Origin, one of Australia’s three-largest energy companies, has been ordered to pay penalties totalling $17 million by the Federal Court for failing to comply with its obligations to protect customers experiencing financial hardship or payment difficulties.
In proceedings brought forth by the Australian Energy Regulator (AER), Origin admitted it had breached its hardship obligations as a result of automated processes that were put in place for customers struggling to pay their power bills.
Jon Briskin, Origin’s executive general manager of retail, acknowledged in a statement that the energy giant had “got it wrong”.
“This occurred when we automated some processes to try and improve the administration of our hardship program in 2018, but we got it wrong and we are sorry,” he said, adding that Origin was in the process of compensating customers whose power was wrongfully disconnected.
These breaches occurred on more than 100,000 occasions over a period stretching from January 2018 to October 2021. More than 900,000 customers across New South Wales, Queensland, South Australia and the Australian Capital Territory were impacted as a result.
Origin also admitted that its automated process caused it to breach its own hardship policies and the rules applied to retail energy providers. The AER alleged in its case that this meant some vulnerable customers weren’t offered payment plans, and some were wrongfully disconnected.
AER Chair Clare Savage said the $17 million penalty was the largest ever imposed on a retailer for breaching the National Energy Retail Law and Rules.
“This record $17 million penalty reflects the seriousness of the breaches by Origin and should send a strong deterrence message to all energy retailers that they must maintain and implement their hardship policies in accordance with the law, to protect customers experiencing financial distress,” she said.
“This message is even more important in the current market conditions where customers are facing significant cost of living pressures, including as a result of recent energy price rises.”
Ms Savage said the situation served as a reminder to retailers that automation could be a “dangerous substitute” for human interaction when helping customers facing financial hardship.
“Applying automated inflexible processes across thousands of customers without considering whether they can actually meet the payments shows a complete disregard of the hardship obligations in the national energy laws, which are designed to protect customers in vulnerable situations,” the AER said.
“When a retailer automates aspects of its hardship program, it needs to ensure it continues to offer individualised and tailored solutions to customers and has regard to a customers’ circumstances as the rules require.
“For many customers, being unable to afford a necessity like electricity is distressing enough. If a customer is not afforded the protections under the laws and rules it may push them closer to debt collection and disconnection, causing even greater distress.”
The Federal Court also ordered Origin to pay $200,000 in legal costs and said it must establish a compliance and training program to improve the way it worked with customers experiencing hardship or financial difficulties.
The AER said Origin cooperated with it through the proceedings and made joint submissions to the court alongside it.
Origin’s Mr Briskin said the retailer was committed to helping customers experiencing hardship and apologised for the breach.
“Origin is strongly committed to supporting customers in financial hardship through our Power On program, and we deeply regret that some customers did not receive some of the important protections they were entitled to,” Mr Briskin said.
“We put a stop to these automated processes last year, have taken significant steps to improve our compliance and training to ensure hardship customers receive the assistance they’re entitled to, and we are in the process of compensating customers who were disconnected in error.”