Gas retailer Kleenheat fined over big discount advertising

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Western Australia gas retailer Kleenheat has been fined more than $25,000 for allegedly misleading consumers about the potential benefits of a big discount plan.

The Wesfarmers-owned gas supplier has been stung by the Australian Competition and Consumer Commission (ACCC) over advertisements promoting savings of 35%.

From April 2018, Kleenheat advertised that new customers in Western Australia could “Save 35% on gas charges” by switching to its Monthly Energiser Plan. However, the ACCC alleged that this representation was false and misleading because the discount only applied to a customer’s gas usage charges – not other charges, like the gas supply charge or account fee.

The consumer watchdog also alleged that the overall impression created by the advertisements was that the discount would apply while the consumer remained a customer, when in fact the discount only applied for 12 months, after which it dropped to 25%.

These advertisements appeared on television, radio, Facebook, Spotify, billboards, bus panels and emails. Some advertisements contained a reference that conditions apply, while others included references in fine print explaining the deal.

Kleenheat is Western Australia’s second largest gas retailer, and thousands of customers took up the Monthly Energiser Plan after the advertisements, which have now been withdrawn, the ACCC says.

“The ACCC alleges that Kleenheat made representations to potential customers which were false and may have caused some people to switch their account to Kleenheat from other gas suppliers,” ACCC Acting Chair Roger Featherston said.

“WA gas customers who saw the Kleenheat advertisements could easily have assumed the discount was permanent and applied to the entire bill. People who took up the plan saved about $40 less in the first year than they would have saved relying on Kleenheat’s claim of a 35 per cent saving on gas charges.

“Qualifications which explain the terms and conditions of a deal must be prominent and not only in fine print, so that consumers understand what the deal involves.”

In response to the allegations, a Kleenheat spokeswoman said the company had worked quickly to clear up the nature of the plan with its customers.

“Kleenheat is proud of its record of great customer service and is disappointed that the ACCC believes customers may have been misled by some of its advertising,” she said.

“Prior to the issuing of the infringement notices by the ACCC, Kleenheat had been working with the commission to clarify the nature of the discount provided in its ’35 per cent discount on gas charges’ advertising for its monthly energiser plan customers.

“Feedback from the ACCC suggested that the description and term of the discount for customers on Kleenheat’s monthly energiser advertisements were not sufficiently clear.

“As a result, Kleenheat proactively contacted all of its monthly energiser plan customers to clarify the discount, and altered the advertising in response to the feedback.

“Kleenheat regrets if any of its customers were confused by this advertising and encourages anyone with a query about their service or plan to contact the Kleenheat customer service team.”

WA gas competition heats up

The alleged misleading advertising from Kleenheat comes at a time of intense competition between gas retailers in Western Australia. While Kleenheat and Alinta Energy continue to dominate much of the market, the arrival of three other major gas suppliers has seen customers proactively comparing offers and switching, with discounts being increased to keep or attract households.

East-coast energy giants AGL and Origin have both moved west to compete for gas customers in the Perth area, joined by Simply Energy in 2018. The upshot of the increased competition is that discounts and other sign-up incentives have been improving.

Kleenheat, Alinta Energy, AGL and Simply Energy all now promote plans with 35% discounts off gas usage charges, while Origin’s biggest discount is currently 30% off gas usage. The conditions of these plans vary between retailers.

Because of the regulated price cap on gas usage and supply charges in WA, there is very little difference between retailers when it comes to the actual prices customers pay before discounts.

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