AGL and subsidiaries, including AGL Retail, Sales, South Australia and Power Direct, were found in August to have breached National Energy Retail Rules more than 16,000 times.
AGL overcharged hundreds of customers who allow regular deductions from their Centrelink payments. (Tracey Nearmy/AAP PHOTOS)
The court found AGL overcharged 483 Centrepay customers, a bill paying service in which people can elect to arrange regular deductions from their Centrelink payment, between January 2017 and October 2021.
The amount overcharged totalled $468,310, the judge found.
She also found AGL failed to notify and refund these customers within the required time frames.
"As customers were improperly deprived of their welfare payments for months or years as a result of the contraventions by AGL, this caused them loss and damage, which is a factor that weighs in favour of a substantial penalty," Justice Downes said in her decision.
The high penalty would be sufficient to deter AGL and others for breaking the rules.
"It is one that goes beyond being a mere 'cost of doing business' and it reflects the nature and extent of AGL's contraventions," she said on Thursday.
"Having regard to AGL's size and financial position, a penalty in this amount is not oppressive."
AGL Energy's market value on the Australian Securities Exchange is $7.3 billion.
AER chair Clare Savage said the "record" penalty served as a warning to all energy companies. (Mick Tsikas/AAP PHOTOS)
Justice Downes also ordered AGL to implement processes to stop the overcharge issue from happening again.
Australian Energy Regulator chair Clare Savage said the record penalty reflected the seriousness of the breaches and served as a warning to all energy companies.
"The actions by AGL negatively impacted hundreds of people over an extended period, many of these may have been experiencing vulnerability," she said.
"The AER will take enforcement action where consumers have been harmed and will continue to monitor compliance with overcharging obligations."
AGL is disappointed the issue occurred and, while it respected the court's decision, it's weighing up whether or not to appeal.
"As the penalty is significantly higher than expected, AGL will closely review the court's judgment and consider whether to appeal," a spokesperson said.
Since the issue was identified in mid-2020, AGL has undertaken "significant process enhancements" to improve its handling of Centrepay payments, it said.
Payment of the penalty will not impact the company's underlying earnings for the 2025 financial year, AGL told the stock exchange.
Earnings before interest, tax, deprication and amortisation are projected to be between $1.8 billion and $2.1 billion.
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