Energy suppliers mull legal advisers as royal commission feared

Major electricity and gas suppliers are already considering external legal talent to steer them through a potential royal commission into energy in the expectation such an inquiry could be around the corner whichever party wins next year’s general election.

Large, integrated generator-retailers such as EnergyAustralia and Origin Energy are said to have held initial discussions with law firms that could pave the way to advisory contracts to help senior executives navigate the process and complexities of such an inquiry, should it be called.

The situation is complicated by the fact some of the most experienced lawyers and firms are occupied with the banking royal commission and that another chunk of capacity will get tied up in the newly announced aged care one.

“There is a finite amount of talent out there and a royal commission can do tremendous damage to the business if it’s not handled well,” an energy industry insider said.

“Both sides of politics are talking about [an energy royal commission] and, as we’ve seen with the banking one, when it happens it’s only a couple of months or so before the public hearings start and there’s an enormous amount of work that has to go into it before then.”

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Top-tier law firms are said to have begun pitching for work during the past two months to ensure they are front and centre to snare potential energy royal commission roles. The idea is to align as a preferred legal firm should a commission be called and appointments follow.

Law firms with key roles in the banking and financial services commission include Clayton Utz, Herbert Smith Freehills, Allens, Gilbert + Tobin, Ashurst, Arnold Bloch Liebler, King & Wood Mallesons and Corrs Chambers Westgarth.

Revenue rush

The Hayne royal commission into financial services has created a revenue bonanza for major law firmswith most allocating multiple teams to handle parts of the inquiry.

When announcing the aged care royal commission on Sunday, Prime Minister Scott Morrison left the door open to a similar inquiry into the energy sector, where hikes in electricity and gas prices have stung households and industry.

Opposition Leader Bill Shorten has also signalled Labor could go down that path: “We need the energy companies to explain why there shouldn’t be a royal commission, and so far they haven’t,” he said this month.

Shadow energy minister Mark Butler on Tuesday said that while a royal commission hasn’t been formally considered by Labor, “there could be a case to investigate the impact of privatisation in the electricity sector on power prices”.

Still, the announcement of the royal commission into aged care is likely to have pushed out the threat of one on energy, while the intense scrutiny the sector has already been subject to – most notably by the Australian Competition and Consumer Commission – may also point against the Coalition government going down that path.

A lawyer specialising in energy said the government might be thinking that a royal commission into energy would only highlight the policy failure that had contributed to higher prices, and the problems of that the National Energy Guarantee the policy that the Liberals were unable to get through their own party room – was supposed to solve.

The lawyer said their talks with energy clients were focused  primarily on ensuring the necessary legal connections were live and prepared, and on learnings from the royal commission into banking on how to prepare for it and react.

After being subjected to exhaustive questioning by the ACCC for its inquiry into electricity prices, the energy suppliers are probably better prepared to face the demands a royal commission would make in terms of the provision of documents than the financial services sector was, sources said.

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