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Alinta’s mea culpa won’t end scrutiny after shabby behaviour

The apology, which included wiping the debt of the affected customers, was published soon after the energy regulator, Essential Services Commission (ESC), slugged Alinta with a record fine of $1.1 million after listening to a number of voice recordings between Alinta staff and customers that were in breach of the Energy Retail Code in Victoria.

ESC chair Kate Symons said some of the voice recordings showed customers were clearly upset and distressed. She said one customer was heard saying they had reached the end of their tether and couldn’t see a way out. “These people were reaching out and wanting help but weren’t getting it,” Symons said.

Alinta breached the rules by telling customers they needed to speak to a financial counsellor before they would provide hardship arrangements, which is not true. Some were given a window of 13 days or faced being disconnected.

These people were reaching out and wanting help but weren’t getting it.

Energy regulator

Since Alinta changed ownership in April 2017, after Chinese-owned Chow Tai Fook was given approval by the Foreign Investment Review Board (FIRB), subject to certain conditions, it has been embroiled in controversy.

Some was exposed in a joint The Age, SMH and ABC 7.30 investigation, which revealed deficiencies in Alinta’s protection of the personal information of up to 1.1 million customers and concerns that sales tactics had become more aggressive under the new owners.

One customer, Jenna McDonald, a financially strapped carer battling her own medical issues, told the investigation Alinta shamed and embarrassed her then threatened to disconnect her after she missed a payment on her plan.

Alinta Energy pursued 80-year-old David White (right), and his family (left) for bankruptcy while bushfires threatened their dairy farm in King Valley in Victoria's High Country. Picture: Ron Ekkel

Alinta Energy pursued 80-year-old David White (right), and his family (left) for bankruptcy while bushfires threatened their dairy farm in King Valley in Victoria’s High Country. Picture: Ron EkkelCredit:

Another customer, dairy farmers the White family, received a bankruptcy notice in late November 2019 after missing a $2000 payment on an electricity bill. “There was no letter saying, you know, your account will be disconnected. It went from nothing to bankruptcy right before Christmas,” Carolyn White told the media investigation at the time.

On January 31, 2020 the Federal Circuit Court dismissed Alinta’s petition and ordered the energy firm to pay the Whites’ costs of $6824.80.

Other issues with customers included switching them to new energy contracts without their consent, which cost the company a $280,000 fine from the ESC last year. Some involved door to door agents using fake accents to impersonate customers in phone calls.

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More recently, in November last year, Alinta was slugged with a $200,000 fine by the Australian Energy Regulator (AER) after breaching requirements around the registration of customers on life support.

“Alinta Energy was issued $200,000 of infringement notices after admitting that on more than 1500 occasions it breached the requirements around the registration of life support customers. This placed these customers at risk of having their power disconnected. The AER also accepted a court-enforceable undertaking from Alinta Energy,” AER chair Clare Savage said at the time.

“While no customers were disconnected – vulnerable customers did not receive this important protection which could have dangerous and even fatal consequences.”

Indeed, Consumer Action Law Centre head Gerard Brody says energy payments are one of the top two areas where customers require help, second only to credit card debt.

“Energy retailers are not always giving consumer protections that they should,” he says.

Another area of concern since Alinta’s new owners took over is the issue of privacy compliance, as outlined by a whistleblower who was concerned the company was snubbing its nose at customers, regulators and the government.

A cache of documents included a June 2019 privacy compliance audit by its internal auditor EY, which assigned Alinta a “red” or “significant” risk rating on key aspects of its privacy compliance.

EY said Alinta lacked proper oversight and structure to manage privacy and “may not be adequately protecting personal information” and at times “doesn’t meet the requirements of privacy laws”.

The EY report said there was no framework to manage the company’s privacy obligations.

Alinta tried to play down the issues but put the spotlight on the role of FIRB in allowing critical infrastructure to be sold to foreign investors.

One of the more shocking revelations was that in January 2019, FIRB had two staff overseeing the country’s foreign investment compliance of companies, such as the $4.1 billion sale of Alinta; the $7.4 billion sale of power line, gas pipeline and power plant group DUET to Cheung Kong Group; the sale of the Loy Yang coal station; and a series of Hunter Valley coal, rail and port assets to Yancoal, whose major shareholder is China’s Yanzhou Coal Mining Company.

Treasurer Josh Frydenberg has since slapped tough restrictions on foreign takeovers to protect local businesses from predators.

FIRB has also taken a greater interest in Alinta to ensure it has met its conditions of sale. In a statement on Friday, Alinta said it had finally met those FIRB conditions as at December 31.

But the Chinese owner’s quest to repair the damage to Alinta’s image continues. It has opted to relocate a call centre in the Philippines to Australia, which will create 230 jobs.

And late last year it started to revamp the board with a new chairman and the appointment of former Virgin boss John Borghetti as a non-executive director. But with Australia-Chinese relations never far from the headlines the scrutiny will continue.

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