Regulatory Risks in Energy

Overview

Regulatory Risks: Competition

Key issues

• Regulation: Operators and owners need to be involved in the development of new regulation and policy and have good relationships with the ACCC and the Australian Energy Regulator (AER) who contribute to it.
• Price controls: temporary price controls are likely. We expect the ACCC and Government will consider the impact of price controls on the competitive process. Longer term, reforms to the Competition and Consumer Act are likely to encourage the energy transition.
• Market design: the AER is likely to incorporate energy transition considerations in its implementation of NEM 2025 and market design reforms.

Regulatory Risks: Commercial Litigation

Key issues

• Greenwashing: This is a top priority for ASIC (and the ACCC) with detailed surveillance and enforcement action ramping up in 2022. ASIC is focused on green claims when offering or promoting sustainability related financial products.
• Climate-related financial reporting and disclosures: new standardised and internationally aligned reporting requirements for large businesses ae coming, moving them to mandatory reporting on financial and non-financial climate risks. Until then, ASIC encourages proactive disclosures of climate-related risks.
• Shareholder activism: Failing to meet investor demand or to fulfil consumer expectation for adequate ESG policies and reporting increases litigation risk, including the targeting of boards and directors for failures to implement climate strategies.