The Government recently released a Cabinet paper, Progressing the Energy Package: Building Better Markets, which provides more detail on the previously announced proposal to strengthen the Electricity Authority's ("EA") mandate through a range of amendments to the Electricity Industry Act 2010 ("Electricity Act") and the Electricity Industry Participation Code ("Code").
For more details regarding the initial release of the coalition Government's Energy Reforms package please see our previous insight.
Proposal for Reform: Addressing Identified Weaknesses
The Government has identified that the electricity industry needs a "powerful, decisive regulator focused on ensuring a competitive market and the best outcomes for consumers" and suggests that "weak enforcement tools and slow rulemaking have hampered the EA's ability to effectively regulate the industry."
To address these issues, Cabinet has agreed to a range of initiatives aimed to ensure there is a credible deterrent to non-compliance and that the EA has more effective tools to monitor competition within the electricity industry.
The key legislative initiatives are as follows:
- Increase penalties for breaches of the Code, raising the maximum from $2 million to $10 million (or three times the commercial gain) to align with Commerce Act standards. This will apply to the most serious breaches of the Code (further work is being undertaken to identify these breaches). Penalties greater than $2 million will be decided by the High Court, rather than the Electricity Rulings Panel.
- Introduce a new criminal offence for knowingly misleading or attempting to deceive the EA.
- Allow the EA to issue infringement fines to industry participants of no more than $2,000 for minor and repetitive non-compliance (further work is being undertaken to identify infringement offences) and to enable the EA to publish enforcement outcomes where desirable.
- Allow the EA to suspend an industry participant for no more than 15 days if their actions threaten the integrity, reliability or security of the electricity market.
- Enable the EA to compel information from any person when ensuring compliance with the Electricity Act or carrying out a Ministerial review.
- Include an explicit function to monitor competition in the EA's statutory functions.
- Introduce requirements for the EA to integrate international best practice to competition assessment, integrate international and domestic hydro valuation methodologies into its market monitoring, and publish reports on the state of competition in at least the wholesale, contract and retail markets, on at least an annual basis.
New Power to Impose Entry Requirements on Participants
A notable reform proposal not previously highlighted is that the EA will be empowered to impose entry requirements on participants in the Code.
Further context is provided by the Regulatory Impact Statement, which discusses the option of providing the EA with powers to establish eligibility criteria for the entry of new retailers. This is intended to safeguard consumers and other industry participants from unsuitable participants joining the market, while also aiming to minimise the occurrence of breaches that require significant attention and resources from the EA.
This represents a potentially significant expansion of the EA's regulatory toolkit, especially if it is enabled to set conditions for market entry.
Formal Code Change Process: A Balanced Approach
The Cabinet paper further states that the Government has considered but ultimately declined to implement a fully formal Code change process for industry participant proposals, as recommended by the Frontier Economics review. While Cabinet agreed in principle in September 2025 to have a formal process to respond to Code change proposals from industry participants, the paper notes that establishing such a formal process "would take significant resources and jeopardies the Electricity Authority's ability to advance its 'own' Code changes or changes that align with Government priorities."
Instead, the Government has adopted a transparency-focused alternative.
The EA will be required to publish annually:
- a list of all Code change proposals received;
- the criteria it applies to prioritise across proposals; and
- a progress report on those proposals.
This approach responds to stakeholder concerns that the EA "does not take enhancements proposed by the sector seriously" whilst preserving the EA's ability to advance its own priorities.
Implications for Market Participants
The proposed reforms mark a material strengthening of the EA's mandate, enforcement powers, and monitoring role.
Participants in the wholesale and retail electricity markets should anticipate:
- significantly higher potential financial and criminal exposure for serious breaches and for knowingly providing misleading information;
- a more flexible enforcement toolkit (including improvement notices, enforceable undertakings, infringement notices and short-term suspensions); and
- more intensive and methodologically robust competition monitoring, with regular public reporting.
The Cabinet Paper notes that the responsible Ministers will submit a bid for the Electricity Industry Act Amendment Bill to be passed before the election (category 2 on the legislative programme).
For more information about what these developments might mean for you, please get in touch with one of our experts.