In short:

A competition class action against power companies Stanwell and CS Energy has been dismissed.

In Australia's largest energy class action, the companies were accused of driving up prices illegally.

What's next?

Justice Sarah Derrington told the court Stanwell and CS Energy did not take advantage of their market power.

Two Queensland government-owned electricity generators did not manipulate the market to maximise company profits, the Federal Court has ruled.

In Australia's largest energy class action, Stanwell Corporation and CS Energy limited were accused of driving up prices illegally.

The class action was initiated by Ronnie and Nick Adamson from the Stillwater Pastoral Company, on behalf of more than 47,000 customers who paid for electricity in Queensland between January 2015 and January 2021.

Law firm Piper Alderman led the class action, which was heard in the Federal Court in Brisbane and sought to recover compensation for customers.

It was alleged the electricity giants controlled about 70 per cent of the state's energy market and that they abused that dominance.

It alleged Stanwell and CS Energy manipulated the bidding system in the National Energy Market (NEM) by bidding late in the settlement process to artificially create scarcity of supply and spike energy prices.

Both companies rejected the allegations of manipulation.

Justice Sarah Derrington dismissed the class action case on Wednesday.

In her judgement, Justice Derrington said Stanwell and CS Energy did not take advantage of their market power.

She found the power companies' conduct was legitimate "profit maximisation behaviour".

"During the conduct period under section 46 (2a) did they together have a substantial degree of power in the market? No," Justice Derrington said.

"Did they engage in short-notice bidding? No."

Generators reject claims

Stanwell said it operated within the rules, adding that the NEM was one of the most scrutinised and regulated competitive markets in Australia.

"Stanwell is run on behalf of all Queenslanders to support a reliable and competitive wholesale electricity market," a spokesperson said in a statement.

"We believe that this class action reflected a fundamental misunderstanding of the Australian electricity market.

"We are pleased that the Federal Court has today rejected the allegations of misconduct that have been wrongly levied against Stanwell by the international litigation funders and their representatives behind this misconceived action."

CS Energy also welcomed the Federal Court's judgement.

"CS Energy is committed to complying with all market rules and regulations and has dedicated substantial resources to ensuring we meet our obligations," a spokesperson said in a statement.

"Our bidding activity is regulated under the National Electricity Law and the National Electricity Rules by the Australian Energy Regulator."

"The applicant has indicated that it may seek to appeal this decision. As a result, we will not be making any further comment regarding the case at this time."