Federal Court finds AGL SA made false or misleading representations about discounts under energy plans

16 December 2014

The Federal Court has found that AGL South Australia Pty Ltd (AGL SA) made false or misleading representations and engaged in misleading or deceptive conduct concerning the level of discount residential consumers would receive under AGL SA’s energy plans, in proceedings brought by the Australian Competition and Consumer Commission.

The Court found that consumers who commenced an energy plan between January and mid July 2012 would have understood they would be charged the rates that generally applied to residential consumers like themselves as a result of making a telephone call to AGL SA and subsequently receiving a welcome pack.

Although they initially received the discount, in mid-2012 AGL increased the rates under its energy plans and sent a letter to these consumers advising them of their new rates which stated they would continue to receive their discount, when that was not the case.  This was because , following the rate increase, their rates were higher than those AGL SA applied to consumers who subsequently commenced an energy plan or supply under its standard retail contract.

Justice White found that AGL SA’s conduct “reduced the benefits of the discounts represented to the consumers when they agreed on their energy plan.”

“Power bills are a significant cost for consumers and can place an enormous pressure on household budgets. Energy plans featuring discounts are appealing to consumers because they offer the opportunity to ease that pressure, and are a competitive advantage” ACCC Chairman Rod Sims said.

“The Court has found that AGL SA made false or misleading representations to consumers about the key benefit under their energy plan – the discount off energy usage charges. Other retailers should sit up and take note – they must not mislead consumers about the savings they will achieve under energy plans.”

The ACCC had also alleged that:

  • AGL SA misled residential consumers who commenced an energy plan in 2012 at the time of an increase in their rates for energy usage charges in mid 2013 by representing to them that there had been no change in the discount they would continue to receive under their energy plan;
  • AGL SA ought to have disclosed certain information to consumers who commenced their energy plan in 2012 at the time of the mid 2012 and mid 2013 rate increases and by failing to do so engaged in misleading or deceptive conduct.

The Court found these allegations were not made out.

A hearing will be held in the Federal Court in Adelaide at a later date in relation to the relief sought by the ACCC comprising declarations, injunctions, corrective notices, costs, pecuniary penalties and redress for the consumers affected by AGL SA’s conduct.

Background

The ACCC brought the proceedings against AGL SA as part of its work in a priority area for 2014 – Consumer protection in the energy sector with a focus on savings, also referred to as Discounts off what?

Release number: 
MR 310/14

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