A demand for payment is essential; the regulator must repay the money with interest.
The Full Federal Court overturned a $25 million penalty against AGL, ruling that it did not overcharge customers by keeping their overpaid welfare deductions.
In AGL Retail Energy Limited v Australian Energy Regulator [2026] FCAFC 106, decided on 19 August 2026, the Full Court of the Federal Court of Australia found that AGL had not overcharged 483 former customers under r. 31 of the National Energy Retail Rules.
The customers were welfare recipients who paid AGL for electricity or gas through Centrepay, the Services Australia deduction service. After each customer stopped receiving energy and paid a final bill, neither AGL nor the customer cancelled the deduction. AGL's automated system kept pulling the payments and adding them to closed or inactive accounts between 23 December 2016 and 2 November 2021. AGL accepted that it lacked an adequate system to spot money building up in those accounts.
The primary judge found that AGL had overcharged the customers, breaching rules that require a retailer to tell customers about overcharges and refund them, and a separate provision requiring retailers to maintain systems that monitor their own compliance. In December 2024 the court imposed a $25 million penalty, which AGL paid in January 2025.
On appeal, the Full Court said that the key question was whether AGL had "overcharged" its customers. The court held that overcharging required the retailer to have demanded too much money – for example, by issuing a bill – for energy it had supplied. Simply receiving and keeping money a customer paid by mistake, with no such demand, was not overcharging.
The court found that r. 31 assumed a billing cycle and covered amounts a retailer demanded and then kept as revenue. Because AGL sent no bill or demand for the payments made after the accounts closed, the money was an overpayment, not an overcharge. The court said a "mere" overpayment was for a retailer's other legal and contractual duties to address. AGL's agreement with Services Australia already required it to cancel the deductions, the court noted, rather than r. 31.
The court accepted that a "small customer" could include someone who had stopped buying energy, so the 483 people still counted even though AGL no longer supplied them. That did not help the regulator, because the court had found no overcharge. AGL had therefore not breached that monitoring requirement.
The Full Court allowed the appeal, cancelled the penalty and dismissed the case. It also rejected the regulator's own challenge and ordered it to repay the $25 million, with interest, and to pay AGL's costs.
