Weston Energy has sold two gas supply contracts that were claimed by AGL. 

AGL took on 1,300 Weston customers as retailer of last resort after the Australian Energy Regulator suspended Weston’s licence in May.

The customers were shifted over after Weston failed to cover the cash flow requirements of its trading portfolio.

While the customers were switched automatically, Weston refused to hand over cheap long-term gas supply contracts of beyond three months. 

Weston chief executive Garbis Simonian now says the company will auction gas supply contracts beyond that, and has already finalised the sale of two contracts.

AGL has contested Weston’s interpretation of the market rules in a legal letter sent to the retailer.

Traditionally, when a retailer collapses, it hands over all supply contracts to the company that inherits its customer base to ensure the continuity of supply to customers.

However, Australia’s ongoing energy crisis is testing the decades-old market rules.

Many retailers have collapsed amid surging wholesale electricity and gas prices, and it is likely that more will follow. 

Retailers are required to submit confidential financial information about cash flows and hedging positions to the Australian Energy Regulator.

AGL says it has a legal right to the Weston Energy supply contracts and needs them to ensure it is offering its inherited customers a better deal, but with Weston withholding the long-term contracts, AGL had to put the inherited customers on default price plans, which are probably much higher than they were paying previously. 

Reports say most of the former Weston customers have now been transferred to cheaper plans, and refunded customers to cover the gap in prices paid.