Energy market legislation

Energy ministers are responsible for the legislative and regulatory framework within which Australian energy markets operate.

There must be clear rules for the energy market so that participants understand their rights and responsibilities.

Rules are made under national energy laws designed to promote efficient investment, operation and use of energy services for the long-term interests of consumers with respect to price, quality, safety, reliability, and security of supply.

Rules determine how companies can operate and participate in the competitive generation and retail sectors. They also govern the economic regulation of electricity transmission and distribution networks and gas pipelines.

Key legislation

The laws are applied by state and territory application legislation in New South Wales, Queensland, Victoria, South Australia, Tasmania and the Australian Capital Territory, and to a limited extent in the Northern Territory and Western Australia.

National Electricity Law (NEL)

The NEL is the schedule to the National Electricity (South Australia) Act 1996 which establishes the governance and enforcement framework and key obligations surrounding the national electricity market and the regulation of access to electricity networks. The NEL is supported by further regulations and the National Electricity Rules (NER).

The Northern Territory has also applied the NEL with a number of variations to cater to local requirements.

National Gas Law (NGL)

The NGL is the schedule to the National Gas (South Australia) Act 2008. It establishes the governance and enforcement framework and key obligations surrounding the access to gas pipelines and establishes a gas market bulletin board. The NGL is supported by further regulations and the National Gas Rules (NGR).

WA adopted the NGL through complementary legislation in January 2010.

National Energy Retail Law (NERL)

The NERL is the schedule to the National Energy Retail Law (South Australia) Act 2011 which regulates the supply and sale of both gas and electricity to retail customers. The NERL is supported by further regulations and the National Energy Retail Rules (NERR).

Victoria has not applied the NERL, however, the Victorian Energy Retail Code provides a range of similar consumer protections.

Australian Energy Market Commission Establishment Act 2004

AEMC Establishment Act 2004 establishes the Australian Energy Market Commission and sets out matters such as the functions of the AEMC and how it is constituted.

Prohibiting Energy Market Misconduct

The Australian Government will introduce legislation to implement a strong regime to crack down on poor market practices. The legislation will:

empower the ACCC to recommend a range of enforcement remedies where unacceptable outcomes have been identified
empower the Treasurer to issue contracting orders on advice from the ACCC, that will require electricity companies to offer electricity financial contacts to third parties
empower the Federal Court to order divestiture of assets following an application by the Treasurer on advice from the ACCC (as a last resort)
enhance the Australian Energy Regulator’s (AER) information-gathering powers

Stronger protections for energy consumers

The government has submitted rule changes to the AEMC to better protect customers, including placing limits on the penalties customers can face when they don’t pay on time.

The government will also propose an ambitious agenda for the COAG Energy Council including:

introducing a market cap on generation ownership
increasing transparency in the wholesale contract market
introducing higher penalties for breaches of the National Electricity Law and related laws, of up to $10 million
increasing the AER’s powers to investigate market manipulation and impose appropriate remedies