Essential Services Commission sanctions nine businesses over bungled energy efficient fridge upgrade program

Nine businesses have been sanctioned and more than $1.3m in fake carbon credits ripped up following a probe into Victoria’s bungled appliance upgrade program.

A probe into Victoria’s free fridges scam has led to sanctions for businesses and more than $1.3m in carbon credits being wiped from the government program.

The Essential Services Commission (ESC) on Tuesday revealed it had taken action against nine different businesses in the Victorian Energy Upgrades (VEU) scheme after revelations of widespread rorting.

Last year, dozens of fridges at a time were being dumped outside businesses across the state because of a loophole that was being exploited.

The scam, first revealed by the Herald Sun, emerged because the carbon credits awarded from providing energy-efficient display fridges were so lucrative that installers could afford to give them away for free.

Businesses were bombarded with free fridges under a carbon credits scam.

The fridges were meant to replace older, more energy expensive fridges but a group of installers quickly realised they could get away with giving away the appliances to any business they could find while still claiming the carbon credits.

This became so popular that some installers were handing out a dozen fridges to businesses that ordered one, or dumping boxes of fridges in the middle of the night to stores that did not want them.

One winery which was a victim of the scandal joked that they would start giving away a free fridge for every carton of wine ordered by customers.

Each carbon credit awarded under the VEU is meant to represent a tonne of emissions saved from the atmosphere and it is a key part of the Andrews government’s net-zero targets.

Installers create the certificates through replacing gas or poor quality appliances with more efficient electric products that reduce the need for greenhouse gases.

They are then sold on an open market to power companies, who are required to purchase hundreds of thousands of credits each in an effort to make them pay for the improvements to the state’s energy usage.

It is expected these costs are then passed on to consumers as part of the process of setting power bills.

The fridge saga threw the integrity of the scheme under a cloud as thousands of costly energy-saving certificates were handed out without providing any of the environmental benefits they were created for.

Lucrative carbon credits can also be generated via activities such as tree planting

In June 2022, the ESC announced a full probe into the scam.

On Tuesday it revealed nine businesses had been targeted by their investigation.

About 18,238 carbon credits created under the VEU were rejected, which is equal to about $1.36m based on their current spot price of $74.50.

This included more than 3400 carbon credits created where investigators found no fridges were installed.

Of these nine businesses, one has conditions placed on their accreditation and another has had their credential suspended while a full audit takes place.

Both are banned from installing fridges in the VEU.

The remaining seven businesses have received formal warnings.

Essential Services Commissioner Sitesh Bhojani said the probe found repeated instances of bad behaviour by a small group of businesses.

“Two accredited businesses in particular demonstrated a clear disregard for these important program rules and the commission has responded accordingly with an accreditation suspension and activity ban for one business, and an accreditation condition and activity ban for the other,” he said.

“We take our role as regulator of the VEU program seriously and do not hesitate to act where we find businesses are not following the program rules.

“It is the responsibility of every accredited business to know what the program rules are and what is required to demonstrate compliance with the rules, or risk enforcement action if found in breach of the rules.”

The ESC will soon have tougher powers to crack down on dodgy operators in the VEU as new reforms come into effect later this year.