The Australian Energy Regulator (AER) recently released its Annual Compliance and Enforcement Report for 2022–23, outlining its activities over the past year to monitor and enforce compliance with Australia’s national energy laws and rules. A key focus has been on supporting vulnerable customers, including those experiencing financial hardship. The AER has also acted to support the efficient operation of competitive energy markets through monitoring compliance of generators, gas pipelines and retailers.
In the report the AER note that “Compliance with national energy laws gives consumers and energy market participants confidence that energy markets are working effectively and in their long-term interests.” The AER set five compliance priorities for 2022–23, focusing on consumers, wholesale electricity and gas markets.
Supporting Consumers Experiencing Vulnerability
A top priority was effective identification of residential customers in financial difficulty and ensuring they were offered tailored payment plans. The AER issued guidance to retailers on best practice and conducted compliance checks, stating “We have set out the AER’s expectations of best practice when engaging with consumers that demonstrate hardship indicators and have provided retailers with practical guidance on what this looks like.”
The AER also focused on improving outcomes for consumers in embedded networks by tightening obligations on ‘exempt sellers’ who on-sell energy. New requirements include having a hardship policy to support customers facing payment difficulties. The AER noted, “To support the release of the Retail Exempt Selling Guideline we have engaged in a range of compliance activities, including publishing a number of fact sheets for consumers and small businesses designed to clearly explain the rights and obligations of exempt sellers and their customers.”
Supporting Efficient Wholesale Electricity and Gas Markets
A priority relating to generators was compliance with dispatch offers, instructions and obligations to provide accurate information to AEMO. The AER’s report into the June 2022 suspension of the NEM found some generators had withdrawn capacity in a way that contributed to the market suspension. The AER noted that behaviours identified raised concerns and demonstrated shortcomings in aspects of the market design and participants’ behaviour during periods of system stress. However, the AER also noted generators had worked closely with AEMO during a difficult event.
In gas, the AER focused on compliance with information disclosure and reporting obligations, particularly in relation to gas auctions and demand forecasting. The AER took enforcement action against several participants for inaccurate forecasting and non-compliance with auction obligations. The AER said, “The efficient transportation of gas to downstream gas markets is linked to the efficient forecast of demand for those markets, without which there may be over or under forecast amounts of gas.”
Recommendations for Energy Sellers
Based on the report there are a number of recommendations for energy sellers to improve their compliance:
• Ensure effective systems are in place to identify residential customers experiencing financial hardship and payment difficulty. Offer tailored payment plans that consider a customer’s capacity to pay.
• Comply with all obligations relating to exempt selling, including publishing a hardship policy, to support customers facing payment difficulties.
• Understand obligations relating to auctions, including submitting accurate information on available capacity, and comply with dispatch instructions and performance standards. Monitor performance to ensure compliance.
• Submit accurate demand forecasts and auction reports to facilitate efficient gas markets. Update forecasts where needed.
• Review the AER’s compliance priorities and guidance to understand key areas of focus. Implement strong compliance systems and training.
• Report any breaches of obligations to the AER as required under the national energy laws and rules. Take prompt action to remedy issues.
The AER will continue to monitor compliance in these areas and take enforcement action where needed to support consumer protections, power system security, and efficient energy markets. Overall, the report provides useful insights into the AER’s compliance and enforcement work over the past year for regulated entities to consider in reviewing their own compliance frameworks and systems.