Simply Energy pays penalty for alleged wrongful disconnection

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On 13 August 2021, the Essential Services Commission (Victoria) served a penalty notice on IPower 2 Pty Limited and IPower Pty Limited (trading as Simply Energy). The Penalty notice can be viewed here.

Most energy providers are aware of the processes they must undertake before disconnecting a customer’s energy supply. The Penalty Notice in this case cites a wrongful disconnection contravention within the meaning of s 54E of the Act:

S54E (definitions)

wrongful disconnection contravention
means a contravention referred to in section 54H(1)(c);

Section 54E cites 54H(1)(c) identifies “conduct that requires compliance with the Energy Retail Code”. The Energy Retail Code itself at clause 118 states:

  1. Request for de-energisationIf a customer requests the retailer to arrange for de-energisation of the customer’s premises, the retailer must use its best endeavours to arrange for: de-energisation in accordance with the customer’s request; and a meter reading; and if applicable, the preparation and issue of a final bill for the premises; and where a customer can be disconnected by de-energising the customer’s premises remotely and the retailer believes it can do so safely, the retailer must arrange for de-energisation of the customer’s premises within two hours of the customer’s request, unless the customer has requested de-energisation at a scheduled time. (emphasis added)

For this Penalty Notice, the keywords in clause 118 above are the last words in (1)(d), “unless the customer has requested de-energisation at a scheduled time”.

In this case, Simply Energy received a request from the customer (in April 2021) to have the electricity disconnected and requested that the disconnection be scheduled for 10 May 2021.

The electricity was disconnected from the customer’s premises on 21 April 2021, 18 days prior to the scheduled time requested by the customer. The customer was an elderly woman and the ESC Commissioner in a press release stated:

“It is concerning a basic request from a customer could not be followed leaving this 86-year-old woman without electricity for more than 10 hours on a cold April day.

“She also has a visual impairment and was unable to heat her home during a cold snap,”

The Commissioner’s comments are noteworthy. It is impossible to determine whether the vulnerability of the customer was considered in issuing the Penalty Notice and/or Simply Energy’s response to the customer. It is also impossible to quantify the commercial damage that Simply Energy experienced from the public reporting of the infringement.

The Message:

What the penalty and the public denunciation of Simply Energy suggests is that the ESC is sending a clear message to energy providers. The specific deterrence meted out to Simply Energy is clear.

The general deterrent effect to energy providers is also clear. Large energy retailers would be better equipped to manage a $5000 fine than small providers. However, the negative public relations aspect may be of greater concern to large providers.

I further imagine that most energy retailers would have taken a close look at their internal systems to ensure that they were not subject of a (potentially) significant penalty and publicly named and shamed. This would apply to disconnections for non-payment as well as requested disconnections.

Robust compliance by employing effective internal systems is not only prudent for regulatory purposes (avoiding penalties) but also for safeguarding reputation and goodwill.

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