Origin Energy companies have paid $5 million in penalties after it allegedly charged 20,000 customers prohibited exit fees.
The Victorian Essential Services Commission found that Origin Energy had charged the 22,371 small business customers a combined $489,774 in exit fees, despite laws banning exit fees.
Exit fees can only be included on fixed-term retail contracts with fixed charges, tariffs and fees in Victoria. These contracts did not meet that criteria.
“Origin Energy knew at all times about the changes in the law banning exit fees and they even reviewed 19 different contract templates but didn’t remove the exit fees,” commissioner Sitesh Bhojani said.
“Given the size and standing of Origin Energy, the commission is concerned about the company’s compliance culture over that four-and-a-half-year period from 2016 to 2020.”
The Commission issued 250 penalty notices to Origin Energy after finding that more than 77,000 contracts in total included exit fees.
“Origin Energy knew at all times about the changes in the law banning exit fees and they even reviewed 19 different contract templates but didn’t remove the exit fees,” Sitesh said, adding that this is the strongest compliance action it has taken against an energy company in Victoria.
“Given the size and standing of Origin Energy, the commission is concerned about the company’s compliance culture over that four-and-a-half-year period from 2016 to 2020,” he added.
Origin Energy is attempting to contact former overcharged customers, it told the commission.
“When we discovered this issue, we self-reported to the regulator, apologised, credited the accounts of current Victorian small business customers who were charged the $22 fee in error, and offered refunds to former customers," Origin’s executive general manager, retail, Jon Briskin said in a statement.
“We value our customers and take all of our compliance obligations seriously, so we are disappointed we did not implement these regulatory changes correctly and we are sorry.”
More than half are still eligible for refunds, with the commission encouraging former small business customers to contact Origin to find out if they’re owed a refund.
“Some of the affected businesses were charities and not-for-profits who can’t afford extra fees,” Bhojani said.
“Some were charged multiple times, paying thousands of dollars in prohibited fees.”
The commission found that one local council was allegedly charged exit fees multiple times, while charities and places of worship were also charged.
“At least one customer thought Origin was being generous after they complained and were told the fee would be waived,” he added.
Origin Energy reported the alleged breaches to the commission in September 2020.
However, while Origin Energy received complaints in 2018, it didn’t stop charging the fees until late 2020.
“The sheer scale and length of time of these alleged contraventions has the potential to damage the integrity of our competitive market by limiting the ability for customers to shop around for a better deal,” Bhojani said.
“This can have the effect of lowering consumer trust in Victoria’s energy market.”