AGL accuses Weston Energy of refusing to help lower prices by failing to hand over contract information

The energy giant says it has been unable to get contract information for the collapsed retailer’s clients, leaving it unable to offer them gas at lower prices they agreed to.

AGL Energy says Weston’s lack of communication has left it unable to offer lower prices as agreed to with the collapsed retailer’s customers. Picture: Brendan Beckett

AGL Energy has laid out a demand for collapsed retailer Weston Energy to hand over long-term gas contracts so it can provide cheaper supplies to big manufacturers with the power giant worried Weston may auction the gas for commercial gain.

Weston, a major NSW wholesaler, supplied 7 per cent of the east coast commercial and industrial market but shut its operations on May 23 due to an “unprecedented rapid rise” in gas and coal costs.

The collapse of Weston triggered the rarely used retailer of last resort scheme which saw its 400 customers transferred to a variety of bigger players in the market to ensure they still had a supply lifeline to keep their plants running. Some customers were automatically transferred to AGL which was forced to offer default spot prices for gas of more than $44 a gigajoule for large customers, more than four times usual rates, as a rush to secure supplies landed during a squeeze in the market in the lead-up to winter.

However, AGL said it had yet to receive the full details of long-term supply contracts from Weston which had inhibited its ability to offer a cheaper deal to the failed retailer’s customers than the default offer. The power operator, Australia’s largest electricity generator, called on Weston to hand over the contracts.

“Despite its suspension from the market and with no customers left to serve, Weston Energy refuses to agree to a novation to make its long-term gas supply contracts available to AGL beyond an uncertain, short-term duration under the direction from the Australian Energy Regulator,” an AGL spokesman said.

“Instead, disappointingly, Weston looks to be seeking to frustrate the process with the intention of auctioning the gas for its own commercial gain.”

Weston rejected AGL’s claims to owning the gas, noting the last resort arrangements only last for 3 months. It added Weston remained the contacted buyer of the gas and could decide both the terms and where it was made available.

“We are following the rules at all times,” Weston Energy chairman Garbis Simonian said. “We have legal rights and we will defend them.”

Still, AGL said getting the gas deals would hand the market certainty.

“Without certainty over the duration of access to these gas supply contracts and without the detail of which customers were on fixed price contracts, AGL is unable to offer fixed price, fixed term contracts to Weston’s relevant former customers,” AGL said.

“Instead, AGL is exposed to the extraordinary prices in the east coast gas markets and we’re providing supply to all Weston customers at default prices. The novation of the gas supply agreements to AGL and detail of the customers on fixed priced agreements would allow us to pass on the benefit of lower gas prices to former Weston customers that were on fixed price contracts.”

NSW magnesium producer Causmag International, which bought its gas from Weston, has previously hit out at the cost hike under AGL and said it was being forced to find emergency supplies through the last resort scheme.

Exxon and Santos had contracts to supply Weston customers on a fixed price basis, which had opened up accusations that AGL may be looking to profit by taking on those same contracts at lower prices. However, AGL rejected that speculation and said it was working with the AER to serve customers.

“Wherever we can, we’re ensuring the benefit of lower-priced gas we’re securing from other suppliers is being shared across the Weston customer base. We’re working through the details of rebates now and we’ll be keeping our customers informed. Any suggestion AGL is profiting from this event is false,” a spokesman said.

“We are working collaboratively with regulators and we’re trying to work with Weston … but so far Weston is refusing to make any concerted effort to assist its former customers.”

Wholesale electricity prices at least doubled in most states in the first quarter of 2022 and quadrupled in Queensland amid high demand and fuel prices.