ASX company busted allegedly misleading customers

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

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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.

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