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Watchdog to investigate Queensland energy producers

State-owned power companies in Queensland are being investigated for price gouging and strategic bidding by the Australian Competition and Consumer Commission (ACCC). The ACCC said that the probe is part of a wider investigation into electricity prices across Australia.  

The main focus will be on the bidding practices of the two state-owned companies, CS Energy and Stanwell Corporation, which have been accused of using strategic bidding to push up power prices.

Watchdog concerned at lack of competition in Queensland energy market

Rod Sims, head of the ACCC

ACCC chairman Rod Sims said that he is concerned about the lack of competition in the Queensland electricity generation market, where the state government controls 65 percent of the market.

In a statement, and ACCC spokesman said: “The Australian Competition and Consumer Commission’s electricity supply and prices inquiry is looking at all drivers of electricity prices across the supply chain, including the wholesale market structure and conduct by generators.”

The companies at the centre of the price-gouging allegations hit back at criticism from the Australian Energy Regulator, saying wholesale electricity prices in Queensland would be higher under private ownership.

CS Energy CEO Martin Moore

CS Energy chief executive Martin Moore said the AER and federal Energy Minister Josh Frydenberg had been selective in the figures used to criticise the state-owned companies. Mr Moore said wholesale prices in Queensland between March and June were the lowest in the country.

He said prices were higher in January and February due to hot weather, demand from the $80 billion liquified natural gas industry and a lack of investment resulting from uncertainty over federal climate policy.

Mr Moore said wholesale prices in Queensland have dropped a further 19 per cent since Queensland Energy Minister Mark Bailey directed Stanwell to bring down prices and the government announced it would bring Swanbank E power station back online.

The Queensland government is also considering creating a third generation company for renewable investments.

Queensland energy producers say bidding practices have not changed

Speaking to the Australian Financial Review, Mr Moorse said: “The AER investigated the high price events in Queensland in January and February and their conclusion was that it had nothing to do with bidding behaviour, but it was the high demand to do with the extreme weather events.

He said the company’s bidding behaviour hasn’t changed. “Four or five years ago we were losing money hand over fist and now we’re starting to make a little bit of dough in a market where the supply/demand dynamics have changed radically. I’m running a business and we’re here to make money and let’s face it, that’s not a sin.”

Australian Energy Regulator chairman Paula Conboy

Australian Energy Regulator chairman Paula Conboy said high wholesale electricity prices would persist in Queensland while the two state-owned power generators continued to control two-thirds of market share.

She said the lack of competition had the potential to entrench the power of the two state-owned generators in influencing prices.

Mr Sims said after last week’s Council of Australian Governments energy council meeting he had ongoing concerns about the Queensland power market. “I think there is no doubt that collapsing three generators into two has increased market concentration and has boosted prices. There’s not much you can do about it, it’s a structural problem.”

Federal Energy Minister Josh Frydenberg welcomed the ACCC inquiry. “The allegations about the bidding practices levelled against the Queensland state-owned generators are very serious,” he said.

“The ACCC and the AER are perfectly placed to provide advice on how such behaviour can be prevented in the future and competition enhanced in order to ensure lower electricity prices for consumers,” he said.

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