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Australian Energy Regulator Enforcement Focus

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Australia Publication June 2021

In June 2021, the Australian Energy Regulator published its updated enforcement priorities for 2021/2022. The release of the new priorities falls largely in line with market developments.

The enforcement focus comes at a time of heightened AER activity and an increased arsenal of enforcement tools. We covered this in detail in our update published in February outlining the increase in maximum penalties and AER’s expanded investigatory powers, including the potential for penalties to exceed $10 million. 

The key priorities include:

AER’s key compliance and enforcement priorities for 2021-22  Comment 
Focusing on registered generators’ compliance with AEMO dispatch instructions and their ability to comply with their latest offers at all times 

In the wake of some high profile outages occurring and the increasing amount of intermittency in the system, the AER is continuing its focus on ensuring sufficient supply (of electrons and also other ancillary services that support the functioning of the system) by holding generators (baseload and renewable) to their indications of capacity and bids.

“The AER will also be monitoring compliance by generators with dispatch instructions issued by AEMO, with a particular focus on recent rule changes preventing weather-reliant generators, such as large scale wind and solar farms, from reducing their output when they are instructed by AEMO to generate electricity.”

Meanwhile, the ACCC is also looking at the behaviour of retailers in passing through wholesale market savings and opportunistic bidding of generators in the NEM under the “big stick” legislation, which has now been in force for one year. Read our article on that here.
 
Ensure embedded network compliance with exemption conditions, including consumer access to Ombudsman scheme 

With the rise of embedded (i.e. islanded) networks, and the delay of expected rule changes in this area, the AER is focused on ensuring that consumers in “off market” networks (such as high rise buildings) are offered fair terms and sufficient protections to those consumers “on market”.

Read our article here on the embedded network reform agenda.
 
Effective identification of residential consumers in financial difficulty and offer of payment plans that have regard to the consumer’s capacity to pay
 
This is the continuation of an ongoing priority of the AER, aligned with tight regulation of retailer treatment of hardship customers, amplified by COVID-19 circumstances. 
Ensure service providers meet information disclosure obligations and other part 23 National Gas Rules obligations 

Gas network operators that are subject to light-handed regulation are being held more closely to their requirements to ensure effective access to the infrastructure. 
Ensure timely and accurate gas auction reporting by registered participants 

The AER has identified a growth in the usage of the Day Ahead Auction (DAA), which is designed to enhance access to gas pipeline capacity on a more flexible basis.

“The AER has observed issues with the timeliness and accuracy of gas auction reporting…The flow of information is critical to the effectiveness of the auction, which helps to ensure transparency in the market as well as the integrity of the DAA, so the AER will be monitoring compliance in this area.”
 
   

We work with energy market participants to support their compliance and optimise their market activities. Please contact us should you need assistance.



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