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CovaU cops another fine for breaching energy law

CovaU is once again in hot water with energy market watchdogs, paying a $67,800 penalty after failing to comply with energy industry rules.

The Australian Energy Regulator (AER) issued CovaU with an infringement notice after determining that the provider had breached the National Energy Retail Law. The AER alleges that CovaU did not present its standing offer prices online between July 2021, and January 2023, making it difficult for customers to access and compare all of the offers available.

The news comes days after the Australian Competition and Consumer Commission (ACCC) announced CovaU had paid a separate $33,300 penalty for failing to meet its obligations under the Electricity Retail Code in 2022.

What did CovaU do wrong?

Under the National Energy Retail Law, a retailer must show its standing offer plans on its website, alongside its market offers. Standing offers are a ‘safety net’ product where the maximum price is capped by the Default Market Offer (DMO), which is set by the AER annually and applies to customers in New South Wales, south-east Queensland and South Australia.

A standing offer isn’t designed to be competitive, and most customers on these plans are there simply because they are unable to participate in the market, their old plan has expired, or because they haven’t compared offers for an extended period of time. Because of this, standing offers are usually much less attractive than a retailer’s market offer plans, which are determined by the retailer themselves and can include discounts, bill credits and lower rates.

While CovaU’s market offers may have appeared more competitive, failing to also show standing offer plans meant customers weren’t in a position to properly compare all of the options available to them.

“Many Australians are already struggling with cost-of-living pressures,” AER Board Member Justin Oliver said. “Not being presented with all available energy plans limits their choice and means they may be paying more than they need to.”

“All energy retailers, big or small, have an obligation and responsibility to comply with the standing offer requirements in the National Energy Retail Law.”

CovaU has now paid $67,800 infringement notice, and has also submitted a court enforceable undertaking to AER. This will require CovaU to appoint a third-party compliance expert to review its compliance systems, as well as a second independent expert to review any improvements made.

Is this the same penalty CovaU paid to ACCC?

The infringement notice issued by the AER is unrelated to the ACCC’s investigation into CovaU’s Electricity Retail Code breaches. The ACCC alleges that CovaU and fellow retailer ReAmped had each failed to provide customers with required information in price change notices sent out in 2022.

CovaU has now paid penalties to the ACCC three times in the last four years, which ACCC Commissioner Liza Carver said left the consumer watchdog “very concerned”.

With sweeping price rises slated to come into effect from July 1, millions of energy customers will now be receiving notices from their current energy provider outlining rate and offer changes. So there’s never been a better time to get engaged with the energy market, and consider comparing plans and providers if you’re worried about rising power prices.

If you do have concerns about the information you’ve received from your provider, it’s best to contact them directly. Failing that, you may want to reach out to your state’s ombudsman for assistance.

Tara Donnelly
Utilities Editor
Tara Donnelly is an internet and mobile expert - sectors she’s spent a decade covering - and also oversees energy and consumer technology content. She holds a Bachelor of Communications from the University of Canberra and has shared her expertise on national media including 9 News, 7 News, Sunrise and the ABC.

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