Coal-fired Generators Avoid Allegations of Unlawful Bidding and Market Manipulation
The Federal Court recently dismissed claims that two Queensland-owned companies, Stanwell and CS Energy, misused their power in the electricity market. The case, which began in January 2021, alleged that the companies engaged in strategic bidding to drive up wholesale prices. However, the court ruled that profit-maximizing behavior is not illegal, and all claims of market manipulation were rejected.
Leading the case was the Stillwater Pastoral Company, representing over 40,000 Queensland consumers in Australia’s largest electricity class action. The plaintiffs claimed economic losses from paying inflated retail prices due to the power companies’ bidding behavior from 2015 to 2021.
The court’s decision was detailed in a 242-page judgement, where Justice Sarah Derrington explained why the claims against Stanwell and CS were dismissed. The companies were accused of contravening the Competition Act through their market power, but the court found no evidence of wrongdoing.
The case highlighted the complexities of competition law and market power, echoing past electricity crises like California’s in 2000-2001 involving Enron. While Enron used manipulative tactics like withholding electricity generation, no such strategies were proven in the case against Stanwell and CS.
The ruling clarified that while the power companies had market advantage, their actions did not violate competition laws. The plaintiffs sought compensation for higher retail prices, but the court did not impose penalties as the case was led privately, not by the Australian Energy Regulator. In the end, the complex case shed light on the intricacies of wholesale electricity markets and the regulations that govern them.
