The AGL Energy Ltd (ASX: AGL) share price is down close to 3% after a penalty was applied to the ASX energy share by the Federal Court of Australia. AGL is down more than the current 2% drop for the S&P/ASX 200 Index (ASX: XJO).
According to The Guardian, the Federal Court had already ruled that AGL had breached the energy rules 14,000 times by using Centrepay to take deductions from hundreds of welfare recipients who had left as customers. The debit system was meant to help people on welfare pay for essentials such as utilities.
Today, the company announced to the ASX how expensive that mistake was.
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Federal Court orders a $25 million penalty
The Australian Federal Court has ordered that four AGL subsidiaries pay a penalty totalling $25 million following legal proceedings brought by the Australian Energy Regulator (AER).
The Court determined that AGL had breached the national energy retail rules by failing to notify and refund approximately 500 customers within the required timeframe regarding the Centrepay payments.
AGL said it was "disappointed" that this issue occurred and apologised to the affected customers. The ASX energy share noted that the issue was identified by AGL in mid-2020, and since then, it has gone through "significant process enhancements" to improve its handling of Centrepay payments.
The company said it respects the court's decision, but as the penalty was "significantly higher" than expected, AGL will "closely review the Court's judgement and consider whether to appeal".
The Guardian reported that the Court also ordered AGL to implement a compliance and training program to ensure that it was automatically alerted when money was paid to the company through the Centrepay system from former customers.
AGL must ensure that staff do not breach energy retail rules when dealing with inactive customers. The training program must be regularly and independently reviewed.
AGL was also ordered to appoint a compliance officer to ensure the company complies with the court's orders.
Could AGL shares be impacted by an earnings guidance change?
AGL said payment of the penalty will not impact AGL's FY25 guidance, which remains unchanged.
The underlying earnings before interest, tax, depreciation and amortisation (EBITDA), AKA operating profit, for the 2025 financial year is guided to be between $1.87 billion and $2.17 billion.
FY25 net profit after tax (NPAT) is guided to be in the range of $530 million to $730 million.
AGL Energy share price snapshot
Despite today's decline, the AGL share price is up 8.4% in 2024 to date, compared to the ASX 200's rise of 6.7% this year.
