AGL challenges ACCC in Federal Court

AGL Energy Limited (AGL) advises that it has today commenced proceedings in the Federal Court of Australia seeking orders directing the Australian Competition and Consumer Commission (ACCC) to withdraw a notice issued under section 155 of the Trade Practices Act (the Notice).

The Notice was issued on 3 November 2010 and follows an earlier notice issued by the ACCC in May 2010. That earlier notice was later revoked on 22 June 2010 after AGL had informed the ACCC that the notice was defective in a number of respects and that AGL would seek court orders to have it set aside if it was not withdrawn.

The Notice alleges that AGL has taken advantage of market power in the South Australian wholesale electricity market for the 'substantial purpose' of preventing other electricity retailers from engaging in competitive conduct in the South Australian retail electricity market.

The Notice asserts that, on various dates during the summer months of 2008, 2009 and 2010, AGL:

  • bid significant amounts of offered capacity at Torrens Island Power Station into the National Electricity Market (NEM) at prices greater than $9,000 per megawatt hour and
  • on certain unspecified dates, AGL prevented or hindered electricity retailers in South Australia from obtaining hedge contracts at reasonable commercial prices by refusing to supply hedge contracts to those other retailers.
  • The Notice goes on to assert that the consequence of the alleged conduct was that retailers in South Australia were required to pay prices close to the spot price for wholesale electricity on days of high demand and higher prices for forward hedge contracts in South Australia.

AGL rejects the assertions in the Notice that it has engaged in any conduct for the purpose of reducing competition in South Australia. AGL’s operations in the wholesale electricity market were in keeping with the rules governing the operation and design of the NEM.

AGL is challenging the validity of the Notice.

Since March 2008, the ACCC and the Australian Energy Regulator (AER) have, between them, requested information and documents about the Torrens Island Power Station on three separate occasions – once pursuant to the AER's statutory powers and twice on a voluntary basis. AGL has co-operated fully with these requests, including the provision of extensive volumes of documents. On each occasion, the regulator took no further action in response to the information provided.

AGL remains willing to respond to the ACCC's legitimate concerns, but considers the Notice to be invalid and incapable of being complied with.

It is anticipated that AGL's application will be heard early in 2011..

About AGL

AGL is one of Australia's leading integrated energy companies and is taking action toward creating a sustainable energy future for our investors, communities and customers. Drawing on over 170 years of experience, AGL operates retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has one of Australia's largest retail energy and dual fuel customer bases. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia's largest private owner and operator of renewable energy assets and is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.