A $40 million overcharging bungle by WA’s largest energy retailer was a result of serious governance failures and other businesses may have also fallen foul, according to the state’s economic watchdog.
It was revealed yesterday state-owned Synergy has taken $40 million from customers for non-existent bills since 2009.
According to the company’s CEO Kurt Baker, on many occasions this occurred because Synergy “allowed customers to continue to pay to their closed account, even in the absence of a bill”.
Customers were debited for Synergy accounts that had already been closed. (ABC News: James Carmody)
Almost 175,000 customers were affected, with the overcharging ranging from less than a dollar, to tens of thousands of dollars.
The revelations come amid a review into Synergy after revelations from the Economic Regulation Authority of WA (ERAWA) the utility had overcharged disadvantaged customers $2.29 million over 15 years.
ERAWA chair Steve Edwell said payments were being automatically deducted from Centrelink payments from customers whose Synergy accounts were already closed.
Steve Edwell is chair of Economic Regulation Authority of Western Australia. (ABC News: Cason Ho)
“We focused on the Centrepay cohort of customers because they were disadvantaged — the question on the table was the extent to which this is a broader issue,” Mr Edwell told the ABC.
Mr Edwell said Synergy’s $40 million bungle, affecting mostly residential customers, was the worst case of its kind he was aware of.
Almost 175,000 people were affected by the issue, dating back to 2009. (ABC News:Â Chris Gillette)
“There are around 13,000 accounts which have accrued in excess of $500, and there are 467 accounts which have accrued a credit balance in excess of $5,000,” he said.
‘Very serious lapse’
Mr Baker said on Friday the company had been alerted by customers in the past of automatic payments being made to closed accounts, and those customers were refunded.
Mr Edwell said Synergy should have noticed those instances as red flags indicating there was a broader issue.
“That’s why we have an issue with the governance around all this. We think there’s been a very serious deficiency,” Mr Edwell said.
Synergy customers overcharged $40 million
“To be frank, it’s a very, very serious lapse in Synergy governance.”
The review into Synergy is part of a broader effort by the Economic Regulation Authority to understand the full extent of the issue across the industry.
Mr Edwell has flagged there are other businesses which have also overcharged customers in a similar fashion.
“It doesn’t appear to be an endemic problem across the sector [but] that doesn’t mean to say we won’t be taking some form of action against some other retailers,” he said.
Mr Edwell said he was unable to reveal details about the other businesses, or the full extent of the issue, until the review was complete.
Refunds coming
Synergy said on Friday it would contact all affected customers and issue cash refunds, or credit for future bills, but that process could take several months.
“On behalf of Synergy I’d like to say I’m sincerely sorry for the impact that we’ve had on our customers,” Mr Baker said.
“I’m confident this will not happen again.
Kurt Baker says he’s confident the issue won’t be repeated. (ABC News: Cason Ho)
“We’ve done our own internal reviews, we’ve got the state government’s independent review, we’ll be taking our findings, the state government’s findings, to improve our systems.”
Mr Edwell said ERAWA had the ability to issue fines of “over $100,000” if businesses like Synergy failed to fix the issue.
“The penalty of that size is in nowhere near proportion to the damage that’s done here,” he said.
“The ERA is currently considering as part of this review, what we can say to Synergy, what we can say to government, about appropriate enforcement action.”
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