ACCC charges EnergyAustralia with misleading customers, exposing retailer to heavy fines

The ACCC alleges the energy retailer misled existing customers and deceived potential new ones about the lowest possible prices, exposing it to millions in fines if convicted.

The Australian Consumer and Competition Commission has charged EnergyAustralia with misleading customers, exposing the country’s third largest electricity and gas retailer to fines worth millions of dollars.

The allegations if proven will pile pressure on EnergyAustralia, which is already grappling with the consequences of recent heavy financial losses that is widely seen as curtailing the capacity of the regulator to invest in zero emission energy sources.

The competition regulator said the allegations can be split into elements, misleading existing customers and deceiving potential new ones.

The ACCC alleges that between June and September 2022, EnergyAustralia failed to inform customers of the “lowest possible price” when it sent price change notices to existing customers.

The competition regulator said the retailer also misled potential new customers, by failing to declare the lowest possible price, as well as failing to state the percentage difference to the reference price, which is a benchmark price set by the government on advertisements on its website.

An example of an EnergyAustralia electricity bill. Picture: energyaustralia.com.au

ACCC chair Gina Cass-Gottlieb said both elements of the allegations are egregious but the impact on existing customers was potentially more consequential.

“We do see the existing customer conduct as more important because existing customers are already contracted,” Ms Cass-Gottlieb told The Australian.

“When they receive notices, it is at that moment a call to action and they can determine whether they can get a better deal. But without the information they need, the lowest possible price, then they can’t make an informed choice.”

The price renewals were sent when customers were being sent notices that prices would climb as much as 20 per cent after upheaval in global energy markets.

EnergyAustralia’s chief customer Officer Mark Brownfield said the retailer was sorry for the disclosure failures.

“We understand the clarity of our customer communication is particularly important at a time when cost of living pressures are a key concern for Australian households,” Mr Brownfield said.

“We want to confirm the fundamental importance EnergyAustralia attaches to regulatory compliance in every aspect of our operations. We have already prioritised the completion of our program of improvements to customer communications to ensure our customers have the information they need to make informed decisions.”

Ms Cass-Gottlieb said previous allegations against other companies have triggered fines of up to $12m, a meaningful figure for EnergyAustralia which is desperately looking to turn its fortunes around.

The ACCC charges come just months after EnergyAustralia was fined $400,000 for distorting the gas market for more than a year by failing to comply with a rule that requires market participants to detail their supply and demand intentions.

The Australian Energy Regulator said that between July 2020 and December 2021, EnergyAustralia failed to submit 376 bids in both the Adelaide and Sydney short-term trading markets.

EnergyAustralia can ill-afford to fall foul of regulators.

In August, EnergyAustralia posted a half-year loss of more than $100m despite an uptick in the broader market conditions that have aided rivals such as AGL Energy and Origin Energy.

Much of the loss was attributed to higher interest costs to service debt incurred primarily when the retailer reported a half-year loss $1.55bn in 2022.

EnergyAustralia chief executive Mark Collette said the company is looking to turn it fortunes around from what he described as a “difficult” 2022, but potential fines in the millions will intensify pressure on the retailer.

The financial toll will hinder the capacity of EnergyAustralia to invest in renewable energy generation. Australia’s retailers are under pressure to rapidly source renewable energy sources to meet their customers needs, but EnergyAustralia is struggling to keep pace with its rivals.

EnergyAustralia’s Hong Kong-listed parent company CLP Group has for months been seeking a partner for the retailer that provides electricity and gas to about 2.5 million Australians.

CLP Group said a partner would provide the necessary capital for EnergyAustralia to develop new renewable energy generation and storage projects, but no deal is believed to be close after deal with Macquarie abruptly ended when it appeared close to finalisation.

Originally published as ACCC charges EnergyAustralia with misleading customers, exposing retailer to heavy fines