An incentive to invest in compliance 3 min read
New laws came into effect from 29 January 2021 which significantly increase the penalties payable for breaches of Australia's electricity, gas and energy retail laws. They also provide the Australian Energy Regulator (AER) with stronger powers when investigating and enforcing contraventions of the energy laws.
In this Insight we examine the new penalties and the other changes made to Australia's national energy laws.
Key takeaways
- It has never been more important to ensure your business operations are compliant with the National Energy Laws. The AER has made it clear it expects businesses to view the increased penalties as an incentive to invest in their compliance with energy laws.
- Recent activity by the AER and other jurisdictional regulators indicates a willingness to levy significant penalties for breaches of laws and we expect this trend to accelerate under the new penalty regime.
- Ongoing investment in, and support for, compliance systems, processes and culture will be critical if energy businesses are to minimise their exposure to potentially costly enforcement action.
Higher penalties now in force
Significant increases have been made to the maximum penalties payable for contraventions of the National Electricity Law, National Gas Law, National Energy Retail Law and the rules made under these laws (together, the National Energy Laws), with different tiers of applicable penalty depending on the nature of the law or rule in question. The amount payable under an infringement notice (which the AER can issue in lieu of commencing court proceedings) has also been significantly increased.
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Old maximum |
New maximum |
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Companies – court-ordered penalty |
$100,000 (plus $10,000 per day for continuing breaches |
Tier 1 breach: The greater of $10,000,000, three times the benefit obtained, or 10% of the annual turnover of the company Tier 2 breach: $1,435,000 (plus $71,800 per day for continuing breaches) Tier 3 breach: $170,000 (plus $14,400 per day for continuing breaches) |
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Companies – infringement notice |
$20,000 |
Tier 1 and 2 breach: $67,800 Tier 3 breach: $33,900 |
Each of the 800+ civil penalty provisions in the National Energy Laws have been assessed as being a tier 1, tier 2 or tier 3 provision, with provisions categorised based on the potential for consumer harm, adverse market impacts, supply security and reliability impacts, and unacceptable participant behaviour. Examples of tier 1 provisions include (among others):
- retail energy provisions relating to hardship customers and life support customers;
- electricity provisions relating to registration, bidding, dispatch, information provision to AEMO, compliance with generator performance standards and ringfencing; and
- gas provisions related to registration, access, ringfencing and compliance with market procedures.
The new maximum penalty and infringement amounts are indexed against CPI and are adjusted every three years. The penalties payable by individuals who contravene relevant laws have also been increased.
Strengthened investigation and enforcement powers
In addition to increased penalties, the new laws have provided the AER with the ability to:
- require witnesses to present for oral examination during investigations;
- seek court orders requiring compliance with notices to provide information or documents; and
- seek orders requiring 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.