ACCC enforcement actions against energy retailers – misleading discount representations

Update on the ACCC’s latest civil penalty actions against energy retailers under the Australian Consumer Law.

Since 2012, the ACCC has subjected the sales practices of energy retailers to close scrutiny for compliance with the Australian Consumer Law.

In 2013, it successfully obtained civil penalty orders against Australian Power and Gas Company and AGL’s Victorian and South Australian retail arms (and their contractor, CPM Australia) for contravening the ACL in their door-to-door sales practices.

Recently, the AER has established civil penalty contraventions against AGL South Australia and Origin Energy for misleading statements about the discounts available under various electricity and natural gas retail plans.

In ACCC v AGL South Australia [2014] FCA 1369, AGL notified certain customers of tariff increases in mid-2012, but stated that customers on plans with discounts or rebates would continue to receive those discounts or rebates following the rate increases. But after the rate increases, AGL subtracted the discounts from higher base rates than the base rates by reference to which the original discount representations had been made to the customers when entering into the plan. White J thus held that AGL had breached ss 18 and 29(1)(g) and (i) (false and misleading representations as to benefits/price of goods and services) of the ACL. The ACCC was unsuccessful in its misleading conduct claims regarding rate increase notices sent to customers in mid-2013. Penalties for these contraventions have yet to be determined or approved by the Federal Court.

In ACCC v Origin Energy Ltd [2015] FCA 55, White J held, on the basis of agreed facts, that Origin had contravened s 29(1)(g) and (i) of the ACL by making misleading representations as to the discounts available under certain energy plans. The misleading aspect of these statements was more straightforward, in that the discounts were overstated from the commencement of the plans, because the base rate from which Origin subtracted the discount was a different, and higher, rate than the base rates from which customers would reasonably have understood the discounts would be subtracted. White J approved penalties totalling $325,000, which the parties jointly proposed to the court.

The findings of contravention in each case – after trial in the AGL matter, and by consent in the Origin matter – demonstrate the ACCC’s willingness to ensure that the complexity of retail energy plans does not provide cover for retailers to make misleading statements about contract pricing structure. The ACCC’s actions in the retail energy sector echo its enforcement measures in the retail telecommunications and internet sector.

In November 2013, the ACCC and the AER simultaneously commenced civil penalty proceedings against EnergyAustralia, respectively for breaches of the Australian Consumer Law (misleading or deceptive telemarketing conduct) and the National Energy Retail Law (transferring customers to new retailers or plans without consent). This is the AER’s first civil penalty proceeding under the National Energy Retail Law. The proceeding is set down in March 2015 for hearing of joint submissions on contravention and penalty.

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