Country's largest energy class action will be launched in the Federal Court alleging two electricity generators manipulated prices.
Country's largest energy class action will be launched in the Federal Court alleging two electricity generators manipulated prices.

Massive class action against power generators

AUSTRALIA'S largest energy class action will be launched in the Federal Court on Wednesday alleging two Queensland Government owned electricity generators manipulated prices.

The action, initiated by law firm Piper Alderman and backed by litigation funder LCM, has been filed on behalf of 40,000 customers who paid for electricity in Queensland between January, 2015 and January, 2021.

The majority of registrants in the case against the generators, CS Energy and Stanwell, are residential users but more than 1600 businesses also have signed on.

Piper Alderman dispute resolution and litigation team head Greg Whyte said the firm had spent more than two years investigating Stanwell and CS Energy's conduct on the National Electricity Market (NEM) which allegedly involved manipulating the pricing system and artificially inflating consumers' electricity bills.

 

CS Energy’s Mica Creek Power Station.
CS Energy’s Mica Creek Power Station.

"There is a lot of complexity in generation and power prices," said Mr Whyte. "The conduct occurred at the generation stage and retailers passed that cost through to consumers."

He said the action would seek to prove that the state-owned power generators manipulated the wholesale cost of electricity for their own profit, amounting to a hidden tax.

Brisbane business owner Iain Saul said he registered in the class action to help highlight the impact of soaring power prices on the economy. "I don't want anything out of if personally but I want to help other people," said Mr Saul, who runs an electronics company. Mr Saul said he had noticed a significant increase in power prices over the last five years.

CS Energy and Stanwell dominate power generation in Queensland and in 2018-19 contributed $895.2 million in net profits.

Mr Whyte said the firm would seek an order that the generators repay the amount they had gained from the conduct, equal to about $1000 per residential customer and more for business customers. "The conduct of Stanwell and CS Energy has had a devastating effect on the Queensland economy," he said. The total amount sought in the action, which is being fought on a "no-win, no fee basis", was not yet known.

 

Piper Alderman partner Greg Whyte.
Piper Alderman partner Greg Whyte.

He said that while the firm would seek an early settlement of the case it could continue for several years, with economists and electricity market experts called as witnesses.

Both Stanwell and CS Energy has indicated they will defend the action. A Stanwell spokesperson said it strongly refuted any allegation of misuse of market power. "We are totally transparent in our trading activities in the wholesale electricity market and have acted in accordance with market rules and our values," the spokesperson said.

Stanwell said the National Electricity Market was heavily monitored and scrutinised by a range of regulatory agencies, including the Australian Energy Regulator and the Australian Energy Market Commission (AEMC), which have found no evidence of misuse of market power or breach of market rules.

CS Energy said it totally rejected the "false claims" in the class action and Queenslanders should question who will benefit from the class action.

"Is it Queenslanders or an overseas litigation funder whose main interest is making a return on their investment in class actions?" said the spokesperson. "As a Queensland-based and publicly owned Queensland business, the proposed class action is pursuing the revenues that we return to the state which are used to fund important services for all Queenslanders."

LCM, or Litigation Capital Management, is listed on the London Stock Exchange but has been operating in Australia since 1998.

 

Class action over power could run for years.
Class action over power could run for years.

The CS Energy spokesperson added that Queenslanders had enjoyed the lowest average wholesale electricity prices in the NEM for the past three years.

"There is strict oversight of the National Electricity Market by the Australian Energy Regulator," the spokesperson said. "Previous investigations found price changes were due to a wide range of influencing factors, including extreme weather fluctuations."

In 2017, the State Government ordered Stanwell to pursue less profit and offer more capacity after an outcry by the resource industry over spikes in wholesale spot pricing.

From this year, settlement times on the NEM be will cut from 30 minutes to five minutes to reduce the opportunities for large generators to use their market power to potentially manipulate wholesale electricity prices. 

Originally published as Massive class action against Qld power generators


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