Power players may face legal action over

Jackgreen
Clancy Yeates
Sydney Morning Herald, Business Day, April 19, 2010
INTEGRAL ENERGY and the Australian Energy Market Operator could face legal action over their role in the
collapse of the renewable energy company Jackgreen.
Jackgreen, which was Australia's largest specialist renewable retailer, went into voluntary administration in
December after it failed to pay a $500,000 bill to the NSW government-owned Integral Energy.
At the time, the company claimed it was squeezed out of business by its bigger rival, which acquired most of its
customers soon after the corporate paramedics were appointed.
Now its administrator, PKF, is mulling possible actions against state-owned power companies and the Australian
Energy Market Operator, which suspended Jackgreen's power retail licence soon after the administrators took
charge.
In a report to creditors of Jackgreen International, a wholly owned subsidiary of the listed company, PKF
recommended creditors put the company into liquidation at a meeting this week.
This could pave the way for potential action against Integral, which is estimated to have acquired 15,000 of
Jackgreen's customers. According to industry rules of thumb, acquiring Jackgreen's customers would have been
worth between $10 million and $17 million to the government-owned retailer, which is up for sale this year.
''Further investigations may reveal that there may be a claim against state government-owned electricity
businesses or the regulator,'' one of the administrators, Atle Crowe-Maxwell said. The report estimated that trade
creditors, which include Origin Energy and AGL Energy, will receive between 0.5 and 3.6 in the dollar. Most of
Jackgreen's 100 staff have been sacked, and shares in the group are effectively worthless.
In the highly concentrated industry of power retailing, Jackgreen's collapse highlights the difficulties of small
players trying to salvage value once they are in financial stress.
Almost as soon as administrators were appointed they were required to move all of Jackgreen's customers to a
rival because of restrictions to ensure power supply was not threatened. This destroyed nearly all the value in the
business, whereas administrators to other companies retain control of key assets, salvaging more for creditors.
Mr Crowe-Maxwell said: ''In my opinion there's a conflict between the Corporations Act and National Electricity
Market rules, which don't allow for a company similar to Jackgreen to appoint an administrator for the purpose of
restructuring the company, or maximising the chances of staying in existence.''
Separately, the administrators have said the listed parent company, Jackgreen Limited, may have traded while
insolvent from May last year until December.