Under the Essential Services CommissionAct, the Commission has a strong role in relation to compliance andenforcement in regulated industries, with a suite of associated powers which itutilities to ensure that consumers’ long-terms interests are appropriatelyprotected.
The Essential Services Commission Act 2002, specifies that the statutory functions of the Commissioninclude:
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 beingof the utmost gravity, considering the essential nature of the industries itregulates, and gives effect to its regulatory compliance role through a numberof related actions. First, it is important that regulated entities are madeaware of the regulatory obligations imposed on them and of the possibleconsequences of non-compliance. Secondly, compliance must be monitored, and avariety of strategies implemented to ensure that an effective monitoring regimeis in place. Finally, appropriate enforcement action must be taken in caseswhere non-compliance is detected.
In undertaking its compliance role, theCommission is guided by its legislative objectives, and in particular the needto protect the long-term interests of South Australian consumers with respect tothe price, reliability and quality of essential services. A strong culture ofcompliance is likely to be consistent with protection of consumer interests, butit must not be such as to impose high levels of regulatory costs on regulatedentities.
The Commission has sought to balance these needsthrough establishment of a collaborative compliance regime established underindustry 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 becategorised 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, providing guidance on the criteria andprocesses it uses in determining the type of enforcement action required on acase by case basis. In general terms, the exercise of the Commission’sadministrative process is the primary means of enforcement used by theCommission, with disciplinary and prosecutorial processes reserved for the moreserious matters of non-compliance.
In the context of general regulatory compliance,the Commission uses a range of strategies to promote and facilitate complianceby 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 strongeradministrative enforcement options such as verbal and written warnings, plusformal Warning Notices provided for in the Essential Services CommissionAct and relevant industry regulation acts, together with prosecutorial anddisciplinary powers.
In the energy industry, consumer complaints arean important means of detecting non-compliance and the Commission thereforeliaises closely with the Energy and Water Ombudsman of SA on such matters. TheCommission also liaises with the Office of the Technical Regulator concerningenergy industry entities’ compliance with safety and technical obligations.
In 2019 the Commission undertook compliance action against EnergyAustralia in relation to a shortfall in its achievement of its 2018 priority group energy efficiency activity target.