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AGL penalised $1 million for misleading discount claims

legal court judgment ruling

The South Australian arm of electricity retail giant AGL has been penalised over $1 million for misleading customers on the discounts they would receive under the company’s energy plans.

The Australian Competition and Consumer Commission (ACCC) spearheaded proceedings against the company, which will now have to pay a court-ordered fine of $700,000 and $300,000 towards ACCC’s costs. 23,000 consumers are set to receive a refund from AGL, totalling in the proximity of $780,000.

The Federal Court found that AGL SA had misled customers that commenced an electricity plan with them between January and mid July 2012. Customers entering these plans were to be charged a discount rate, but the discount was no longer the same when AGL increased rates in mid 2012.

According to the ACCC:

In a letter sent to these consumers advising them of their new rates, AGL SA stated they would continue to receive their discount, when that was not the case. This was because, following the rate increase, their rates before the discount was applied were higher than the rates for those consumers who were supplied under AGL SA’s standard retail contract or those consumers who had subsequently commenced an energy plan with AGL SA.

Refunds have been ordered to go to customers who ended up paying more under the energy plan they had assumed came with a discount. They actually would have paid less if they had been on AGL SA’s standard retail contract.

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

“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.”

In a statement, AGL said they “did not intend to mislead consumers”, but admitted that they “could have done a better job” in clarifying the details of the changes to energy plans.

“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.”