AER signals potentially stronger enforcement action following gas auction penalties

Pelican Point Power and Simply Energy, both subsidiaries of energy company ENGIE, have paid penalties totalling $200,000 following enforcement action by the Australian Energy Regulator (AER).

The penalties relate to alleged breaches of the National Gas Rules for failing to make required records in connection with gas day-ahead auctions which allow for the trading of contracted but unused capacity on gas pipelines.

ENGIE self-reported 1,484 potential failures to make records as required by the rules between March 2019 and April 2020 and were issued with a total of 10 infringement notices by the AER.

AER Chair Clare Savage said this matter was a timely reminder to gas pipeline users to comply with record keeping requirements to support the integrity of the auctions, or potentially face bigger penalties in the future.

“Monitoring compliance with gas auction reporting is a priority area for the AER because of ongoing issues we have observed with the timeliness and accuracy of the reporting. These reforms have been in place for more than two years, so businesses have had plenty of time to get their houses in order,” Ms Savage said.

“The flow of information is critical to the effectiveness of the auction, which helps to ensure transparency in the market, protects participants against market manipulation, and ultimately helps get gas to where it is needed most.

“Non-compliance with these crucial rules is taken very seriously.

“New provisions were introduced early this year allowing the courts to impose bigger penalties that are proportionate to the harm caused by a business that breaches the law.

“The AER may take stronger enforcement action in future if we continue to see repeated breaches of these important rules,” Ms Savage said.

The gas day ahead auctions commenced in March 2019. Gas pipeline users must make and keep timely records of material changes in the unused capacity that they submit to pipeline operators, and provide these records to the AER upon request.  

This helps to ensure that gas pipeline users are transparent about the capacity that is available to their competitors through the auction process.

The payment of infringement notices does not constitute an admission of liability by Pelican Point Power or Simply Energy but does preclude the AER from taking any further action in relation to the alleged conduct.

Issued date: 
4 August 2021
AER reference: 
NR 22/21
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