Simply Energy fined $60,000 for alleged failure to obtain consent before switching customers

IPower Pty Limited and IPower 2 Pty Limited, in partnership trading as Simply Energy, have paid total penalties of $60 000 following the issue of infringement notices by the Australian Energy Regulator (AER).

The AER issued three infringement notices to Simply Energy because it had reason to believe that Simply Energy had breached the National Energy Retail Law, for failing to obtain explicit informed consent (EIC) before entering customers into new contracts.

The AER alleges on three separate occasions customers who received Simply Energy telemarketing calls either did not understand the nature and the purpose of the call, or did not have the capacity to provide the proper consent.

Affected customers included residents of a nursing home and a retirement village.

“While active competition between energy retailers can help customers get a better deal, the explicit informed consent provisions of the Retail Law provide fundamental protections to stop retailers unlawfully switching customers who have not been made fully aware of what they are agreeing to, or indeed who have not agreed at all,” AER Chair Paula Conboy said.

“Protecting vulnerable consumers and promoting confidence in the retail energy market are ongoing priorities for the AER,” Ms Conboy said.

“Where we see evidence of retailers failing to comply with their obligations, we will take appropriate enforcement action,” she added.

The alleged conduct occurred in New South Wales in 2015 and Simply Energy reported the incidents to the AER in accordance with its reporting obligations. Simply Energy previously paid penalties of $80 000 in 2015 in relation to alleged breaches of the explicit informed consent obligations in 2014.

The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Retail Law or Rules. The AER can issue an infringement notice where it has reason to believe a business has contravened a civil penalty provision of the Retail Law or Rules.

Background

The National Energy Retail Law and Rules (which apply in New South Wales, the Australian Capital Territory, Tasmania, Queensland and South Australia) set out key protections and obligations for energy customers and the retail and distribution businesses they buy their energy from.

The Retail Law requires a retailer to obtain the explicit informed consent of a customer to transfer the customer to a new energy retailer, or to enter the customer into a market retail contract. In order for a customer to give their explicit informed consent, a retailer, or a person acting on their behalf, must clearly, fully, and adequately disclose all matters relevant to the customer’s consent, including the purpose or use of the consent.

The AER previously issued four infringement notices to Simply Energy in 2015 for alleged breaches of the explicit informed consent obligations. Simply Energy paid penalties of $80 000.

In March 2015, in proceedings brought by the AER, the Federal Court imposed penalties of $500 000 against another energy retailer, EnergyAustralia Pty Ltd, for failing to obtain the explicit informed consent of 27 customers in South Australia and the ACT before transferring them to new energy plans.

IPower Pty Ltd and IPower 2 Pty Ltd are two entities operating in partnership to trade as Simply Energy.

About the AER

The Australian Energy Regulator regulates energy markets and networks under national legislation and rules in eastern and southern Australia, as well as networks in the Northern Territory. Its functions include:

  • monitoring wholesale electricity and gas markets to ensure energy businesses comply with the legislation and rules, and taking enforcement action where necessary;
  • setting the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy;
  • regulating retail energy markets in Queensland, New South Wales, South Australia, Tasmania (electricity only), and the ACT;
  • operating the Energy Made Easy website, which provides a retail price comparator and other information for energy consumers;
  • publishing information on energy markets, including the annual State of the energy market report, to assist participants and the wider community.
Issued date: 
24 January 2017
AER reference: 
NR 02/17
Contact: 
AER Media inquiries 1300 138 917