Description and analysis of the Regulatory Regime in the Australian Energy Sector:
In this paper, the regulatory regime in the Australian energy sector will be analyzed. This analysis will take place in four sections, a brief description of the Australian regulatory approach, what legal acts govern regulation, what are the names and functions of the regulatory bodies, and finally a short analysis of the advantages and disadvantages of the current regulatory regime
the Australian energy sector regulation - somewhat like the political nature of Australia – is extremely diverse and both state and sector specific. Indeed, there is no “one size fits all” policy of regulation in Australia, and the entirety of this paper could be spent just on explaining the complicated nature of the balancing act between the Australian National and State regulatory approach. A brief outline of the Regulatory approach can be found in the graph below.
Legal Acts Governing Regulation:
The legal framework of the Australian Regulatory Regime is split into; the National Energy Law (NEL), the National Gas Law (NGL), the various legislation of each state and territory in Australia, the National Energy Retail Law (ERL), and finally; the Australian legislative instruments including National Electricity Rules (NER) and National Gas Rules (NGR). As can be seen, Gas and Energy Regulations are quite split and separate. However, the overarching legal act regulating both sectors, and within each state and Territory of Australia, stems from the Commonwealth Competition and Consumer Act 2010 (CCA 2010). This Act established many of the laws and regulatory bodies that regulate both the energy and gas markets in Australia (with the exception of the state of Western Australia and the Northern Territory). Part IIIAA of the CCA 2010, should be particularly noted, as it establishes the Australian Energy Regulator (AER), ands sets up the legal framework for the Australian Energy Market Agreements between states and territories in Australia. In 2012, this led to much harmonization between state and national regulatory law. The state of South Australia – in particular- was heavily involved in this process, as example; the National Electricity Law, stemmed from the National Electricity (South Australia) Act 1996, The National Gas Law, stemmed from the National Gas (South Australia) Act 2008, and the National Energy Retail Law stemmed from the National Energy Retail Law (South Australia) Act 2011. As can be seen from the previous diagram1 the legal acts governing regulation in Australia are complicated despite the recent harmonization between state and national laws.
The CCA 2010 establishes the functions of the governing bodies in the Australian Regulatory Regime. These are; the Standing Council on Energy and Resources, (SCER) responsible for pursuing a strategic national agenda across the energy and resources sectors, the Australian Energy Market Commission (AEMC) responsible for maintaining and developing the National Electricity Rules, the previously mentions Australian Energy Regulator (AER), responsible for economic regulation and enforcement, and finally, Australian Energy Market Operator (AEMO) responsible for the operation of the National Electricity Market (NEM) These regulators function on a national level in Australia, with the exception in Western Australia and the Northern Territory2, where, the Economic Regulation Authority (ERA), and the National Competition Council (NCC) also exist. Separate smaller and specifically designed regulators also exist in each state and territory and are too numerous to mention in such a short paper.
Advantages and Disadvantages:
The Australian Energy Regime, reflecting the nature of Australian geographical and political realities – is extremely complex. This complexity allows for many checks and balances to regulate the market efficiently, protecting consumers from abuse on both a state and national level6. Conversely, as can be seen, the complexity of the Australian Regulatory Regime leads to much inefficiency that is currently trying to be overcome for the benefit of both the market and consumer in Australia. This has however, only taken place in mainly Eastern and Southern Australian states, as they share the same gas and electricity networks. This is also why Western Australia and the Northern Territory still have much autonomy when it comes to regulation and legislation, as they have separate grids from the rest of the country1. It can be argued that in recent years, with the privatization of the energy and gas market in Australia, the average consumer has benefitted from an increase in competition in both the energy and gas sectors. The energy and gas sectors themselves, however, have suffered from the cumbersome nature in which the regulation and enforcement of this regulation differs from state to state in Australia, leading to many inefficiencies which cost the Australian tax payer.
 Byrnes, Liam; Brown, Colin; Foster, John and Wagner, Liam “Australian Energy Policy: Barriers and Challenges” University of Queensland, Australian, Available from; http://www.uq.edu.au/eemg/docs/workingpapers/2013-02.pdf
 Schwartz, David, L. “Energy Regulation and Markets Revue: Law Business Research, 2012, Available from; http://www.minterellison.com/files/uploads/Documents%5CPublications%5CMediaManagerDocuments/The-Energy-Regulation-and-Markets-Review.pdf
 National Electricity Rules, “Version 62 No. 4, National Electricity Amendment” 17th April, 2014 Available from; http://www.aemc.gov.au/getattachment/59559b99-e10c-4f4a-9c84-5f20df368c52/National-Electricity-Rules-Version-62.aspx
 Electranet “Regulatory and Market Framework” 2014, Available from; http://www.electranet.com.au/network/national-electricity-market/regulatory-and-market-framework/
 United Energy and Multinet Gas, “Australian Regulatory Framework”, 2014, Available from; http://www.unitedenergy.com.au/about-us/regulatory-framework.aspx
Written by Christopher Harkin