Delta Power & Energy is facing legal action from Australia’s corporate regulator for allegedly manipulating energy futures prices to secure higher payments under a deal with Shell. The scheme may have distorted the electricity market for other participants.
The Australian Securities and Investments Commission (ASIC) claims Delta placed specific orders in electricity futures contracts near the close of trading from September to October 2022. According to ASIC, these trades aimed to increase the settlement prices set by the ASX, the market operator. These prices directly affected how much Delta could charge Shell under a pre-established deal that included a pricing formula based partly on those values.
Delta runs the Vales Point coal power station in New South Wales, which contributes around 4% of the electricity to the National Electricity Market. While ASIC believes the trading approach may have begun in 2016, the case centres on 30 specific incidents in 2022. The regulator states that Delta focused on quarterly futures contracts, anticipating the influence on the annual prices used in its agreement with Shell, Australia's largest business electricity provider.
Court documents cite internal reports and board-level decisions that endorsed this method of trading shortly after the deal with Shell was signed in 2015. ASIC alleges these records show the company intentionally created a system to raise the final price it could invoice to Shell. The alleged conduct not only increased costs for Shell but also led to added margin obligations for other traders on the ASX24 futures market.
Shell has responded to the case by noting its awareness but confirmed that it is not taking part in the legal process. Delta, which underwent a change in ownership in late 2022, stated that the alleged practices occurred before the current management assumed control. The company also confirmed it has been co-operating with ASIC's inquiry.
The legal case highlights broader concerns around the potential for market manipulation within price-setting systems. It raises questions about how derivative pricing can affect contracts for energy delivery and has renewed interest in oversight reforms within Australia's electricity trading framework.
