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Origin whacked with monster fine in Victoria for charging exit fees

Origin Energy has paid penalties totalling $5 million for allegedly charging exit fees to more than 20,000 small business customers in Victoria.

The retail energy giant was slapped with 250 penalty notices from Victoria’s energy regulator after more than 77,000 electricity and gas small business customers were found to have exit fees wrongly included in their contracts.

From June 2016 to September 2020, these contracts caused $489,774 to be charged in exit fees to 22,371 customers.

In Victoria, exit fees can be only be charged on fixed-term energy contracts – contracts that offer the same rate, charges or fees for a certain beneficiary period, usually 12 to 24 months. The contracts issued to these Origin customers in this instance however, did not fit this criteria.

The Essential Services Commission (ESC) claims the retailer failed to adjust these contracts adequately, despite receiving customer complaints as early as 2018 and knowing about the changes in law around exit fees.

These penalties are the strongest action taken against an energy company in Victoria to date, and reflected the severity of this behaviour in the energy market, Commissioner Sitesh Bhojani explained.

“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,” he 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.”

These fees, which are prohibited, can have a substantial impact on customers, particularly those with businesses, Mr Bhojani added.

“Some of the affected businesses were charities and not-for-profits who can’t afford extra fees. Some were charged multiple times, paying thousands of dollars in prohibited fees.

“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. This can have the effect of lowering consumer trust in Victoria’s energy market.”

Places of worship and charities were among some of the small business customers affected by these faulty contracts. One local council was also allegedly charged multiple exit fees.

Origin self-reported the alleged breaches to the commission in September 2020, and the retailer has since informed the ESC that it is attempting to contact former customers to reimburse the wrongly charged exit fees.

Origin’s EGM Retail, Jon Briskin, said: “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.

“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.”

Former Origin small business energy customers are being urged to check with the company to see if they’re owed a refund.

Image credit: Fahroni/Shutterstock.com

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