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40,000 Aussies join class action over rip-off power bills

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Australia's largest energy class action is seeking to prove that two big electricity generators deliberately inflated consumers' electricity bill.

It's significant news for anyone who has ever been bewildered by the size of their electricity bill, as the case suggests that prices could be being artificially manipulated at the generation stage.

More than 40,000 electricity customers - households and small businesses - signed up for the class action, filed by law firm Piper Alderman.

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The case is being brought against two Queensland state-owned electricity generators, Stanwell and CS Energy.

Because the alleged price gouging happened at the generation stage, the retail electricity brands who send you your bill would have simply passed the prices on to consumers.

Anyone who paid for electricity in Queensland between January 20, 2015, and January 20, 2021, was eligible to register for the case. And, because so many people are impacted Piper Alderman has indicated that it will apply to join new registrants to the action so that there will be a final opportunity for electricity consumers to get their money back if they wish to join.

It doesn't cost anything to join the action and it is being fought on a "no win, no fee" basis.

"There is a lot of complexity in electricity generation and power prices. Our team has spent over two years investigating Stanwell and CS Energy's unlawful conduct," Piper Alderman's head of dispute resolution and litigation Greg Whyte said.

"The unlawful conduct occurred at the generation stage, and your retailer simply passed that cost through to consumers. This is why this action is available to all Queensland businesses and residents."

Piper Alderman's team believes it has found evidence that Stanwell and CS Energy manipulated the wholesale cost of electricity for their own profit.

Because these two generators are state owned, the law firm says the price increase essentially amounts to a hidden tax paid by all Queenslanders without their knowledge.

"We brought this action on behalf of Queensland based businesses and households who have all been affected. The conduct of Stanwell and CS Energy has had a devastating effect on the Queensland economy," Whyte said.

CS Energy and Stanwell said they will defend the action, with both strongly rejecting all of Piper Alderman's claims.

"As a Queensland-based and publicly owned Queensland business, the proposed class action is pursuing the revenues that we return to the state which are used to fund important services for all Queenslanders," CS Energy said.

The chief executive of Stanwell, Richard Van Breda, said: "The proposed class action is opportunistic and entrepreneurial, funded by an international litigation funder that treats class actions as a means of generating profits."

The action is being funded by LCM, a litigation funding firm. It is putting up the money to cover the cost of fighting the case in the event that the case is unsuccessful, but if the class action is successful LCM will recover its costs and fees. LCM is an Australian firm but it does have offices in London and Singapore.

Litigation financing has come under scrutiny of late, as the fact that litigation funders make it so much easier for class actions to get off the ground has prompted the government to take a closer look. There is an ongoing push for tighter regulation of litigation funding firms.

No matter the source of the funding though, the class action is certainly food for thought when it comes to electricity prices. How do you know you're getting a fair deal when the way electricity is priced is not exactly transparent?

Last year the Independent Competition and Regulatory Commission issued a report on electricity pricing in the ACT. It found that the comparability and transparency of electricity prices have lots of room for improvement.

The commission found most consumers had difficulty working out what was the best electricity deal for their circumstances and that it was difficult to understand how discounts were calculated or what different tariff types were.

It concluded that to improve transparency, governments should develop a reference electricity bill amount. Consumers could then use this as a point of comparison to have an idea of whether or not something is a good deal.

Energy retailers should also be required to notify customers if they have a better offer and ask customers whether they need assistance in switching to the better offer, the report said.

So far these measures have not been introduced.

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Elizabeth McArthur is a senior journalist at Financial Standard covering wealth management including financial advice. She has a bachelor's degree in journalism from UTS and a master's in creative writing from Melbourne University.
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