Origin Energy slapped with $5m fine for exit fees

Origin's FY22 figures reflect almost unparalleled market conditions, CEO Frank Calabria says.

Origin's FY22 figures reflect almost unparalleled market conditions, CEO Frank Calabria says. Photo: 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 non-profits, while one council was charged multiple times.

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

Commissioner Sitesh Bhojani said it was the strongest action yet against an energy company in Victoria.

“Origin Energy knew at all times about the changes in the law banning exit fees and they even reviewed 19 different contract templates but didn’t remove the exit fees,” Mr Bhojani said in a statement.

“Given the size and standing of Origin Energy, the commission is concerned about the company’s compliance culture over that four-and-a-half-year period.”

Mr Bhojani said retailers charging prohibited fees could have a substantial effect on customers, particularly on businesses.

“Some of the affected businesses were charities and not-for-profits who can’t afford extra fees,” he said.

“Some were charged multiple times, paying thousands of dollars in prohibited fees.”

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

Commissioner Bhojani said Origin failed to respond adequately to complaints.

Origin Energy has advised the commission it is trying to contact former customers. Fewer than half have so far been reimbursed for the wrongly charged exit fees.

The commission is urging former small business customers of Origin to check with the company to see if they are owed a refund.

Origin has been contacted for comment.

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