Electricity giant Origin has been fined $12 million for consumer law breaches related to the supply of energy to households which have life-support equipment.
In reasons published on Monday, the Federal Court declared that between 1 February 2019 and 12 September 2022, Origin Energy Retail, Origin Energy LPG and Origin Energy Electricity (collectively Origin) contravened rules 124 and 125 of the National Energy Retail Rules (NER Rules) through:
- a failure to register 127 customers as requiring life support equipment at their premises;
- a failure to notify relevant distributors of the life support requirements of 17 customers;
- the deregistration of the premises of 4769 customers as requiring life support equipment other than in the circumstances permitted by the NER Rules; and
- of those customers whose premises were deregistered, the de-energising of the premises of 58 customers requiring life support equipment for non-payment after improperly deregistering their premises.
Origin also breached Section 273 of the National Energy Retail Law by failing to establish policies, systems and procedures to enable it to properly monitor its compliance with the rules, law and regulations.
Federal Court Justice O’Bryan fined Electricity $10,750,000; Retail $260,000; and LPG $990,000.
“The Life Support Rules serve the essential purpose of ensuring that individuals who require life support equipment are not exposed to a risk of disconnection of their energy supply, have access to the information necessary to prepare for unplanned outages, and have additional notice of planned outages,” he said.
“In light of the important protections which the Life Support Rules provide to vulnerable individuals, a failure by a retailer to comply with one or more of the rules may result in harm or, in the worst of cases, death.”
At June 2023, Origin had almost 42,000 customers around Australia who required life support equipment, of more than 2,350,000 customers.
The company self-reported the breaches in August 2020 and April 2021, with a subsequent independent audit finding various problems with Origin’s operations.
“The parties submitted, and I accept, that there is no evidence that Origin’s contraventions were dishonest or deliberate, or that any person within Origin’s senior management was aware of any of the breaches of the Life Support Rules the subject of this proceeding prior to them being identified and reported to the AER (Australian Energy Regulator),” Justice O’Bryan said.
“Rather, the admitted contraventions occurred as a result of certain system, process or agent errors, or failures in certain detective and preventative controls.
“These system and agent errors occurred notwithstanding that, at the time the admitted contraventions occurred, Origin had systems, controls and processes in place that were intended to achieve compliance with the Life Support Rules and to detect any instances of non-compliance in a timely manner.
“Nonetheless, the parties submitted, and I accept, that the admitted breaches are serious, in terms of number and duration.
“If life support protections are erroneously withheld from a vulnerable individual who truly needs them, the consequences can include severe damage to health or even death.
“While the majority of the deregistration contraventions, and some of the failure to register contraventions, relate to acts or omissions on the part of Origin’s third-party agents, rather than Origin directly, the responsibility still remained with Origin to monitor the conduct of entities and individuals engaged to act on Origin’s behalf.”
Justice O’Bryan said there was no evidence that any customer was actually harmed as a result of the breaches, but the contraventions affected vulnerable customers and involved the risk of serious harm.
In determining the penalty, he considered steps taken by Origin to remedy the breaches and ensure compliance; its full co-operation with the AER; and its enforceable undertaking which included a payment of $1 million in community-based redress.
He also considered an undertaking given by Origin not to seek indemnities from its agents whose conduct contributed to the contraventions.
He said the effect of immunising the agents from liability for their defective performance of their contractual obligations “might be regarded as inimical to the public interest”.
“I accept the parties’ submissions, however, that the failures of Origin’s service providers are not a defence to Origin’s contraventions, and it remained Origin’s statutory responsibility to monitor and ensure the compliance of such service providers with Origin’s systems,” he said.
“The objective of imposing the penalties on Origin is to ensure that Origin complies with its statutory obligations in the future, including by ensuring that its service providers properly perform their contractual obligations.
“Although the undertaking was sought by the AER, it was nevertheless voluntarily proffered by Origin to resolve the proceeding and ensures that the ‘sting’ or burden of the penalties is preserved, by prohibiting a pass-through of liability to third parties.”
Origin was also ordered to pay $175,000 towards the AER’s court costs.
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