AGL Energy Ltd v. Queensland Competition Authority & Anor; Origin Energy Retail Ltd v Queensland Competition Authority & Anor

The case involved AGL Energy Ltd and Origin Energy Retail Ltd as applicants challenging a decision by the Queensland Competition Authority. The dispute centred on the calculation of the benchmark retail cost of energy under the Electricity Act 1994 (Qld). The applicants argued that the Authority erred in its calculation of the benchmark retail cost for the relevant tariff year and the preceding tariff year. They contended that the Authority failed to form a view of the likely total costs to purchase energy to supply the NEM load of the state for the relevant tariff year and that it used data inconsistently across the two years.

The central legal issues revolved around whether the Authority was required to exclude directly connected customers when calculating the cost to supply the entire NEM load of the state and whether it was required to base its estimate on the long run marginal cost of energy. Additionally, the court had to determine whether the Authority was mandated to adopt the previous year’s benchmark retail cost index (BRCI) or if it could recalculate the BRCI each year. The applicants claimed that these errors constituted an error of law and that the Authority had considered irrelevant considerations and acted for improper purposes.

The court found that the Authority did not correctly follow the statutory requirements when calculating the benchmark retail cost. It held that the Authority did not form a view of the likely total costs to purchase energy for the NEM load of the state for the relevant tariff year, as mandated by section 92(1) of the Act. Furthermore, the Authority used data inconsistently across the two years, employing data in the calculation for the preceding year that it had not used in the calculation for the relevant tariff year, and which it was not entitled to use. This was deemed to be a significant error of law, leading to the conclusion that the decision was not made in accordance with the Electricity Act.