Energy retailer Blue NRG has agreed to compensate several small business clients after it admitted it made false or misleading representations when telling more than 500 customers on fixed-rate contracts that it had a legal right to raise electricity prices, when it did not.
Following intervention by the ACCC, Blue NRG did not proceed with the foreshadowed increase effectively doubling the price of electricity for 543 business customers, announced in December 2022 at the time of significant global energy price rises. Many of these customers were small businesses.
Blue NRG has provided a court-enforceable undertaking to the ACCC that it will not increase electricity rates for the term of the fixed-rate contracts or make any representations that it has a legal right or power to do so.
Some affected business customers had already signed up for new, more expensive contracts with other providers after receiving Blue NRG’s initial letter advising that it was increasing prices during the life of their fixed-term contract.
Additionally, the court-enforceable undertaking requires Blue NRG to offer compensation to impacted customers who changed energy providers because of the proposed price increase. These customers will be eligible to receive compensation for the difference in price between their new contract and the original contract with Blue NRG.
“Small businesses, like consumers, are facing cost of living pressures, including higher energy prices. We will not hesitate to take enforcement action where energy retailers make misleading or deceptive statements about increasing prices where they do not have a proper legal basis to do so,” ACCC Deputy Chair Mick Keogh said.
“The ACCC is closely monitoring energy retailers to ensure they honour the terms of their customer agreements.”
The ACCC estimates that the proposed price increase would have cost the impacted businesses a combined total of approximately $5 million.
Blue NRG is an energy retailer which provides electricity to approximately 13,380 businesses in Victoria, New South Wales, South Australia and Queensland.
In November 2022, 543 business customers across NSW and QLD were told by Blue NRG that their electricity bills would approximately double despite being on fixed rate contracts. Many of these customers were small businesses.
Impacted customers received a letter from Blue NRG which explained the fixed rates could change because of ‘force majeure’. A force majeure clause is a contract clause which relieves a party from performance of their obligations where that performance is impacted by events beyond their control. However, the relevant Blue NRG contracts either did not contain a force majeure clause, or contained a force majeure clause which was not applicable in the circumstances.
Almost a month later, a second letter was sent to customers setting out the price increases that would begin from 2023.
By sending these letters to customers, Blue NRG represented to customers that it had a legal right to increase electricity prices under the fixed-rate contracts when in fact it had no such legal right.
The ACCC was concerned that the representations made by Blue NRG were false or misleading and may have amounted to misleading and deceptive conduct in breach of the Australian Consumer Law.
Following an investigation by the ACCC, Blue NRG agreed to an interim undertaking to not proceed with the price increase, withdraw any invoices sent to customers and provide a credit or refund to customers that had already paid invoices at the higher price.
Blue NRG cooperated with the ACCC’s investigation and during the negotiation of the s87B undertaking.
In the court-enforceable undertaking, Blue NRG has agreed to offer compensation to impacted customers that changed energy providers because of the proposed price increase.
Customers will be eligible to receive compensation for the difference in price between their new contract and the original contract with Blue NRG.
An independent auditor will be appointed to resolve any disputes about compensation arising between Blue NRG and impacted former customers.
All other impacted customers that have remained with Blue NRG will continue to receive the benefit of the fixed rates as set out in their contracts.
Blue NRG has also committed not to represent to any other fixed rate customers that it has the legal right or power to increase electricity prices where this is not the case. Additionally, it will establish and maintain a three-year compliance program, conduct a compliance review and provide training to senior management.
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