Origin Energy has paid a penalty of $126,000 after the ACCC issued it with an infringement notice for an alleged false or misleading representation in a price increase letter sent to residential electricity customers in Victoria.
In the letter, Origin told customers on market offers that its electricity prices were changing, and represented that the reason for the change was the Victorian Essential Services Commission’s increase to the Victorian Default Offer.
The Victorian Default Offer is a price set by the Essential Services Commission for consumers on standing offers, and does not apply to consumers on market offers. Therefore, a change to the default offer does not affect the prices charged by Origin to households on market offers.
“The decision of whether or not to increase the electricity prices of customers on market offers was entirely in Origin’s hands, and they chose to increase prices for the majority of these customers,” ACCC Chair Rod Sims said.
“Electricity retailers must be clear when making price increase announcements so consumers aren’t given the misleading impression that government changes that don’t apply to them are the reason for the increase.”
“Electricity bills are a major household expense, and the ACCC will continue to take enforcement action against retailers that make misleading claims about the reason for price increases,” Mr Sims said.
Most electricity customers in New South Wales, South Australia, South East Queensland and Victoria are on a market offer, which will often include special discounts or prices for a set period. Market offer plans vary between providers and can be changed at any time.
Standing offers are applied when a customer does not enter a market contract. In Victoria, standing offer contracts are tied to the government’s Victorian Default Offer. In New South Wales, South Australia and South East Queensland, consumers on standing offers have their electricity prices capped by the Default Market Offer.
Standing offer contracts are designed to give consumers access to a fair electricity deal, even if consumers are unable or unwilling to engage in the retail market.
In November 2019, the Essential Services Commission announced that the Victorian Default Offer would increase by 7.8 per cent on 1 January 2020 due to factors such as increased costs incurred by retailers in purchasing electricity in wholesale markets, and increased costs to access network to transport electricity to their customers.
In December 2019, Origin Energy sent the letter to residential consumers, including those on market offers in Victoria about Origin’s price increases.
The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Australian Consumer Law.
The ACCC can issue an infringement notice when it has reasonable grounds to believe a person or business has contravened certain consumer protection provisions in the Australian Consumer Law.