New wrongful disconnection laws for energy retailers in Victoria

I would like to alert the community and remind energy businesses in Victoria about new wrongful disconnection laws that the Essential Services Commission expects to come into effect on 1 March 2022.?

The Victorian Parliament, on behalf of the Victorian community, has passed laws[1] to send a strong message against wrongful disconnections in the energy sector.?

The Victorian Parliament’s four objectives[2] in amending the wrongful disconnection laws are:?

• to recognise the essential nature of the supply of electricity and gas;?
• to consider community expectations that ongoing access to electricity and gas will be available;?
• to consider community expectations that the supply of electricity and gas to homes and small businesses will not be disconnected solely because of a customer’s inability to pay for the electricity or gas supply; and?
• to promote the principle that the supply of electricity and gas to homes and small businesses should only be disconnected as a last resort.?

The Victorian Parliament has chosen to both increase penalties for wrongful disconnections and to criminalise wrongful disconnection conduct.?

This strong message to prevent, deter and stamp out wrongful disconnections must be acted on by energy retailers in Victoria.?

Once the new laws take effect, the commission will still be empowered to try and finalise matters in a timely way by serving one or more penalty notices on an energy retailer if the commission has reason to believe a retailer has contravened relevant wrongful disconnection provisions. However, the penalty amount for each penalty notice, which is fixed by the Victorian energy rules, will be increased from $5,000 to $36,348 per notice.[3]?

In addition, there will be new civil or criminal litigation liabilities:?

• If a court in a civil proceeding finds that an energy retailer has contravened the wrongful disconnection provisions, the retailer may be liable to a maximum civil penalty of $218,000 per contravention.??
• Alternatively, if a court in a criminal prosecution convicts an energy retailer of a wrongful disconnection offence, the retailer may be liable to a maximum criminal fine of over $1 million[4] or imprisonment for 10 years per offence.?
• Individual officers of energy retailers who knowingly authorise or permit wrongful disconnection contraventions or offences will also be at risk of civil penalties or criminal sanctions being imposed on them by the court.?

The commission’s job is to investigate alleged wrongdoing and, depending on the evidence, take appropriate enforcement action.?

We strongly recommend all energy retailers in Victoria review their compliance systems and compliance culture regarding Victoria’s energy rules to ensure that they are up to date and fit for purpose.?

We would prefer energy retailers prevent wrongful disconnections by complying with Victoria’s energy rules.?

However, rest assured that we will certainly pursue allegations of wrongful disconnections in the public interest and without fear or favour.?

Read about our latest enforcement action here.?

[1] Energy Legislation Amendment (Energy Fairness) Act 2021 (Vic) – assented to on 10 August 2021 (“Energy Fairness Act”)

[2] See new section 40SC of the Electricity Industry Act 2000 as inserted by section 9 of the Energy Fairness Act; and new section 48DE of the Gas Industry Act 2001 as inserted by section 23 of the Energy Fairness Act

[3] This can be compared with the Wrongful Disconnection Penalty Notices the commission was previously empowered to serve which were set by the rules at $5,000 per contravention. See section 54T of the Essential Services Commission Act 2001 and new section 40SE of the Electricity Industry Act 2000 as inserted by section 9 of the Energy Fairness Act; and new section 48DG of the Gas Industry Act 2001 as inserted by section 23 of the Energy Fairness Act.

[4] $1,090,440 to be precise [6,000 penalty units x $181.74 per penalty unit (currently)]