The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against AGL South Australia Pty Ltd (AGL SA) for making false or misleading representations and engaging in misleading or deceptive conduct.
The alleged conduct relates to representations made by AGL SA to residential electricity consumers in South Australia about the level of discounts off electricity usage charges that could be obtained by consumers under AGL SA’s energy plans.
“AGL SA represented to consumers that if they entered into an energy plan, they would receive a specified discount off the charges they would otherwise pay AGL SA. However, AGL SA later increased the rates charged to consumers under energy plans and, despite representing that the discounts would continue, the level of discounts that consumers had signed up to was eroded,” ACCC Chairman Rod Sims said.
Specifically, the ACCC alleges that when AGL SA increased rates for energy usage charges under its energy plans in mid-2012 and mid-2013, AGL SA made false or misleading representations to consumers who had entered into an energy plan that they would continue to receive their discount or that there had been no change to the discount, when this in fact was not the case.
“The ACCC alleges that at least from the time of these rate increases, consumers with energy plans effectively received reduced discounts, and in some cases paid more for electricity than if they had been supplied by AGL SA under its standard retail contract,” Mr Sims said.
“For example, the ACCC alleges that consumers who signed up to AGL SA’s Freedom 3% plan between January and June 2012 received three per cent off their energy usage charges. Following an increase in their rates in July 2012, these consumers were being charged energy usage rates that were approximately 4.6 per cent higher than what they would have been charged under AGL SA’s standard retail contract, leaving them approximately 1.5 per cent worse off than if they had been supplied under the standard retail contract,” Mr Sims said.
“Power bills are a significant, rolling cost for Australian households. Consumers are attracted to energy plans featuring discounts because of the opportunity they offer to reduce these costs,” Mr Sims said.
“Energy retailers are under particular scrutiny from the ACCC for conduct which misleads consumers, as consumer protection in this sector is an ACCC priority.”
The ACCC is seeking pecuniary penalties, declarations, injunctions, publication orders, a compliance program, redress for affected consumers, and costs.
CORRECTION - 20 March 2014:
The ACCC has identified an error in its media release issued on 5 December 2013 in relation to the issue of proceedings against AGL South Australia Pty Ltd.
The media release referred to the example of consumers who signed up to AGL SA’s Freedom 3% plan between January and June 2012 and incorrectly stated that following an increase in their rates in July 2012, these consumers were 1.5 per cent worse off than if they had been supplied under AGL SA’s standard retail contract.
Following a review of these calculations, the ACCC has identified that in fact those consumers were approximately 0.4% better off following the rate increase in mid 2012 than if they had been supplied under AGL’s standard retail contract.
The ACCC apologises to AGL for this calculation error. It remains the ACCC’s case that consumers who commenced their energy plan in the first half of 2012 effectively received reduced discounts from the time of the 2012 rate increase and that in 2013 some of these consumers paid more for electricity usage than if they had been supplied by AGL SA under its standard retail contract.