Five days later, on May 30, Energy Minister Mark McArdle announced Tony Bellas – ERM Power's non-executive chair, and former director – had been appointed as the chair of the government's Independent Review Panel, which had been established to “oversee the reform of power delivery by government-owned electricity entities in Queensland”. A spokeswoman for Mr Bellas said, in a statement, Mr Bellas's role on the panel was to “develop options to address the impact of the electricity network in Queensland on energy prices” in relation to network costs, not generation or retailing of electricity. "ERM Power is not a network company and any implication that Mr Bellas influenced government policy related to ERM Power's scope of operations is false, baseless and defamatory," she said. In a separate statement, ERM Power managing director and CEO Philip St Baker said his company "maintains a position of impartiality with respect to political parties and sees no conflict of interest". The union first raised concerns about the relationship between ERM and the state government early this year, when the government's October 2012 decision to shut down two generators at its Stanwell power generation plant removed 750MW, or about 10 per cent of the state's base load generating capacity, from the grid.

In peak times, such as January and February this year, the shortfall was covered by privately owned power generation companies which were able to charge up to 200 times the average long term wholesale electricity price of $45 to $50 Megawatts per hour for that time of year. However, Mr McArdle said the decision to close the generators was made by the independent Stanwell Corporation Board – not the government – due to “an over-supplied energy market with a lower than forecast electricity demand”. Mr Bellas is considered one of the most experienced people in the industry, having worked in Queensland Treasury under the previous Labor state government before moving into energy. Mr McArdle said he did not comment on the “financial performance of any private company”, but said Mr Bellas was appointed to the government's panel because “of his skills and experience”. “He has relevant tertiary and post graduate qualifications, is a former Ergon [Network business] and CS Energy CEO, former Deputy Under-Treasurer in the Queensland government and experienced executive with the experience to lead the review. These were appointments all whilst Labor held state government,” Mr McArdle said.

“He is recognised as an industry leader, and his experience has contributed to the Newman government's electricity sector reforms that will start delivering more than $3 billion in savings from 2013-14.” While the ETU also acknowledges Mr Bellas's experience, state secretary Peter Simpson said the union remained concerned about the relationship between the private business and the government. In June, the company released its annual report, which revealed a 67 per cent revenue increase over the last financial year, including a 22 per cent increase in profit on the previous year from its Queensland generator in Oakey. The company won a $150 million New South Wales government contract to supply energy to more than 10,000 sites in February, accounting for some of the profit increase, but the ETU says its relationship to the Queensland government bore scrutiny. In relation to the private generators selling electricity to the state at a higher cost during increased demand, Mr McArdle said the short term increase in wholesale prices had no real impact on electricity retail prices because they were accounted for in “overall prices”.

But Mr Simpson said private generation companies did benefit and with the government looking to take a proposal to sell its generation company assets to the next election, questions needed to be asked. “We raised issues about base load capacity earlier this year and the concerns have been highlighted further by the massive increase in revenue reported by ERM, heading into the hotter months and facing the prospect of a similar spike in generating costs the Queensland public deserve answers” Mr Simpson said. In his letter to the ACCC and the AER, Mr Simpson said the union was “concerned that a private generator can seemingly reap massive revenue benefits following the decision of a state owned generator to 'mothball' generator capacity when there are such direct links between the private operator and the government over the same period”. “We hold the view that in situations where relationships between two National Electricity Market participants are as close as this privately owned generator and Queensland government, the public interest dictates that such relationship must be open and transparent so that public confidence in the proper and equitable operation of the NEM is maintained, and the objects of the relevant legislation governing the NEM and its participants is not undermined,” Mr Simpson wrote. “While ultimately all these matters may in fact be coincidence, we believe that on an objective interpretation of the facts ... the public interest warrants investigation to confirm that the operation of the NEM has not been compromised in any way.”

Because the matter related to government policy, the Queensland Energy and Water Ombudsman could not comment. A spokeswoman for the AER said the regulator “does not ordinarily comment upon whether it is investigating particular matters”.