, he proclaimed that the rates written in my bill could not be that low - they must be the rates after discounts. I told him I am very certain that these are the rates before discount for computing the usage charges, after which the 10% discount is then applied.

I emphasized to him the importance I attach to an unconditional, non-binding contract as I will not have to pay early termination charges if I decide to switch provider. He claimed that all companies have contracts and if AGL raises its rates unreasonably in the future, I can easily terminate the contract. I know this is not the case. Two years ago, when I tried to cancel the contract with AGL while during the cooling off period, I was told I could not do this over the phone. I need to mail AGL an official letter, stating the reasons for opting out of the contract. I never need to go through such lengthy and troublesome procedures with either Simply Energy or Origin.

Having discovered from the internet that AGL has gained a notorious reputation for its sales tactics, I feel fortunate that I did not fall for its traps. I would advise anyone to take the words of a salesperson with a pinch of salt. Always do your due diligence before committing to anything.

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