Australian Energy Regulator welcomes federal funding boost

Price gouging under fire in AER investigation of electricity networks.

The Australian Government will increase funding to the Australian Energy Regulator (AER) by $67.4 million over the next four years.

The funding increase, which begins July 1 2017, was announced this week.

Making the announcement, the Turnbull Government added: “Every decision we make in the energy sector is designed to ease pressure on household bills and make businesses more competitive.”

AER chair Paula Conboy said the funding increase will allow her organisation to meet “the challenges of an increasingly complex energy market”.

“The AER has an important role in helping to deliver security, reliability and affordability in energy markets through our work in network regulation, consumer protection and monitoring the effectiveness of wholesale markets,” Ms Conboy said.

“The government’s announcement will strengthen our ability to make Australian energy consumers better off, now and in the future.”

Government says appeals against AER decisions ‘will end’

In its funding announcement, the Federal Government pointed to the excessive litigation electricity networks have brought against the AER.

AER to get federal funding boost.

The Turnbull Government has increased funding to the Australian Energy Regulator. Image Pixabay

“We will stop big electricity companies from running to the courts to try to overturn the Australian Energy Regulator’s decisions,” the announcement said.

“Companies have made 52 appeals and the courts have ruled against consumers 31 times. This will end.”

Most recently, an AER appeal defending its decision on network revenue cuts failed in the Federal Court.

The AER believed the networks’ operating costs, particularly maintenance, were overestimated.

However, the networks successfully challenged the decision, taking the AER to the Australian Competition Tribunal.

The AER appeal’s failure against that decision means networks can increase the cost of wholesale electricity, a cost absorbed by consumers.

The scope of the Australian Energy Regulator

The AER regulates energy markets and networks under national legislation. Its functions include:

  • Monitoring wholesale electricity and gas markets to ensure energy businesses comply with the legislation and rules, and taking enforcement action where necessary;
  • Setting the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy;
  • Regulating retail energy markets in Queensland, New South Wales, South Australia, Tasmania (electricity only), and the ACT;
  • Operating the Energy Made Easy website, which provides a retail price comparator and other information for energy consumers; and
  • Publishing information on energy markets, including the annual ‘State of the Energy Market’ report.