The Federal Government has announced new legislative measures to hold energy companies to account for pricing misconduct are now enforceable.
The ‘big stick’ legislation came into effect on 10 June 2020, six months after royal assent.
It will ensure reductions in wholesale costs are passed onto customers, while penalties will apply for anti-competitive behaviour or moves to manipulate electricity prices.
It is hoped the measures will drive down energy prices and strengthen supply, ensuring fair deals on energy prices for Australian households, small businesses and industries.
The new legislation is motivated in part by findings from the Australian Competition and Consumer Commission (ACCC) that energy companies have “played a major role in poor outcomes for consumers”.
This new law comes at a time when an increased number of households and small businesses are experiencing hardship due to the COVID-19 pandemic.
The ACCC will be responsible for enforcing the legislation, and will have a graduated range of penalties at its disposal to punish misconduct ranging from public warnings and court-ordered fines.
For the most egregious breaches, the legislation makes available two additional significant remedies:
- Federal Treasurer-issued contracting orders that will require electricity companies to offer electricity financial contracts to third parties
- Federal Court-ordered divestiture orders relating to misconduct in the wholesale market
This legislation is part of the Federal Government’s plan to deliver a fairer, more affordable and reliable energy system and a stronger economy for all Australians. This includes:
- Establishing an ongoing ACCC inquiry into the National Electricity Market to 2025
- Introducing the Government’s Default Market Offer ‘price safety net’, leading to reductions in both standing offers and high-priced market offers for Australian families and small businesses
- Getting rid of sneaky late payment penalties
- Extending the Consumer Data Right to energy, to make it easier for consumers to switch energy providers to get a better deal
- Progressing the Underwriting New Generation Investments program to improve competition and reduce wholesale prices
- Establishing a new $1 billion Grid Reliability Fund, to support government investment in new energy generation, storage and transmission infrastructure