One of Australia’s largest electricity and gas providers, EnergyAustralia, has been taken to court by the Australian Competition and Consumer Commission (ACCC) for allegedly failing to provide simple price information to customers so they can compare providers.
EnergyAustralia is accused of misleading customers by “failing to state the lowest possible price” when sending price change notifications to customers. The ACCC maintains EnergyAustralia has breached the Electricity Retail Code (ERC) and Australian consumer law.
The ‘lowest possible price’ is a mandatory estimate of the amount a customer would be charged in a year, based on model usage and assuming the conditions attached to any discounts will be met.
The ERC requires electricity retailers to communicate price information in a simple and standardised manner to make it easier for customers to compare plans across providers.
ACCC chair Gina Cass-Gottlieb says her organisation began the Federal Court proceedings because it felt EnergyAustralia was making it harder for consumers to compare energy prices.
“With electricity prices increasing, and many Australians looking for a better deal, it’s crucial that the information people receive from their energy company is correct and can be relied on,” she said.
“We have commenced this court action because we allege that EnergyAustralia’s conduct made it harder for people to accurately compare their electricity plan with offers from other retailers.”
What is alleged?
Specifically, the ACCC is alleging EnergyAustralia published 27 electricity price offers on its website, between July and September 2022. The ACCC says EnergyAustralia failed to state lowest price in those communications and also failed to state the percentage difference to the ‘reference price’, which is set by the government.
“Correspondence from energy companies often contains complex information that is hard for consumers to decipher, which is precisely the problem that the ERC was introduced to deal with,” Ms Cass-Gottlieb said.
“Households cannot do genuine like-for-like comparisons between different electricity plans unless every energy company complies with the code requirements on price offers.”
The ACCC is seeking penalties and declarations, costs, and other orders from EnergyAustralia. It is the first time the ACCC has commenced litigation in relation to the ERC since it was introduced in 2019, but it has issued several warnings.
Why is it important?
The ERC was implemented to help consumers compare ‘apples with apples’ when comparing energy plans.
The code sets rules on how prices and discounts must be advertised, published and offered, and also sets a limit on how much standing offer (or default offer) customers are charged. This standing offer limit is used as a common reference price when comparing other offers.
By obscuring this information, customers are potentially missing out on the best deal, while the energy provider gets paid a higher price for the same service.
And it’s not a small problem, with research from Victoria’s Essential Services Commission showing one in two energy consumers there are not on their provider’s best deal.
The research also found that 28 per cent of Victorian residential households could have saved $100 or more last year by moving to their retailer’s best offer. Around six per cent could have saved between $250 and $400 per year and another six per cent could have saved over $400 per year.
“Victorian households could have saved an estimated $191 million on electricity bills and $89 million on gas bills last financial year if they had been on their retailer’s best offer,” the report states.
In response, EnergyAustralia chief customer officer Mark Brownfield said his company had cooperated with the ACCC and promised to do better in future.
“We understand the clarity of our customer communication is particularly important at a time when cost-of-living pressures are a key concern for Australian households.
“On behalf of EnergyAustralia, I apologise to our customers.
“We have been open with the ACCC on the issues they identified and the importance we attach to clear, transparent communications to our customers.
“We want to confirm the fundamental importance EnergyAustralia attaches to regulatory compliance in every aspect of our operations. We have already prioritised the completion of our program of improvements to customer communications to ensure our customers have the information they need to make informed decisions.”
Are you a customer of EnergyAustralia? Do you know if you’re getting the best deal on your power? Let us know in the comments section below.