Energy companies zapped for misleading conduct

Energy companies zapped for misleading conduct

As part of the ACCC’s focus on the energy sector last year, recently two energy companies, Origin Energy and Simply Energy (including some subsidiaries) have been hit with large penalties as a result of making false or misleading representations to consumers.

The Federal Court of Australia ordered Origin and two of it’s subsidiaries to pay $325,000 for representing that under a “Daily Saver” energy plan, consumers would receive up to a 16% discount off Origin’s electricity charges, and up to 12% off their natural gas charges.

The usage charges for these discount representations were calculated at a higher rate than the subsidiaries standard retail contracts, so consumers received a reduced discount as a result.

In contrast, Simply Energy (in partnership with IPower 2 Pty Ltd) was issued with two infringement notices, paying a penalty of $20,400 for misleading door-to-door sales conduct. If the ACCC have reasonable grounds to believe a person has contravened consumer protection laws, they may issue an infringement notice.  However, the payment of these penalties is not, in itself, an admission of a contravention of Australian Consumer Law.

In two instances last year, sales representatives selling Simply Energy products were purported to claim to consumers that there was an “urgent problem” or “something wrong” with their existing electricity supply, when this was not the case.

This energy company crack-down by the ACCC follows on from the recent allegations made against AGL, which did not succeed.

Although both related to energy, there are learnings that all businesses can take from these cases:

  1. Ensure that your discount calculations are substantiated and correct. Take care not to base discounts on potentially misleading figures or rates – a simple miscalculation or error can be a costly mistake in regards to both finances and your goodwill.
  2. Create clear employee guidelines and workplace policies. Ensure that employees use sales tactics in an honest manner according to your company values – they are the people that represent your business and you are liable for the representations they make.

These cases illustrate the importance of honesty and transparency in representations made to consumers – make sure that your business does not get caught out doing the wrong thing.

If you are require advice concerning the representations you have made to consumers or are unsure about your claims, do not hesitate to contact Gladwin Legal on  or 1300 033 934.