Energy companies to fight Morrison’s Big Stick

Australian Prime Minister Scott Morrison (quad)

Australian energy retailers have sought legal advice on whether the Morrison Government can proceed with forced divestment under Prime Minister Scott Morrison’s Big Stick policy.

Last month Morrison threatened energy retailers with forced divestment if they didn’t slash their prices, accusing them of price gouging and “ripping off” ordinary Australians in an impassioned speech to media.

According to The Guardian, commercial law firm Ashurst has provided advice to the Australian Energy Council, saying there are concerns about the “framing and constitutionality” of the Morrison Government’s measures to force private companies to lower prices.

Related article: Energy companies to face wrath of Morrison’s Big Stick

The advice stated if the government was going to proceed with the interventions such as price regulation and forced divestment then the power should be exercised independently of ministers “so that the decision-making process is not influenced by the potential for political interference, or the appearance of political interference”.

The advice notes there are precedents of divesture powers in Commonwealth legislation.

Power companies have warned in a new submission to the treasury, which will be enforcing the laws, that unless there is clear and objective criteria surrounding how the proposed power is used then the presence of these laws will result in decreased investment in the Australian energy sector.

Related article: Energy roundtable: Voluntary comparison rate announced

The energy sector has said that change to regulatory frameworks could better serve the interests of consumers, but the new penalty regime by the Morrison Government will not improve competition, lower prices or encourage investment.