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 ASX Share Market News

A girl sits on her bed in her room while using laptop and listening to headphones.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another rough ride for investors this Thursday.

Read more »

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.
ASX Share Market News

5 amazing ASX ETFs for Australian investors in August

Looking for ETF ideas? Here are five to consider.

Read more »

Smiling woman with her head and arm on a desk holding $100 notes, symbolising dividends.
Broker Notes

For a yield of more than 7% and capital gains check out this ASX property trust: Broker

Could this company deliver the best of both worlds?

Read more »

An old-fashioned news boy stands on a stool and yells through a microphone in an open field.
ASX Share Market News

Why is everyone talking about Treasury Wine, ANZ and Telstra shares on Thursday?

Telstra, Treasury Wine, and ANZ shares are turning heads today. But why?

Read more »

An aircraft maintenance technician stands atop a platform inspecting the jets of an aircraft within a hangar.
Broker Notes

This ASX critical minerals producer could more than triple in value: Broker

This hi-tech company is growing its revenues fast.

Read more »

Stressed shopper holding shopping bags.
Broker Notes

Premier Investments shares will go how high? 2 brokers have their say

Are these shares looking like a bargain?

Read more »

A boy is about to rocket from a copper-coloured field of hay into the sky.
ASX Share Market News

3 ASX 200 shares tipped to grow 45% to 75% over the next 12 months

These ASX 200 shares are trading for cheap right now.

Read more »

Stressed man in an an office with his eyes closed and phone in his hand, with investing graphs open on two iMacs.
Broker Notes

Why Bell Potter just downgraded this popular ASX 200 stock

The broker is feeling cautious about this fallen giant.

Read more »