The last of the misleading discount fines?

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Energy retailers operating in those jurisdictions which have adopted the National Energy Customer Framework offer market retail contracts, which are negotiated contracts, and standard retail contracts, which are contracts on terms substantially specified in the National Energy Retail Rules. Standing offers are pricing offers based on a retailer’s standard retail contract. They apply in a number of ‘default’ situations i.e. where a customer is no longer on a market contract and in the case of a ‘move-in’ customer.

On 18 July 2019, the Australian Competition and Consumer Commission announced that M2 Energy Pty Ltd (Dodo) and CovaU Pty Ltd had paid penalties totalling $37,800 and $12,600 respectively after the regulator issued each with infringement notices for alleged misleading claims about discounts available on the energy plans. In addition, both retailers have committed to refunding affected customers.

As was the case with Origin Energy in 2015 (and indeed with other retailers in other reported cases), the alleged contraventions related to higher market offer rates rather than standing offer rates being used in the calculation of advertised discounts. In commenting on the case, the ACCC’s Chair Rod Sims said: “energy retailers are reminded that any discount must be genuine and not based on confusing and inappropriate calculations which result in inflated percentage discount claims being advertised to consumers.”

Australian Competition and Consumer Commission v Origin Energy Limited [2015] FCA 55: This case was decided by Justice White on 9 February 2015 in the Federal Court of Australia. From 1 February to 30 June 2013 Origin’s website and contracts sent to customers contain statements that under a DailySaver energy plan, residential customers would receive a discount on the usage charges of up to 16% for electricity and up to 12% for gas. The relevant plan had a 12-month term.

Sections 29(1)(g) and (i) of the Australian Consumer Law relate to misleading and deceptive conduct with respect to goods and services and with respect to the price of goods or services. In this case, Origin Energy admitted: “that some consumers would have understood, reasonably, that the discounts would be from energy usage charges calculated by reference to rates applicable generally to consumers like themselves.” Origin Energy also made various admissions in relation to website discount representations. An agreed penalty of $325,000 was imposed.

From 1 July 2019, the Retail Electricity Code limits standing offer prices that are charged to certain consumers in New South Wales, South Australia and Southeast Queensland using a cap called the Default Market Offer. The Code also requires that retailers advertise the prices of their plans by reference to the Default Market Offer.

Retailers are reminded to comply with the Code and where the Code does not apply to ensure that they do not fall foul of the same ACL provisions.

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