AGL fined $3 million over energy efficiency failure

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Australia’s biggest power producer AGL Energy has been fined nearly $3 million after failing to surrender enough certificates to offset its liability under the Victorian Energy Efficiency Target scheme.

The Essential Services Commission confirmed on Monday that AGL had paid a shortfall penalty of $2,991,621 after failing to surrender 64,033 Victorian energy efficiency certificates, which is between five and ten percent of its total 2017 liability.

Under the Victorian Energy Efficiency Target scheme, energy retailers must surrender certificates in proportion to the volume of electricity and gas they sell to Victorian customers. Each certificate represents one tonne of carbon dioxide equivalent.

For each certificate a retailer fails to surrender, the commission imposes a shortfall penalty calculated using a legislated formula. The penalty rate in 2017 was $46.72 per certificate.

“AGL fully understands its responsibilities but failed to surrender the correct number of certificates,” said Commission chairman Ron Ben-David, adding that legislation is very clear about retailers’ obligations and the consequences of failing to meet those obligations.

This is the third time that the Commission intervened since the inception of the scheme in 2009. Two previous notices included payments of around $38,000 (Momentum Energy in 2010) and $12,000 (AGL in 2014).

“It’s disappointing that a company with an AGL experience would fail to fully comply with its obligations,” said Ben-David, noting that all other electricity and gas retailers operating in Victoria fully met their obligations to hand over certificates for the 2017 year of compliance.

AGL’s executive for wholesale markets, Richard Wrightson, apologized and called the shortfall an oversight.

“AGL has created the required number of energy efficiency certificates for the period, but did not give them up due to accidental omission,” Wrightson said.

The fine comes only a week after the Essential Services Commission threatened to revoke the AGL license to sell electricity in Victoria, if the retailer of energy can not supply accurate and reliable data to the regulator.

The state’s largest retailer, supplying almost a quarter of all electricity and gas customers in Victoria, told the commission that it was unable to provide data on the number of disconnected customers, how many customers were falling behind the bills, how many had their bills estimated, and how many of its customers receive a solar feed-in tariff.

“It is extraordinary to think that AGL, the largest retailer in the state, can not even tell us how many customers it has at the moment,” Ben-David said, stressing that the community has a right to know what’s happening in the energy market.

The energy regulator has given AGL until the end of October to provide the correct data, otherwise, it will begin the process of reviewing the license of the retailer’s license to operate in the state.

While still on a lookout for a new CEO, following the abrupt departure of its chief executive Andy Vesey, the company announced earlier this month its intention to close its residential solar installation business, a decision which has brought with it a $47 million loss in goodwill write-down, system investments and inventory, and closure costs.