Ouch: Sumo fined $500,000 for alleged wrongful disconnections

Energy retailer Sumo Power has paid $500,000 in penalties for wrongfully disconnecting dozens of customers in late 2020, the Victorian regulator says.

The Essential Services Commission (ESC) alleges that Sumo Power and Sumo Gas wrongfully disconnected 143 Victorian energy customers, issuing the retailer with 100 penalty notices in November 2021.

Under the state’s energy rules, retailers must give consumers a warning period of six business days before cutting power to a property, and companies must follow stringent guidelines leading up to a disconnection.

It is alleged that Sumo failed to provide 142 customers with a six-day warning period, while one customer already on a payment plan was cut off without warning, ESC Chair Kate Symons said.

“Electricity and gas are essential services and customers should only ever be disconnected by an energy retailer as a last resort and by following the correct procedure,” she said.

Commissioner Symons explained that Victorian energy retailers were given a ‘statement of expectations’ around protecting customers by keeping them connected during COVID-19 stay-at-home orders.

“When those orders were lifted in November 2020, it appeared from the evidence that Sumo had been keen to resume disconnections. This included Sumo setting themselves a target of disconnecting more than 1,500 customers between the start of November and Christmas 2020.

“Sumo’s board and executive management were involved in and aware of Sumo’s approach to disconnecting customers. This raises concerns for the commission in relation to Sumo’s compliance culture and its understanding of the essential nature of energy.”

Changes to the legislation in December 2021 has given the ESC more investigative powers and enforcement protocols with greater penalties for any retailer breaking the rules.

The ESC notes from 1 March 2022, wrongful disconnections can attract penalties up to $218,000 per breach.

“This Sumo case signals the importance to all energy businesses about compliance in this area and the commission’s strengthened enforcement powers will focus on this area,” Symons said.

This is not the first time Sumo has been in hot water, as it was fined by the consumer watchdog for allegedly misleading customers over its electricity pricing back in August 2020.

Canstar Blue has contacted Sumo for a response.

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