Compliance

Gas cooker

 

Under the Essential Services Commission Act, the Commission has a strong role in relation to compliance and enforcement in regulated industries, with a suite of associated powers which it utilities to ensure that consumers’ long-terms interests are appropriately protected.

The Essential Services Commission Act 2002 specifies that the statutory functions of the Commission include:

  • monitoring and enforcement of compliance with, and promotion of improvement in, standards and conditions of service and supply under relevant industry regulation Acts; and
  • in appropriate cases, conducting prosecutions for contraventions of the Essential Services Commission Act or relevant industry regulation Acts.

The Commission regards those functions as being of the utmost gravity, considering the essential nature of the industries it regulates, and gives effect to its regulatory compliance role through a number of related actions. First, it is important that regulated entities are made aware of the regulatory obligations imposed on them and of the possible consequences of non-compliance. Secondly, compliance must be monitored, and a variety of strategies implemented to ensure that an effective monitoring regime is in place. Finally, appropriate enforcement action must be taken in cases where non-compliance is detected.

In undertaking its compliance role, the Commission is guided by its legislative objectives, and in particular the need to protect the long-term interests of South Australian consumers with respect to the price, reliability and quality of essential services. A strong culture of compliance is likely to be consistent with protection of consumer interests, but it must not be such as to impose high levels of regulatory costs on regulated entities.

The Commission has sought to balance these needs through establishment of a collaborative compliance regime established under industry specific regulatory instruments (for example Energy Guideline No 4) that:

  • encourages regulated entities to actively cooperate in the early reporting and rectification of any identified non-compliance;
  • uses a risk based approach as far as possible in both compliance monitoring and enforcement, based on the likelihood of a breach of a regulatory obligation and the possible consequences (for example, on South Australian consumers) of such a breach; and
  • reserves stronger enforcement action (for example, prosecution) for more serious cases involving wilful or systemic non-compliances with major consequences, or circumstances in which other processes have not had the desired remedial effect.

The Commission’s enforcement processes can be categorised as follows:

  • Administrative – through the exercise of roles and functions which are prescribed under legislation or arise in the ordinary course of performance of a legislative function;
  • Disciplinary – through the exercise of powers granted under legislation to protect South Australian consumers; and
  • Prosecutorial – through the exercise of powers granted under legislation to bring punitive action against an entity, which does not comply with legislative requirements.

The Commission has published an Enforcement Policy, which was updated in 2012 to reflect the changing functions of the Commission, providing guidance on the criteria and processes it uses in determining the type of enforcement action required on a case by case basis. In general terms, the exercise of the Commission’s administrative process is the primary means of enforcement used by the Commission, with disciplinary and prosecutorial processes reserved for the more serious matters of non-compliance.

In the context of general regulatory compliance, the Commission uses a range of strategies to promote and facilitate compliance by regulated entities, including:

  • the provision of education, advice and assistance;
  • compliance reporting; and
  • compliance audits that the Commission may itself undertake or require regulated entities to undertake.

The Commission also has a range of stronger administrative enforcement options such as verbal and written warnings, plus formal Warning Notices provided for in the Essential Services Commission Act and relevant industry regulation acts, together with prosecutorial and disciplinary powers.

In the energy industry, consumer complaints are an important means of detecting non-compliance and the Commission therefore liaises closely with the Energy & Water Ombudsman SA on such matters. The Commission also liaises with the Office of the Technical Regulator concerning energy industry entities’ compliance with safety and technical obligations.