By Nick Toscano
Power and gas giant AGL has been dealt a record fine of $25 million for wrongly taking money from hundreds of welfare recipients who were no longer using its services.
Australia’s Federal Court on Thursday ordered AGL, one of the nation’s biggest energy retailers, to pay the landmark penalty after finding it had repeatedly failed to notify and refund customers it had overcharged through Centrepay, a debit service intended to help people on welfare pay regular bills for essential goods and services.
AGL is one of Australia’s largest power and gas suppliers.Credit: Getty Images
AGL overcharged 483 Centrepay customers an average of $1000 each between December 2016 to November 2021, the court found.
In her ruling, Justice Kylie Downes said AGL had accepted that its conduct was serious, but had sought to “downplay” it by arguing it should not be deemed large-scale because it affected 1 per cent of its customers who were using Centrepay.
She found AGL had breached the law more than 16,000 times over a prolonged period of time, and had a direct and negative impact on some of its more “economically and socially vulnerable customers”.
“Such conduct was, on any view, large scale,” she said. “It was very serious and cannot be brushed aside because these customers constitute a small fraction of AGL’s total customer base.”
Services Australia, which runs Centrepay, had informed AGL in 2013 of “serious non-compliance” over how it was dealing with customer accounts that had become inactive, the court heard, prompting AGL to implement a short-term manual reporting process. But that program ended in January 2016 for reasons that were not explained.
Clare Savage, chair of Australian Energy Regulator, which brought the case against AGL, said the penalty handed down on Thursday was the largest ever imposed for breaches of national energy laws.
“The record $25 million penalty reflects the seriousness of the breaches and serves as a warning that the Australian Energy Regulator expects all retailers to refund customers if they have been overcharged and to provide consumers the full protections afforded under the rules,” Savage said.
“The actions by AGL negatively impacted hundreds of people over an extended period, many of these may have been experiencing vulnerability.”
The court ordered three of AGL’s subsidiaries to establish and implement a compliance program, to be maintained for three years, to improve the way they deal with overcharging inactive Centrepay customers.
AGL has apologised to affected customers. “Since the issue was identified by AGL in the mid-2020s, AGL has undertaken significant process enhancements to improve its handling of Centrepay payments,” the company said.
AGL said it respected the court’s decision, but would review its judgment and consider whether to appeal, as the penalty was “significantly higher than expected”.
The penalty would not affect AGL’s earnings guidance for the 2025 financial year, which remains unchanged, the company added.
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