The Federal Court has found that AGL Retail Energy Limited and three other subsidiaries of AGL Energy Limited (together, AGL) breached the National Energy Retail Rules (the Rules) by failing to notify and refund customers for overcharges obtained from Centrepay payments in proceedings brought by the Australian Energy Regulator (AER).
The Court found that AGL overcharged 483 Centrepay customers between December 2016 to November 2021.
It also found that AGL failed to notify and refund these customers within the required timeframes.
Centrepay is a bill paying service administered by Services Australia by which people can elect to arrange regular deductions from their Centrelink payment for essential goods and services. The affected customers had used Centrepay to pay their energy bills but had stopped receiving services from AGL at the time of the alleged conduct.
The Federal Court found that AGL committed a total of 16,156 breaches of the Rules.
Justice Downes said “…the AGL Entities received, processed and retained payments for amounts that exceeded the amount that they were entitled to charge the customers. AGL, through a deliberate design in its payment system methodology… treated each deduction as a payment for a bill, even when the final bill had been paid, and then rather than refunding that excess money to the Affected Customer at that point, AGL, through its payment methodology, applied the amount as a credit to a future bill, even when there was not going to be one.”
AER Chair Ms Clare Savage said the Court’s decision reinforced the critical importance of retailers prioritising consumer protections.
“We expect retailers to have the policies, systems, and procedures in place to give consumers their money back if they have been overcharged and to provide the protections they’re entitled to under the National Energy Retail Rules.
“It’s vital that retailers identify and respond as required when consumers are adversely impacted. We will continue to investigate conduct that harms consumers and take enforcement action where warranted.
The AER is seeking pecuniary penalties, declarations, an order requiring implementation of a compliance program, and costs.
The Court will make orders after hearing further from the parties.
Note to Editors
Judgment
The decision was handed down on Friday 23 August 2024. A copy of the decision can be found on the Federal Court website.
The Federal Court found that AGL committed:
- 3,531 contraventions of rule 31(1) by failing to notify the affected customers of the overcharges within the specified timeframe;
- 3,531 contraventions of rule 31(2) by failing to refund the overcharged amounts as required; and
- 9,094 contraventions of rule 31(3) by failing to refund the overcharged amounts as required.
National Energy Retail Rules and National Energy Retail Law
The National Energy Retail Rules impose legal obligations on energy retailers in respect of circumstances where a customer has been overcharged. These obligations protect customers by ensuring that if overcharging by a retailer occurs, customers are notified within 10 business days of the overcharge being identified by the retailer and that the customer is reimbursed. This protection extends to customers who are no longer being supplied by that particular retailer.
The National Energy Retail Law imposes legal obligations on regulated entities to establish arrangements to monitor compliance with the National Energy Retail Law and Rules.
Court proceedings
On 16 December 2022, the AER instituted proceedings in the Federal Court alleging that AGL Retail Energy Limited and three other subsidiaries of AGL Energy Limited (together, AGL) failed to comply with the overcharging obligations in the National Energy Retail Rules.
The proceedings relate to AGL’s alleged conduct in relation to amounts deducted from Centrelink payments received by customers.
The AER alleged that AGL, after becoming aware of overcharges, failed to:
- notify the affected customers of the overcharges within the specified timeframe;
- use its best endeavours to refund the overcharged amounts as required; and
- implement policies, systems and procedures to enable it to efficiently and effectively monitor its compliance.
The AER sought civil penalties, declarations, an order requiring the implementation of a compliance program and costs.
Services Australia referrals
The AER received referrals from Services Australia in May 2024 related to an additional three energy retailers who allegedly continued to obtain deductions from Centrepay payments for inactive customers.
The AER is currently reviewing the judgment and considering the appropriate next steps in relation to these retailers.
Read the AER’s full statement about these referrals here.