The commission found Sumo Power and Sumo Gas had wrongfully disconnected 143 energy customers in December 2020.
It alleged one customer, who was actively participating in a payment plan, had their energy supply cut off by the retailer without warning.
Another 142 customers were cut off before the required six-day warning period had expired, the commission said.
"This case illustrates the seriousness of a retailer taking shortcuts and not providing assistance to customers when providing an essential service," Commission Chair Kate Symons said.
"Electricity and gas are essential services and customers should only ever be disconnected by an energy retailer as a last resort and by following the correct procedure."
She said the commission's investigation revealed Sumo had set themselves a target to disconnect more than 1500 customers before Christmas 2020.
"It arranged the timing of the billing process, so as to meet minimum regulatory requirements, and it short cut the time required to allow customers to reach out for help prior to disconnection," she said.
"Some customers, who then sought to be reconnected to the energy supply, waited for long periods of time on the phone to speak to a Sumo representative."
Further, she alleged Sumo had the names of customers they were seeking to disconnect "taped to a wall that staff referred to as the wall of shame".
She claimed a separate telephone call queue was set up, with staff told to transfer customers calling about disconnections to that queue.
"Call wait times in the separate call queue were long, an average of 45 minutes, with some customers eventually hanging up before they could speak to Sumo," Ms Symons said.
"Customers being disconnected from an essential service in this way is completely unacceptable."
The commission served Sumo with 100 penalty notices in November 2021 and the company has since paid $500,000 in fines.
AAP has contacted Sumo for a response.
The commission has warned that from March 2022, energy retailer penalties will rise from $5000 to $36,348 per notice.
New civil or criminal mitigation liabilities will also come into effect, with retailers liable for up to $218,000 per contravention, criminal fines up to $1,090,000 or up to 10 years in prison per offence.
