Energy giant AGL fined $25m after wrongly taking money from welfare recipients who were no longer customers

AGL has been fined a whopping $25m after the energy giant wrongly debited welfare accounts of former customers — and took two years to pay some back.

One of Australia’s largest energy companies has been fined $25 million for charging welfare recipients who were no longer their customers.

The Federal Court imposed the whopping penalty on AGL after it wrongly debited money from 483 low income or vulnerable households using an automated billing system.

In some cases, the charges – of which there were 16,000 that totalled $460,000 – continued for four years.

A Judgement handed down by Justice Kylie Downes in the Federal Court on Thursday shows that once the wrongful slug was identified by AGL in 2020, it took more than two years to repay some affected households.

“Some customers were no longer alive,” Justice Downes says.

“No customer was paid any interest, or offered an explanation or an apology for what had occurred.

“To the contrary, a template of a sample letter which was sent to customers appeared to blame them for what had occurred, stating that “[w]e noticed that after you left us, you didn’t update your Centrepay arrangement”.

AGL has been fined a whopping $25 million for charging welfare recipients who were no longer customers. Picture: AAP

The company later accepted in court that the decision not to pay interest on the overcharged amounts was the “wrong decision”, but continued to downplay the issue as “not large scale”.

Customers caught up in the bungle had been signed up to Centrepay, which is a voluntary bill paying service for Centrelink customers that automatically deducts electricity or gas charges.

It is the responsibility of an energy retailer to switch off the automated payments once a customer leaves, under an agreement with Services Australia.

The case was brought to court by the Australian Energy Regulator, and comes two years after Origin Energy was ordered to pay $17 million for failing to protect customers in hardship.

Justice Downes said the penalty, which was $15m less than the AER sought and $20m more than AGL argued for, was “sufficient to deter repetition by AGL as well as contravention by others in the electricity and gas industry”.

“It is one that goes beyond being a mere “cost of doing business” and it reflects the nature and extent of AGL’s contraventions,” she writes.