Energy giant AGL is pushing back against a massive $25 million fine imposed for wrongly withdrawing welfare payments from hundreds of vulnerable Australians. The company argues that the penalty is “manifestly excessive” and that the federal court judge should not have used the fine as a means to “provoke attention” from AGL’s board and executive leadership.
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AGL’s Centrepay Controversy: A Four-Year Wrongdoing
The federal court handed down the fine late last year after finding that AGL had improperly withdrawn an average of $1,000 from the welfare payments of 483 former customers between 2016 and 2020. These customers had already settled their final electricity bills and owed nothing, yet AGL continued to withdraw funds through Centrepay—the government-run system designed to help welfare recipients pay for essential services like utilities and rent.
A Guardian Australia investigation revealed that major electricity retailers, including AGL, had continued to receive money from departed customers long after they had left. AGL had been explicitly warned about this practice in 2013 and initially took corrective measures—only to abandon those measures in 2016, allowing the wrongful withdrawals to persist for four years.
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Federal Court Slams AGL with $25M Fine
AGL’s conduct was deemed a violation of national energy retail rules, with the court finding the company had breached regulations 16,000 times. In response, the court imposed the staggering $25 million penalty, which AGL initially accepted, issuing a public apology and expressing “disappointment” over the issue.
However, the energy giant has now reversed course and filed an appeal against both the ruling and the fine.
AGL’s Appeal: “Fine Was Excessive and Unfair”
AGL contends that the federal court’s ruling focused too heavily on its “size and financial position” while neglecting other important factors. The company argues:
- The fine is disproportionate to the nature of the breach.
- It was not financially motivated or driven by greed.
- The court was wrong to suggest that the penalty was necessary to “provoke attention” and drive cultural change within AGL.
- The judge failed to acknowledge the steps AGL had taken to return funds to affected customers.
AGL has declined to comment further, stating: “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.”
Consumer Advocacy Groups Demand AGL Withdraw Appeal
Consumer rights advocates have condemned AGL’s appeal, urging the company to “do the right thing.” Dr. Domenique Meyrick, co-chief executive officer of Financial Counselling Australia, expressed disappointment in AGL’s decision, stating:
“AGL should be focusing on repaying affected customers and making amends, not trying to overturn a penalty designed to hold them accountable.”
AGL’s Initial Response: Blaming Customers?
The court previously heard that when AGL detected the problem in 2020, it did not immediately offer compensation or issue an apology. Instead, affected welfare recipients received a letter that appeared to shift the blame onto them, stating:
“We noticed, after you left us, that you failed to update your Centrepay arrangement.”
This approach was widely criticized, with many arguing it demonstrated a lack of accountability and concern for vulnerable customers.
What’s Next? The Battle Continues in Federal Court
As AGL continues its legal fight, the outcome of this appeal could have significant implications for corporate accountability within Australia’s energy sector. The federal court will now review AGL’s arguments, determining whether the $25 million fine stands or is reduced.
For now, the battle between corporate power and consumer protection rages on, with many watching closely to see whether justice will prevail for those affected by AGL’s actions.
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