AGL cops $700,000 fine for false, misleading information

The Australian Competition and Consumer Commission has fined energy retailer AGL South Australia $700,000 for giving false or misleading information to customers.

Around 23,000 AGL customers in South Australia are entitled to refunds of around $30 each after Justice Richard White of the Federal Court found the retailer guilty of contravening sections 18 and 29 of Australian Consumer Law.

This isn’t the first time AGL has felt the wrath of the watchdog with the energy company receiving a $1.5 million dollar fine for its door to door sales in 2013.

In his judgment, Justice White found AGL had “selectively increased the rates applicable to (consumers who had applied for the discounts) with the effect that the rates which it used to calculate their energy usage charges were higher than those applicable to its other residential customers.”

“AGL’s history, size and reputation in the South Australian market are such that consumers are likely to have thought that they could rely on its representations,” Justice White said.  

AGL South Australia told customers they would get discounts by signing to a plan, but those discounts were reduced when rates increased later on.  

A spokesperson for AGL said its communication about the plan wasn’t the best.

“AGL Energy did not intend to mislead consumers but we accept that we could have done a better job of explaining to our customers the impact of changes to their energy plan rates in mid-2012,” the spokesperson said in a statement.

“Consumers who are eligible for a refund will be contacted. Refunds will vary depending on individual circumstances, but AGL anticipates the average refund will be around $30.”

“We are constantly looking at ways to improve how we present information about our energy plans to ensure the plans are clear and easy to understand.”

ACCC commissioner Sarah Court said energy retailers must be accurate in the plans and discounts on offer.

“Power bills are a significant cost for consumers, and discounted energy plans are attractive because of the opportunity to limit these costs,” Court said in a statement.  

“These plans can therefore provide a competitive advantage to energy retailers. However, the discounts on offer must be accurate, and the express or implied savings real for consumers.”

Business SA spokesperson Sathya Lawson told SmartCompany the business group endorses the decision.

“Electricity costs remain a significant concern for South Australian business, particularly following substantial price rises since 2009,” she says.

“Business SA supports the approach of the Federal Court to fine AGL $700,000 for misleading representations about the level of discount for residential consumers.”

“Any unlawful misleading conduct by any business, particularly in relation to the cost of an essential service, must be dealt with appropriately. Clear decisions like this one that condemn certain kinds of behaviour support business and consumer confidence that these matters will be dealt with and that there will be consequences.”

The case comes on the back of deals website Spreets being fined $600,000 for making false and misleading allegations earlier this week.