AN ENERGY company has launched court action against the Queensland Competition Authority, arguing it did not consider production costs when setting this year's electricity tariff.
Retailer Origin Energy has told the Supreme Court the QCA did not take into account the cost of producing electricity when it released its 2012-2013 tariff determination in May.
Barrister for Origin Energy, Charles Scerri QC, told the court on Monday QCA should have used a cost-based model but instead they used a market-based one.
He argued QCA did not take into account what the actual costs were in providing energy.
"They should have found what the actual costs were," he said.
"If they found out what the actual costs were - and they had plenty of submission before them about that - they would've have taken into account the (power purchase agreements) and internal generators, which are the two critical things we say they overlooked."
Mr Scerri said Origin did not criticise QCA for making a prediction but stated the flaw was not "starting with the fundamental actual costs".
Mr Scerri said if the judge could not be satisfied QCA had regard to the actual costs than the QCA's tariff decision should be quashed and sent back to the drawing board for determination.
He said QCA was not "faithful" to legal requirements and instead did what it thought was a good idea at the time.
"It's non-sensible to talk about the costs of supplying electricity if you don't have regard to the costs of producing the electricity," he said.
The State Government this year put a freeze on the household electricity tariff 11.
Origin Energy defied the move and increased their tariff but, following harsh criticism, pulled it back into line with the government directive.
The trial continues.
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