The Court declared that SUMO Power enticed consumers with cheap rates and early payment discounts and then increased the electricity rates after consumers had received up to three monthly bills. It also told customers it would maintain low rates and not substantially increase the rates for 12 months; however, it did increase the rates between 28% and 43% for customers within three months. SUMO Power also misrepresented to the customers that the increase was sole because of a rise in electricity generation costs occasioned by the closure of the Hazelwood power station, network upgrades and fees paid to distributors.
The Court ruled that ”Electricity bills are a major household expense and Sumo’s offers enticed consumers to switch plans in the belief they were getting a better deal”, Australian Competition and Consumer Commission’s (ACCC) Chair Rod Sims said.
”Businesses must not mislead consumers about the prices they will pay for a product or service. In this case, Sumo Power advertised large discounts to get consumers to switch energy providers, and did not disclose to these new customers its plan to substantially increase prices in the near future which would effectively erode or eliminate those discounts”, Sims added.
The ACCC had in August instituted a court proceeding against SUMO Power for misleading its customers.