Electricity retailer AGL has been granted an urgent hearing to challenge the energy regulator's plan to cut South Australian electricity prices.
In a draft determination, the Essential Services Commission of South Australia (ESCOSA) foreshadowed a 8.1 per cent reduction in electricity prices for standing contracts.
It is due to make a final decision on December 19, but AGL has sought a judicial review in the SA Supreme Court challenging the Commission's power to make such a determination.
The court has heard the current three-year price contract is not due to expire until January 2014.
Dick Whitington QC for AGL said the draft decision to reduce the standing contract by $27 per megawatt hour was made in error.
He said the Commission had exceeded its jurisdiction by pre-determining there were special reasons for a price change.
"My client essentially complains that in making this special pre-determination, it (Commission) misconstrued the provisions and it has made a number of errors of an administrative nature, which impair that decision," he said.
Mr Whitington said changes in the market, influenced by the carbon price legislation, did not apply to AGL because it was the sole supplier in South Australia.
"Fundamentally what they overlooked is that there is only one standing contract retailer in the state; my client.
But my client has to look to supply customers under the three-year term of the price contract and my client has looked to long-term price lists and therefore is relatively unaffected by the types of market considerations that ESCOSA has had regard to," he said.
"ESCOSA came along, looked at the Australian market which has no bearing on my client's conditions, and said 'The market has dropped, therefore the standing contract price should be reduced' and that, we say, is inconsistent with the current provisions of the electricity act." Mr Whitington said AGL wanted to start the judicial review before a final decision was made later in the month.
"There are special circumstances and that's why we say we are entitled to proceed in the way we have with a pre-emptive application," he told the court.
Dr Chris Bleby SC for ESCOSA said although the draft price determination foreshadowed a reduction the Commission had received 'substantial submissions' since then.
"No-one can say with confidence what the determination will be," he told the court.
Dr Bleby said he was content for AGL to serve his client with the legal action, but foreshadowed an application to revoke that permission later.
The court will hear AGL's application on December 17 to stay the Commission's decision.