A fresh round of enforcement actions have been announced by the Essential Services Commission of Victoria (ESC). Energy sellers should review the announcements made by the ESC and ensure that they have adequate controls in place to avoid the same issues.
Explicit Informed Consent
On 26 July 2021, the ESC has announced that Simply Energy had paid penalty notices totalling $2.5 million after being issued 125 penalty notices.
The penalty notices were issued to Simply Energy after two external sales agents allegedly undertook deliberate fraud to transfer 525 gas and electricity accounts at 264 properties without any contact to obtain explicit informed consent.
Energy retailers are required to obtain explicit informed consent before transferring a customer. We’ve looked at the requirements relating to explicit informed consent in detail here and here.
Lessons: The lessons that energy sellers can take away from the Simply Energy penalties include:
- A single ‘rouge’ sales agent can cause immense damage within a short period of time.
- Energy retailers cannot ‘contract out’ of their obligations. In this instance, the sales agents were external door to door agents.
- Verification processes need to be robust. In this instance, the sales agents allegedly impersonated customers consenting to the switch in phone calls.
- Energy retailers need to independently verify that a customer has provided explicit informed consent.
- Victorian retailers need to ensure compliance with the changes
Disconnection of Energy
On 6 August 2021, ESC announced that Origin Energy has paid $450,000 in penalties for the alleged wrongful disconnection of 349 customers following those customers being sent an SMS message that failed to inform customers about payment help.
In commenting on the enforcement action, ESC Commissioner Sitesh Bhojani said energy retailers must ensure disconnection for non-payment of a bill is a last resort.
“Energy retailers must offer a range of assistance, including flexible payments or bill deferrals and information about relief grants and energy concessions that may be available,” he said.
Between 7 February 2019 and 13 February 2020, Origin Energy allegedly wrongfully disconnected 349 customers who were behind on their bills, with many only receiving a ‘vague’ text message as a final warning.
Further, the ESC noted: “Evidence obtained by the commission showed the retailer did not satisfy the requirements of the Energy Retail Code which says retailers can only disconnect a customer for not paying a bill if, after issuing a disconnection warning notice, it uses ‘best endeavours to contact the customer’ and ‘provide(s) clear and unambiguous information about the assistance available’.”
Lessons: The lessons that energy sellers can take away from the Origin Energy penalties include:
- Ensuring that all communications are reviewed against the applicable regulatory requirements;
- Understanding that the detail of compliance matters and that most areas of energy retail are heavily regulated; and
- Now is a good time to review all customer comms to ensure compliance.
