Energy providers have been put on notice after Origin Energy was ordered to pay $17 million for failing to protect more than 90,000 customers experiencing hardship and payment difficulties.
The fine imposed by the Federal Court was the largest total penalty ever imposed for breaches of the National Energy Retail Law and Rules.
Proceedings were brought by the Australian Energy Regulator (AER) and Origin admitted that its automated processes for customers experiencing hardship and payment difficulties breached its hardship obligations more than 100,000 times.
The breaches took place over a period of nearly four years, between January 2018 and October 2021, across the ACT, NSW, Queensland and South Australia.
Canberra financial counselling company Care welcomed the substantial penalty.
“Many of our clients experience energy stress, with the number likely to grow with recent cost of living spikes,” Care CEO Carmel Franklin said.
“Energy stress is often a part of broader financial hardship combined with multiple other life stressors.
“This decision puts energy retailers on notice and sends an important signal that they need to do better when dealing with customers experiencing hardship.”
Origin admitted its automated processes breached its own 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 customer’s capacity to pay
- Increasing a customer’s payment amounts following a review of the customer’s usage while failing to consider the customer’s 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.
Ms Franklin said seeking hardship relief could be “extremely challenging” and those who needed it both should be treated with dignity and provided with support.
“All too often we see clients who are compromising their health and wellbeing because they cannot afford to pay for heating in winter or cooling in summer,” she said.
“These include older people, single parents, Aboriginal and Torres Strait Islander communities, recently arrived refugees and all those living below the poverty line.
“Automated processes that have led to people in vulnerable circumstances being disconnected from an essential service is completely unacceptable.”
AER chair Clare Savage also said this decision made it clear that automation could be a “dangerous substitute” for human interaction when it came to people experiencing financial hardship who were on payment plans, as each had “unique circumstances and experiences” which could 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,” she 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 customer’s 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.”
In addition to the $17 million fine, Origin was ordered to pay $200,000 in legal costs and establish a compliance and training program to improve the way it dealt with hardship customers and those experiencing financial difficulties.
Origin’s conduct was first brought to the attention of the AER by the South Australian and NSW Energy Ombudsman schemes, which had received many individual complaints.
If you are unable to negotiate an affordable payment arrangement with your energy retailer, you can contact a financial counsellor for assistance through the National Debt Helpline on 1800 007 007. You can also contact your energy provider to check whether you are on the best plan.