Energy giant AGL is disputing a “manifestly excessive” $25m fine for using the Centrepay debit system to wrongly take welfare money from hundreds of vulnerable Australians. It argues that a judge should not have used the massive financial penalty to try to “provoke some attention” from the company’s board and executive leadership.
Late last year, the federal court imposed the hefty fine and excoriated AGL for wrongly taking money from 483 welfare recipients via Centrepay, the scandal-plagued, government-run system that allows automatic diversion of social security payments to essential services, like electricity bills and rent.
A Guardian Australia investigation last year revealed deep flaws with the system, including that some of Australia’s biggest electricity retailers had used Centrepay to continue receiving welfare money from the pockets of departed customers long after they left.
In AGL’s case, the company used Centrepay to receive and retain an average of about $1,000 from the welfare payments of 483 former customers between early 2016 and late 2020. The customers had paid their final bills and owed AGL nothing.
The failure occurred despite AGL previously being warned about using Centrepay to receive money from former customers.
The 2013 warning prompted AGL to fix its systems, only to then inexplicably abandon the fix in 2016, allowing the practice to resume and continue undetected for four years.
The federal court found AGL’s conduct breached national energy retail rules 16,000 times and imposed the $25m fine.
AGL then publicly apologised to affected customers and said it was “disappointed that this issue occurred”.
Earlier this month, however, AGL filed an appeal against the decision, disputing its liability and the severity of the fine.
Court documents obtained by Guardian Australia show AGL has argued the $25m fine was “manifestly excessive”.
The appeal will argue the judge was wrong to find that the penalty was required to “provoke some attention from those on AGL’s board and executive leadership team to focus more closely on these issues” and “seek to effect necessary cultural change within AGL”.
The judge, the appeal argued, was also wrong to only consider AGL’s “size and financial position” when deciding whether a $25m fine would be oppressive.
It argued the judge should have had regard to the fact that AGL was not “motivated by financial gain or potential for financial gain” and was wrong to conclude the company had not done all it could to return the money to affected customers.
AGL declined to comment on the appeal, saying only:
“AGL has closely reviewed the Court’s judgment and decided to appeal [against] the judgment to the Full Federal Court. As the matter is before the Court, we will not be making any comments at this time.”
The Australian Energy Regulator, which brought the case, also declined to comment.
Financial Counselling Australia co chief executive officer Dr Domenique Meyrick said AGL should “do the right thing” by the affected customers and withdraw its appeal.
The court previously heard that AGL, when it finally detected the problem in 2020, did not apologise to customers or offer to compensate them, something one senior executive conceded was wrong.
Instead, it sent a letter to welfare recipients that appeared to blame them for the mistake.
“We noticed, after you left us, you failed to update your Centrepay arrangement,” the letter began.
