Origin Energy slapped with $5 million fine for duping small businesses

Origin Energy has been forced to pay $5 million in fines after a Victorian regulator found it charged illegal exit fees to more than 22,000 small businesses.

The Essential Services Commission issued a record 250 penalty notices to Origin Energy in response to 77,000 gas and electricity small business contracts that included illegal exit fees.

The exit fees added up to a total of $489,774.

About 22,300 customers located across Victoria were charged exit fees between 2016 and September 2020, with some businesses paying up to $7700 to leave contracts.

While Origin Energy said the fees in question were for $22, the Commission said some small businesses were charged multiple times and ended up paying thousands of dollars in prohibited fees. 

Under the Electricity Industry Act 2000 and the Gas Industry Act 2001, electricity and gas retailers are banned from including exit fees in their contracts with small business customers, except in some rare fixed-term retail contracts.

Jon Briskin, executive general manager of retail at Origin Energy, said the company self-reported to the regulator when it discovered it had wrongly charged small businesses exit fees. 

“We value our customers and take all of our compliance obligations seriously, so we are disappointed we did not implement these regulatory changes correctly and we are sorry,” Briskin said in a statement provided to SmartCompany.

Commissioner Sitesh Bhojani said he was concerned about Origin Energy’s compliance systems and culture over the four year period when the exit fees were charged.

“This is the strongest action we have taken against an energy company,” Bhojani said.

“It shows just how seriously we view customers having barriers put in front of them in seeking the best energy deal.”

According to the Essential Services Commission, Origin Energy’s conduct affected small businesses in regional Victoria and metropolitan Melbourne.

“There were non-for-profit and charitable small businesses that paid hundreds and in some instances thousands of dollars in prohibited exit fees,” Bhojani said.

“Evidence shows that Origin Energy knew from the outset of the changes in the law banning exit fees.”

A statement issued by the Essential Services Commission has confirmed Origin Energy paid the $5 million in penalties, however, the company has told the commission fewer than half of the affected customers have so far been reimbursed for the wrongly charged exit fees.