Largest total penalty ever imposed for breaches of the National Energy Retail Law and Rules.

Origin Energy Electricity Limited and other Origin related entities (together, Origin) have been ordered by the Federal Court to pay penalties totalling AU$17 million for failing to comply with their obligations to protect customers experiencing hardship and payment difficulties, in proceedings brought by the Australian Energy Regulator (AER).

This is the largest total penalty ever imposed for breaches of the National Energy Retail Law and Rules.

Origin admitted that the automated processes it put in place in relation to its customers experiencing hardship and payment difficulties resulted in it breaching its hardship obligations on more than 100,000 occasions, over a period of nearly four years between January 2018 and October last year. In total, more than 90,000 customers were affected from four states across New South Wales, ACT, Queensland, and South Australia.

Origin also admitted that its automated processes for dealing with customers experiencing hardship and payment difficulties resulted in it breaching its own hardship policies and the retail rules by

• unilaterally establishing new customer payment plans if the customer’s previous payment plan had been cancelled for non-payment, while failing to consider a customers’ capacity to pay,
• increasing a customer’s payment amounts following a review of the customer’s usage, while failing to consider the customers’ capacity to pay, and
• cancelling customer payment plans where it was unable to discuss with the customer a review of their payment plan, including in circumstances where customers were continuing to make their payments under the existing plans.

AER Chair Clare Savage welcomed the Court’s decision as a clear reminder that automation can be a dangerous substitute for human interaction when it comes to customers experiencing financial hardship who are on payment plans, who each have unique circumstances and experiences that can change over time.

“Applying automated inflexible processes across thousands of customers without considering whether they can actually meet the payments shows a complete disregard of the hardship obligations in the national energy laws, which are designed to protect customers in vulnerable situations,” Ms Savage said.

“When a retailer automates aspects of its hardship program, it needs to ensure it continues to offer individualised and tailored solutions to customers and has regard to a customers’ circumstances as the rules require.

“For many customers, being unable to afford a necessity like electricity is distressing enough. If a customer is not afforded the protections under the laws and rules it may push them closer to debt collection and disconnection, causing even greater distress,” Ms Savage said.

“This record $17 million penalty reflects the seriousness of the breaches by Origin and should send a strong deterrence message to all energy retailers that they must maintain and implement their hardship policies in accordance with the law, to protect customers experiencing financial distress.

“This message is even more important in the current market conditions where customers are facing significant cost of living pressures, including as a result of recent energy price rises,” she said.

The Court also ordered Origin to pay $200,000 in legal costs and establish a compliance and training program to improve the way it deals with hardship customers and those experiencing financial difficulties.

Origin cooperated with the AER by admitting breaches of the National Energy Retail Law and Rules, making joint submissions with the AER to the Court in respect of penalties and consenting to the other orders made by the Court.

Background

The National Energy Retail Law and Rules impose legal obligations on energy retailers in respect of their treatment of customers experiencing financial difficulties.

The AER’s compliance and enforcement priorities this year have included a specific focus on “effective identification of residential consumers in financial difficulty and offer of payment plans that have regard to the consumer’s capacity to pay.”

Origin’s conduct was first brought to the attention of the AER by the South Australian and New South Wales Energy Ombudsman schemes, which received a number of individual complaints.

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