Josh Wilson (Fremantle, Australian Labor Party, Assistant Minister for Climate Change and Energy) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill marks a significant step in our commitment to improve regulatory outcomes in the energy sector, by ensuring dedicated governance and accountability structures that are tailored specifically to energy market regulation.

The intention of this bill is to amend the Competition and Consumer Act 2010 to separate the Australian Energy Regulator (the AER) from the Australian Competition and Consumer Commission (the ACCC), establishing the AER as a non-corporate Commonwealth entity with operational control of its staff, resources and governance arrangements.

The AER is the independent regulator of wholesale and retail energy markets and energy networks, mainly across southern and eastern Australia, under national energy laws and rules. Its key activities include energy network regulation, compliance and enforcement, and the performance monitoring and reporting of energy wholesale and retail markets as well as network businesses.

Taken together, that is an incredibly important function—as perfectly well expressed in the AER's purpose, which is 'to ensure energy consumers are better off, now and in the future'.

The AER currently operates as a constituent part of the ACCC. Both organisations are a single Commonwealth entity for the purpose of the finance law. The AER shares staff, resources and facilities with the ACCC—and as a result, the AER board, which is responsible for regulatory functions, does not have direct control over resources and staff, which remain under the ACCC's authority.

This proposed amendment to legally separate the AER from the ACCC will remove the governance risks that hinder the AER's ability to manage its increasing regulatory responsibilities effectively. It will enable the AER to operate effectively as an independent entity.

The bill will not change the key elements of the Australian Energy Market Agreement—such as the role and function of the AER as the independent energy regulator, the composition of the AER's board, the requirement for the Commonwealth to fund the AER, and the administrative law arrangements whereby the decisions of the AER will continue to be subject to judicial review by the Federal Court.

The National Energy Laws—which provide the AER with more detailed functions and obligations—will also remain unchanged.

It has to be acknowledged that several independent reviews have recommended an autonomous AER.

In 2015 the Review of Governance Arrangements for Australian Energy Markets, chaired by Dr Michael Vertigan, considered governance arrangements of the Australian energy markets and recommended that the AER should have full management and financial autonomy, which would most effectively be achieved by re-establishing the AER as a stand-alone regulatory body.

The 2017 Independent Review into the Future of the National Electricity Market, led by Dr Alan Finkel, noted the AER's role is highly technical and sector specific, and that by constituting the AER as a separate energy agency we would be mirroring the structures of other energy market bodies and comparable energy regulators in similar countries.

State and territory energy ministers have been consulted on the proposal, and, on 19 May 2023, agreed the AER should be established as a standalone Commonwealth entity.

It would surprise no-one to observe that the AER's operational environment has evolved significantly since its establishment in 2005. As the energy market becomes more complex, and with the AER's regulatory functions expanding, the AER needs the authority to manage its own resources and to set its own strategic direction independently from the ACCC.

The ambitious scale and pace of the energy transition requires the AER to operate with greater financial and operational autonomy. A distinctly separate AER will provide for greater management and financial autonomy, contributing to the overall effectiveness of the AER as Australia's energy regulator.

Creating a standalone AER will formalise its governance responsibilities, including for managing its budget, human resources and risk oversight. This change will allow the AER to better align its internal operations with its regulatory mandate and strategic goals.

This is essential for effectively managing the energy transition, overseeing wholesale and retail markets, and addressing issues like energy affordability and network regulation. In other words, this change will make sure the AER is better placed to do what we need it to do in the best interests of the Australian community.

The bill supports the broader energy policy of the government, enabled through the National Energy Transformation Partnership, a framework for Commonwealth, state and territory governments to work together on reforms to help transform Australia's energy system to achieve net zero greenhouse gas emissions by 2050.

One of the priority themes of the framework is strengthening energy governance architecture.

The bill is a necessary and forward-looking reform that helps achieve this priority theme.

The government is committed to delivering affordable, reliable and clean energy for all Australians, and the reforms contained in this bill will help make that vision a reality.

Debate adjourned.