Federal government attempts to intervene in looming electricity price surge

THE Turnbull Government has intervened in a landmark Federal Court case in a last-ditch effort to avoid household power price increases of hundreds of dollars.

EXCLUSIVE: The Turnbull Government has intervened in a landmark Federal Court case in a last-ditch effort to avoid household power price increases of hundreds of dollars.

In a rare submission to the full court, Energy Minister Josh Frydenberg stresses how law changes in 2013 were meant to make it harder for power companies to successfully challenge parts of Australian Energy Regulator decisions they did not like in a bid to extract more money from customers.

Nevertheless, power companies last year persuaded the Australian Competition Tribunal to overturn AER decisions that cut future revenue to power companies in NSW and the ACT by $6.5 billion from 2015 to 2019.

The AER is appealing the tribunal’s determination in the Federal Court.

Mr Frydenberg’s submission in the case says the 2013 changes “substantially raised the bar for successful review by applicants in the tribunal” then questions whether the tribunal made “errors” that allowed the power companies to clear the heightened hurdle.

“The court should, with respect, take care not to embrace those errors,” the submission, obtained from the court by News Corp Australia, says.

The overall aim of Mr Frydenberg’s submission is to explain the “legislative intent” of Parliament — a factor that be can considered by courts.

COURT DOCUMENT: Read the submission here

The judges’ ruling will have implications for the corporate owners of networks in Victoria and South Australia, whose future revenues were also cut, by $2.4 billion and $700 million respectively. Depending on the outcome, power companies in all three states could raise prices to reclaim some or all the revenue cutbacks that have already taken effect.

Despite the tribunal determinations, the AER decisions have been in place for nearly two years, shaving:

NSW:

* $330 a year from bills in the Ausgrid distribution area, which is the eastern half of Sydney, the Hunter and Central Coast;

* $106 a year in Endeavour Energy’s patch, covering Western Sydney, the Blue Mountains, Southern Highlands and Illawarra;

* $628 in the Essential Energy distribution area, which is the rest of the state; and

* $224 in the ActewAGL network, covering Canberra.

Victoria:

* $151 in the Jemena network for the northern and north-western suburbs;

* $141 in the Ausnet distribution area for outer northern and eastern suburbs plus eastern

* $91 in the United Energy zone, covering the southern suburbs and Mornington Peninsula;

* $48 a year in Powercor’s patch, covering the western suburbs and western Victoria; and

* $45 a year from bills in the Citipower distribution area, which is the city and inner suburbs.

South Australia:

* $203 a year from all South Australians’ power bills.

All have sought a Federal Court review of the AER decisions, but the NSW-ACT matter will be decided first and likely act as a precedent. In November last year, SA’s South Power Networks has lodged its own case against the AER decisions in the Federal Court. That case will be heavily influenced by the ruling in the NSW-ACT matter, which began eight months earlier.

The Queensland Government directed its two distributors not to appeal AER decisions that cut their revenue by a combined $2.8 billion over five years.

It has been estimated that the NSW and ACT power companies have spent $150 million in their legal bids to hike prices. In countering those actions the AER has outlaid $3 million while Energy Consumers Australia (ECA), which was set up by the federal, state and territory governments, has forked over $1 million to fund a court appeal that seeks even deeper price cuts.

ECA recently said: “The regulatory and review process is disconnected from the interests of the very people it is meant to serve. This remains the case despite the legislative changes that were made in 2013.”

In August last year, Mr Frydenberg set about entirely removing power companies’ ability to fight future AER decisions.

But at a meeting of energy ministers in December, NSW and Queensland objected.

Instead it was agreed that the bar for a successful review of AER decisions had to be raised even higher and that AER legal costs should be covered by power companies.