Australian power giant AGL has been hit with a record $25 million fine for overcharging welfare recipients through the Centrepay payment system. The Federal Court ruling, announced Thursday, highlights serious breaches of trust involving some of Australia’s most vulnerable citizens.
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Overcharging Scandal: What Happened?
The court found AGL and its subsidiaries—including AGL Retail, Sales South Australia, and Power Direct—guilty of breaching National Energy Retail Rules over 16,000 times between 2016 and 2021.
AGL improperly charged 483 Centrepay users a total of $468,310 after they had ceased to be customers, failing to notify them or issue timely refunds. Centrepay, a government-owned service, allows welfare recipients to automate payments to service providers directly from their benefits.
This breach disproportionately impacted vulnerable groups, including Aboriginal and Torres Strait Islander peoples, older Australians, individuals with disabilities, and those living in remote areas.
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The Fallout: A Record Fine
The $25 million fine is the largest ever imposed by the Australian Energy Regulator (AER), surpassing a $17 million penalty against Origin Energy in 2022.
Justice Kylie Downes described the overcharges as a significant harm to customers who were deprived of essential welfare payments for months or even years. She emphasized that the substantial penalty aims to deter similar misconduct.
“The actions by AGL negatively impacted hundreds of people over an extended period. Many of these may have been experiencing vulnerability,” AER Chair Clare Savage stated.
AGL Responds, May Appeal
In a statement to the ASX, AGL apologized for the breaches but indicated it may appeal the fine.
- “As the penalty is significantly higher than expected, AGL will closely review the Court’s judgment and consider whether to appeal,” the company said.
- Despite the fine, AGL expects no impact on its financial outlook, forecasting a $730 million net profit for the 2025 financial year.
The Federal Court also ordered AGL to implement a three-year compliance system to prevent further breaches.
Centrepay Under the Reform
The AGL case has shone a spotlight on systemic issues within the Centrepay system. The payment service, designed to help welfare recipients manage essential bills, has faced repeated accusations of exploitation:
- In 2019, consumer advocates filed a complaint alleging retailers used Centrepay for predatory high-cost loans.
- In 2023, a disability pensioner was charged $6,760 for a phone by Rent4Keeps, with payments deducted through Centrepay.
In response to mounting scrutiny, Services Australia announced it is pausing new business applications to Centrepay while reforms are underway. Planned updates include improved safeguards, customer protections, and stricter oversight of high-risk products and practices.
Broader Implications for Energy Providers
AGL’s penalty may not be the end of the story. Services Australia has referred three additional energy retailers to the AER for similar misconduct. These cases underscore the urgent need for reform in the way businesses interact with vulnerable customers through government-linked payment systems.
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A Wake-Up Call for Corporate Responsibility
The AGL scandal serves as a stark reminder of the importance of corporate responsibility, particularly when dealing with financially vulnerable populations. While AGL claims to have improved its handling of Centrepay payments, the case highlights the need for stricter regulations and greater accountability across the energy and retail sectors.
With reforms to Centrepay on the horizon, advocates hope the changes will prevent further exploitation and protect those who rely on the system to manage their financial obligations.
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