ASX company busted allegedly misleading customers

Origin Energy told households its electricity rates were going up because of a government decision. The ACCC disagreed.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Energy provider Origin Energy Ltd (ASX: ORG) has paid a $126,000 penalty after the consumer watchdog accused it of misleading customers.

The Australian Competition and Consumer Commission (ACCC) revealed Tuesday the fine was paid in response to an infringement notice for a letter Origin sent to Victorian clients.

The letter stated that electricity prices were rising and the reason for it was the Victorian Essential Services Commission's increase to the Victorian Default Offer.

But in reality, the default offer has no impact on what energy retailers charge most consumers, who are on market offers.

"Electricity retailers must be clear when making price increase announcements so consumers aren't given the misleading impression that government changes that don't apply to them are the reason for the increase," said ACCC chair Rod Sims.

"The decision of whether or not to increase the electricity prices of customers on market offers was entirely in Origin's hands, and they chose to increase prices for the majority of these customers."

The vast majority of electricity customers in Victoria, NSW, South Australia and south-east Queensland are on market offers. These are the familiar plans put out by retailers with customised discounts on set contracts.

The default offer only applies to the very small minority of customers who choose not to enter the retail market.

The Victorian Essential Services Commission decided to increase the default offer by 7.8% in November last year. The power company then sent the allegedly misleading letter in December 2019.

Origin acknowledges the mistake

Origin retail executive general manager Jon Briskin told The Motley Fool that, for simplification, rates for all Victorian customers were raised by the same 7.8%.

"Within two days of issuing the first batch of letters to customers in early December 2019, we realised we were not clear enough about the reason for our price change and took immediate action to address this, which included adding a message to all residential customer bills from January to May 2020," he said.

"We aim to achieve the highest standards of customer service across Origin… so it is disappointing we didn't meet these standards on this occasion."

Briskin added that Origin acknowledged the mistake and accepted the ACCC's findings.

The payment of the financial penalty is not an admission of a legal breach.

Origin's share price was down 1.35% in early trade Tuesday, selling for $4.74.

The Motley Fool reported Monday that the stock price had fallen more than 40% this year due to a COVID-induced export earnings crash.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why 29Metals, Navigator Global, Praemium, and Xero shares are sinking today

These shares are having a tough time on hump day. But why?

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Share Gainers

Why Evolution Mining, Lynas Rare Earths, Paladin Energy, and Sovereign Metals shares are racing higher today

These shares are having a good session on hump day. But why?

Read more »

A woman wearing headphones looks delighted and animated on news she's receiving from her mobile phone that she is holding close to her face.
Opinions

Forget Telstra shares, I'd buy this ASX telco stock instead

This telco is set to soar higher.

Read more »

A colourfully dressed young skydiver wearing heavy gold gloves smiles and gives a thumbs up as he falls through the sky.
Broker Notes

Bell Potter says this ASX silver stock has 'a sky full of upside'

This exciting stock could be a high risk, high reward pick according to the broker.

Read more »

Two miners examine things they have taken out the ground.
Share Market News

Emerald Resources: Memot gold resource climbs 27% to 1.7Moz

Emerald Resources lifts Memot Gold Project resource by 27% to 1.7 million ounces with strong Indicated growth and plans for…

Read more »

Miner puts thumbs up in front of gold mine quarry.
Share Market News

Westgold Resources doubles cash build and sets new production record in Q2 FY26

Westgold Resources posts record gold production and a doubling of cash build for the December 2025 quarter.

Read more »

A man in his 30s with a clipped beard sits at his laptop on a desk with one finger to the side of his face and his chin resting on his thumb as he looks concerned while staring at his computer screen.
Share Market News

Beach Energy shares: quarterly revenue drops, Waitsia ramps up

Beach Energy's quarterly revenue fell 17%.

Read more »

A humanoid robot is pictured looking at a share price chart
Technology Shares

This is a great place to invest $1,000 into ASX shares right now

Tristan Harrison is excited about the potential of this stock.

Read more »