Origin Energy pays $5m fine for exit fees

Liz Hobday and Kaitlyn OfferAAP
Victoria's Essential Services Commission has hit Origin Energy with $5 million in penalties.
Camera IconVictoria's Essential Services Commission has hit Origin Energy with $5 million in penalties. Credit: AAP

Origin Energy has been hit with $5 million in penalties for charging prohibited exit fees to more than 20,000 gas and electricity small business customers.

Victoria's Essential Services Commission issued 250 penalty notices to Origin Energy after it found more than 77,000 gas and electricity small business contracts wrongly included exit fees between 2016 and 2020.

As a result, exit fees adding up to $489,774 were charged to 22,371 customers.

Among those slapped with the fees were places of worship, charities and not-for-profits, with one former customer charged a total of $7700.

Another customer was a community housing organisation running 130 sites, with different contracts for each site.

Origin received complaints about the fees in 2018, but did not stop charging them until 2020, the commission says.

Commissioner Sitesh Bhojani says it is the strongest action against an energy company in Victoria to date.

"The fact that Origin Energy at all times knew of the changes in the law banning exit fees in these types of contracts and the fact that Origin Energy reviewed its 19 different contract templates, many times over the four year period, so there's plenty of opportunity, but still didn't remove the prohibited exit fee clauses," Mr Bhojani told reporters.

Origin has apologised for the breaches and says it takes compliance obligations seriously.

"When we discovered this issue, we self-reported to the regulator, apologised, credited the accounts of current Victorian small business customers who were charged the $22 fee in error, and offered refunds to former customers," Origin's retail executive general manager Jon Briskin said in a statement.

But Mr Bhojani says Origin has reimbursed less than half of its former customers and more than 10,000 businesses are still owed refunds.

He's urging them to contact Origin to see if they are entitled to get some money back.

Alexi Boyd from the Council of Small Business Organisations Australia told AAP the exit fees might seem relatively small, but they deter competition.

"Small businesses are time poor at the best of times, it's not appropriate to make it more difficult to switch energy companies... it's quite disappointing to see this kind of behaviour," she said.

The case came to light in September 2020 after Origin Energy reported the alleged breaches of Victoria's electricity and gas industry acts to the commission.

In Victoria, exit fees can only be included on fixed-term retail contracts with fixed tariffs, charges and fees, which was not the case with the small business contracts.

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