Federal Court Delivers Energy Judgment

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Federal Court Delivers Energy Judgment

Australian Energy Regulator v Australian Competition Tribunal (No 2)[2017] FCAFC 79

Australian Energy Regulator v Australian Competition Tribunal (No 3) [2017] FCAFC 80

The Australian Energy Regulator (AER) brought five applications for judicial review regarding the erroneous nature of the defendant’s conclusion to remit original decisions to the AER. The AER’s key grounds for the judicial review before the Federal Court were that:

  1. The decisions by the defendant were made ultra vires as the defendant misconstrued their review function
  2. The defendant accepted matters that were not previously heard by the AER, an act in contravention to the National Electricity Law and National Gas Law
  3. The defendant erred in applying determination of the rate of return on capital, the value of imputation credits and the operating expenditure criteria under the NEL; and
  4. The defendant’s decision was based on reasons that were irrational, unreasonable and/or uncertain.

The court decided on each of the issues yet found both for and against the applicant. The Court the AER was correct in its action to lower the corporate tax allowance. However the Court upheld the Australian Competition Tribunal decision regarding operating expenses that the AER had sought to limit through maximum network revenue allocations for NSW and ACT electricity and gas networks to improve market efficiency.  The court ordered that the parties engage in consultation to give effect to the reasons provided by the court. Failure to agree on a conclusion based on these reasons will require further court action.

 

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