Australian Energy Regulator Enforces $1.3M Pecuniary Penalty for Breach of Reporting Obligations

Jones Day
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Energy retailers have a fresh impetus to abide by reporting obligations imposed by the Australian Energy Regulator ("AER") after the judgment in Australian Energy Regulator v AGL Sales Pty Limited [2020] FCA 1623. The court ordered by consent a $1.3 million penalty against AGL (one of Australia's largest energy retailers) for the submission of required reporting information which was late, inaccurate and prepared without due care and skill.

As the primary regulator of Australia's energy sector, the AER is responsible for reporting on performance and activity information submitted by energy retailers. This informs stakeholders and policymakers of the state of the operation of the retail energy market, so they can identify trends and provide better consumer outcomes. Energy retailers are in turn required by the National Energy Retail Law to provide relevant information relating to a variety of performance measures, including areas such as customer numbers, disconnections, debt and hardship assistance.

In November 2019, the AER alleged that four AGL entities submitted information which was late, inaccurate and prepared without due care and skill in the 2017/2018 year. Before the Federal Court, AGL conceded the allegations and agreed that the appropriate penalty was $325,000 for each of the AGL entities, totaling $1.3 million. The penalties related to contraventions that lasted for a period of one year.

The judgment in Australian Energy Regulator v AGL Sales Pty Limited should serve as a timely reminder of AER's ability to enforce contraventions of law even of an administrative nature, such as late submissions of information. Market participants must act diligently in submitting required information on time and in the appropriate manner and form required by law. Failure to do so gives rise to risks of pecuniary penalties. Market participants should be wary that such contraventions give rise to reputational risk with the regulator (as well as in the market), rendering it more likely that an entity will be more closely scrutinised in the future. In this respect, it should be noted that one of the relevant factors for a court assessing the appropriate civil penalty is whether the contravener has engaged in similar conduct in the past, rendering it likely that any subsequent penalties will be larger.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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