Consumer matters
Issue date
AER reference
NR 02/21

New and stronger penalties introduced under the national energy laws will provide a greater incentive for businesses to comply with laws designed to protect Australian electricity and gas consumers.

The Australian Energy Regulator (AER) Chair Clare Savage said, “Consumers expect energy companies to play by the rules that are there to protect them, and if those rules are broken, the penalty must reflect the seriousness of the breaches in order to provide a deterrent.

“The new penalty regime aligns energy laws more closely with other regimes for consumer protection and market regulation, and provides a significant scaling up of the penalties available to the courts and the AER.

“The increased maximum penalties will allow the courts to impose penalties that are proportionate to the harm done by a business that breaches the law. We expect the new penalties to incentivise energy businesses to devote even greater effort to comply with laws to protect consumers.”

In the most serious cases, the AER will be able to seek penalties of up to $10 million (or more for large companies) for alleged breaches of the energy laws under new provisions commencing today. There are three tiers of penalty provisions, reflecting three levels of severity of breaches.

Other key changes to the AER’s powers under the new laws include the ability to:

  • require witnesses to attend for oral examination during investigations
  • seek court orders requiring compliance with compulsory notices to provide information or documents
  • seek orders that a person who has breached certain provisions of the National Energy Laws to perform a service for the benefit of the community or publish an advertisement about the breach.

“A regulator investigating illegal misconduct should be able to compel those involved to answer questions where necessary. Previously, we have been unable to do this. These new powers will better equip us to do our job to protect consumers, while incentivising compliance,” said Ms Savage.

The criminal offence penalty for failing to comply with a notice, or for providing false or misleading information to the AER or Australian Energy Market Operator, has also increased to $6,300 for an individual or $31,500 for a corporation.

Increases to penalties apply to conduct from 29 January 2021 onwards. Oral examination notices can be issued from 29 January 2021 and can cover previous conduct.

Notes to editors

The Statutes Amendment (National Energy Laws) (Penalties and Enforcement) Act 2020 provides that civil penalties for breaches of the National Energy Laws have increased as follows:

  • The Act provides for three tiers of civil penalties. Tier 1 provisions will carry maximum penalties for corporations of $10 million, or if greater, three times the benefit obtained from the breach if this can be determined, or if not, 10% of annual turnover. Tier 2 maximum penalties are up to $1,435,000 (plus $71,800 per day for continuing breaches) and Tier 3 are up to $170,000 (plus $14,400 per day for continuing breaches). These amounts will be indexed every three years to ensure their deterrent value is maintained.
  • Each of the over 800 civil penalty provisions in the National Electricity, Gas and Energy Retail Laws, and associated Rules, has been assigned to a penalty tier by amendments to the National Electricity, Gas and Energy Retail Regulations.
  • Infringement notice penalties have also increased; up to $67,800 for alleged Tier 1 and 2 breaches.

About the AER

The AER’s commitment is to make energy consumers better off, now and in the future. Our objectives are to:

  1. Protect vulnerable consumers while enabling consumers to participate in energy markets
  2. Effectively regulate competitive markets primarily through monitoring and reporting, and enforcement and compliance
  3. Deliver efficient regulation of monopoly infrastructure while incentivising networks to become platforms for energy services
  4. Use our expertise to inform debate about Australia’s energy future and support the energy transition.