Energy company AGL fined $25m over welfare rort after Federal Court case

Australian energy company AGL has been slapped with a $25m fine over charges to disconnected welfare recipients and failure to issue timely refunds.

The fine comes after energy regulator AER took the power company to the Federal Court in relation to the issue through entity Centrepay, the ABC has reported.

The government-controlled facility allows welfare recipients to set up automatic payments to services including financial providers and telecommunication companies.

It has been reported the court found AGL continued to deduct payments from Centrepay accounts that were disconnected and failed to inform customers in time or provide timely refunds.

The court found AGL overcharged 483 Centrepay customers between December 2016 to November 2021 to an average of $1,000 each, comprising 16,000 breaches of the law.

In a statement, an AGL spokesperson said they are “disappointed that this issue occurred and apologises to the affected customers”.

The energy giant’s conduct was uncovered by regulators in 2020, with AGL issuing an apology to those affected that began “we noticed, after you left us, you failed to update your Centrepay arrangement”.

The court heard on Wednesday AGL was first issued a formal warning about the issue in 2013.

The issue appeared to be remedied until 2016, when the issue recurred and money again was illegally removed from welfare recipients accounts.

“What we say AGL management will remember is a very substantial penalty,” James Arnott SC, counsel for the energy regulator, said last week.

AGL noted that payment of the penalty will not impact their financial year guidance, including an underlying net profit between $530m and $730m.The energy company said that while they respect the decision of the court, “the penalty is significantly higher than expected” and they are currently considering appeal.