Further penalties paid in relation to disconnection of energy supply

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This month we have seen further cases of energy businesses being penalised for disconnections that were conducted other than in accordance with applicable energy law.

On 16 August 2019, the Australian Energy Regulator announced that Origin Energy had paid penalties totalling $80,000 in relation to four infringement notices issued for the unlawful disconnection of 54 premises between January 2018 and May 2019. In commenting on the matter, AER chairperson Paula Conboy said “the AER’s investigation found systemic issues with Origin’s management of customer disconnections” with Origin failing to have “adequate processes in place to satisfy the disconnection obligations in the National Energy Retail Rules.”

Origin Energy also entered into a court enforceable undertaking, in which it was stated that some of the disconnections occurred due to IT system failures in not ensuring that a disconnection cancellation request was sent to the relevant distributor. As part of the undertaking, Origin has agreed to appoint an independent auditor to complete an audit and provide recommendations in relation to the relevant failure, disconnection training program and disconnection processes and controls to ensure that customers are only disconnected in accordance with the retail rules.

Further, Origin has committed to use best endeavours to complete its proposed steps to implement reasonable recommendations made by the independent auditor and to provide the AER with regular progress reports on the audit and updates on the implementation of any recommendations at intervals of no more than three months from the commencement of the audit.

Two days earlier, on 14 August 2019 the Essential Services Commission announced that 800 Victorian customers will be entitled to compensation after Momentum Energy failed to inform them that they could be disconnected remotely. The ESC’s director of energy Sarah McDowell noted that some customers are entitled to compensation of over $7000.

Momentum Energy also entered into an enforceable undertaking with the Essential Services Commission. The terms of the undertaking include that Momentum Energy will use best endeavours to contact the relevant customers over a period of four months and that it will pay compensation in accordance with the undertaking and the Electricity Industry Act.

Compliance Quarter has developed comprehensive training materials and a comprehensive checklist to ensure that disconnections are only used as a last resort and to ensure that all applicable laws are followed prior to any disconnection.


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