Monitoring and enforcement functions of the Australian Energy Regulator
One of the AER’s major activities is overseeing the operation of the wholesale electricity market. The AER’s functions and powers in monitoring compliance, investigations and enforcement of the market are set out in section 15 of the National Electricity Law (NEL).
Monitoring
The first function conferred on the AER under section 15 of the NEL is monitoring compliance with the NEL and the National Electricity Rules (NER) by registered participants and other persons. By monitoring activity and behaviour in the market, the AER is able to assess compliance and identify breaches of the NEL and NER.
The AER’s monitoring of the wholesale electricity market includes:
maintaining a ‘market snapshot’ on the AER website, including up-to-date information on the wholesale electricity market
weekly public reporting, including details of market outcomes for each week
preparing public reports when the spot price exceeds $5000/MWh.
Compliance
The AER has released a publication “Compliance and Enforcement – Statement of Approach”. The publication sets out its compliance monitoring activities for the coming year and beyond. Those activities include:
Targeted compliance reviews The AER targets NER provisions to determine the extent to which the relevant provisions are being complied with.
Audits The AER will undertake audits to determine compliance with particular aspects of the NER.
Technical standards compliance monitoring programs The AER will undertake audits that specifically focus on assessing participants’ technical standards compliance monitoring programs.
Participant reporting The AER will be enhancing participant reporting requirements with respect to particular obligations under the NER.
A copy of the AER compliance and enforcement statement of approach is available for downloading.
The purpose of the AER’s compliance monitoring regime is to identify any incidents of non-compliance with the NEL and NER. In some cases, a further investigation may be warranted to ascertain the existence, nature and extent of any breach. The AER undertakes special investigations of events to determine whether enforcement action is required.
Under section 59 of the NEL, the AER has sole responsibility for initiating proceedings in relation to an alleged breach of the NEL, NER or relevant Regulations.
A penalty of up to $20,000 for a natural person or up to $100,000 for a body corporate may be imposed by a court for breaches of civil penalty provisions other than the rebidding civil penalty provision. The rebidding civil penalty provision applies in cases where scheduled generators or market participants breach clause 3.8.22A of the rules, by not making dispatch offers, bids or rebids in good faith. In those cases, the AER may seek penalties of up to $1,000,000 (and $50,000 per day).
The AER is able to seek remedies in the state or territory supreme court of the relevant jurisdiction of the national electricity market (NEM) or the Federal Court. The AER may apply to the court for an injunction where a person has engaged in, is engaging in or is proposing to engage in conduct in breach of the NEL, NER or Regulations. Under sections 61 to 63 of the NEL, the courts may make a range of orders including a direction that a participant’s load be disconnected, and that the participant be suspended from purchasing or supplying electricity through the wholesale exchange. The Federal Court also has powers to make orders on application under section 44AAG of the Trade Practices Act and include orders requiring the person to do one or more of the following:
cease the activity that is in breach
take action to remedy the breach and
implement a specified program for compliance with the law.
Under section 74 of the NEL, a further power available to the AER is the ability to issue an infringement notice in relation to any civil penalty provision (other than a rebidding civil penalty provision). An infringement notice can be served on a registered participant and any other person prescribed by the regulations as a "relevant participant", where the AER has reason to believe they have breached a civil penalty provision, that is not a rebidding civil penalty provision. A person who receives a notice may either pay the infringement penalty, or defend, in court, any formal proceedings in respect of the breach.
The amount of an infringement penalty is $4,000 for a natural person and $20,000 for a body corporate.
