“We think these steps [to introduce fines] will further strengthen the ring-fencing arrangements to drive competition and promote better consumers outcomes,” she said.
“We take instances of non-compliance seriously and are expecting greater levels of compliance in future.”
Current maximum civil penalties under national electricity law are up to $100,000 for a regulatory breach, although work is underway through the government to increase this figure.
She said by setting guidelines, backed with the ability to punish breaches, it encourages more competition in the market.
“We want to see new entrants and distribution businesses be appropriately rewarded where they meet the needs of consumers. This is best delivered through competition, with regulation advancing the long-term interest of consumers where necessary.”
Energy services companies carry out work such as large scale solar and battery installations, electricity infrastructure repair or energy efficiency programs.
These tougher rules are also supported by the National Electrical and Communications Association (NECA), which said it is unfair for network companies to run electrical contracting businesses and use their regulated monopoly to stifle competition.
“The breaches identified by the AER have cost hardworking electrical contracting firms, which are unable to compete with the market power of the networks and their subsidiaries,” NECA chief executive Suresh Manickam said.
“We are concerned about what appear to be systemic cultural practices within the sector, which are harming competition, consumers and confidence in the market.
“Action needs to be taken to punish past breaches and we call on the regulator and government to act in the best interests of the community.”
Since the new guidelines came into force on 1 January 2018 the AER has already found three distributors breaching them.
The AER said Canberra-based Evoenergy failed to implement systems to prevent breaches occurring.
NSW-based power distributor Ausgrid was housing energy services company Plus ES’s staff within its own offices. Plus ES is owned by IFM Investors and AustralianSuper, the same investment funds that own Ausgrid.
The AER said South Australia Power Networks (SAPN) had no controls in place to prevent a breach and had call centres scripts directing relevant customers to its subsidiary brand Enerven for energy services.
Ausgrid and Evoenergy both said the rules are new and they are still working to comply with them.
Covering energy and policy at Fairfax Media.