Electricity Industry (Wholesale Electricity Market) Regulations 2004

The regulations build on several foundational concepts. Market rules means the electricity system and market rules (regulation 3). They are made by the Minister (regulation 6(2)) and must be notified in the Gazette (regulation 6(6)) and laid before each House of Parliament within 10 sitting days (regulation 6(9)). The market rules may deal with any matter listed in regulation 17, including the establishment of advisory committees, registration procedures and fees, participation, dispute resolution, monitoring and enforcement, security and reliability, trading and balancing, procurement of capacity, dispatch, pricing and settlements, metering, confidentiality, suspension of obligations, delegation, and transitional matters. The market rules may also provide for their own amendment processes (regulation 7(1)), though the Minister retains certain override powers, including the power to replace the rules in whole and the power to approve rules that confer functions on the Coordinator (regulation 7(3)). The Minister also has time-limited powers to make amending rules: for a period ending on 31 October 2027 (regulation 7(5)). Market procedures are procedures to be followed by participants to comply with the market rules; they may be developed by the Minister initially (regulation 9(2)) and later under the market rules (regulation 9(1)). The Authority, operator and Coordinator each have responsibility for developing amendments to market procedures in their respective functional areas (regulations 11(2), 12(2A), 12C(2)). Registered participant means a participant described in paragraph (a) of the definition of participant in section 121(1) of the Act (regulation 3) , essentially persons who are registered by the operator to engage in the activities listed in regulation 14. Registration is mandatory under regulation 19, and the operator maintains a register and issues certificates that are evidence of registration or exemption (regulation 16). Civil penalty provisions are those provisions of the market rules listed in Schedule 1 (regulation 30(1)). Each provision is assigned a category (A, B or C) with corresponding maximum penalty amounts: Category A penalises first contraventions at $10,000 plus $5,000 daily, rising to $20,000 plus $5,000 daily for subsequent contraventions; Category B sets $50,000 plus $10,000 daily for first contraventions and $75,000 plus $10,000 daily for subsequent contraventions; Category C sets $100,000 plus $20,000 daily, with no increase for subsequent contraventions (Schedule 1). The category affects the maximum penalty but the regulations do not define the categories further. Reviewable decisions and procedural decisions are defined in regulation 41 by reference to the tables in Schedule 2. Reviewable decisions include the Authority's decision to demand a civil penalty under regulation 31(1) and a long list of market rule decisions (e.g. clause 2.13.16, clause 2.13.17). Procedural decisions are a subset of reviewable decisions (listed in Schedule 2 clause 2) and are reviewed only on procedural grounds (regulation 43). Specified governance participant is defined in regulation 51 as AEMO and the Board; these entities benefit from the liability caps in Part 8. SWIS means the South West Interconnected System (regulation 3). Under, in relation to the market rules, includes by, in accordance with, pursuant to and by virtue of the market rules (regulation 3).

The regulations directly affect a range of entities and individuals involved in the Western Australian electricity market, primarily within the SWIS. Registered participants are central: any person who owns, controls or operates a generation system with a rated capacity greater than the specified capacity and supplies electricity to or is electrically connected to a transmission or distribution system that forms part of or is connected to the SWIS; anyone who owns, controls or operates such a transmission or distribution system; anyone who sells or purchases electricity or another service to or from the operator; anyone who sells electricity to customers in respect of facilities electrically connected to the SWIS; and anyone who administers or operates a wholesale market for dispatch of generating units or loads (regulation 14). These persons must register with the operator (AEMO) and comply with all applicable market rules and procedures. They may also be subject to directions from the operator or the Authority (regulation 15). The operator, AEMO, is affected as the entity responsible for operating the SWIS in a secure and reliable manner (regulation 12(5)), maintaining a website, developing market procedures, and complying with directions from the Authority (regulation 12(6)). AEMO's costs are allocated to registered participants (regulation 21). The Authority, the Economic Regulation Authority, has investigation, enforcement and civil penalty demand powers under Part 5, develops market procedures related to its functions, and maintains its own website (regulation 11). The Coordinator, under the Energy Coordination Act 1994, has functions relating to rule development and governance matters (regulation 12C). The Minister and the Minister administering the Electricity Corporations Act 2005 may have functions conferred on them by the market rules (regulation 10). The Minister also makes the market rules and may make amending rules during certain periods (regulation 7). The Electricity Generation and Retail Corporation and the Electricity Networks Corporation are state-owned corporations that may have functions and requirements imposed on them by the market rules (regulation 12A) , these entities own and operate generation, network and retail assets. The Board (the Electricity Review Board) is affected because it hears applications for review of reviewable decisions and applications for orders for contraventions (Part 6 and Part 7). Officers and employees of specified governance participants are affected by the liability caps: they face a maximum civil monetary liability of $1 for acts or omissions (regulation 53). Persons who provide information about possible contraventions to the operator or Authority are affected because they may be notified of decisions not to take action (regulation 38). Finally, customers and other persons negatively impacted by a contravention may benefit from distribution of civil penalties if the market rules so provide (regulation 37(aa)).

The regulations impose specific duties and confer corresponding rights on participants and regulators. A central duty is the obligation not to engage in the activities listed in regulation 14 without being a registered participant or exempt (regulation 19). The penalty for contravention is $100,000 plus $10,000 for each day after notice from the Authority. Registered participants must comply with directions given by the operator or the Authority (regulation 15(2)). Participants must also make payments required under the market rules by the specified day; if payment is not made within 28 days after that day, an offence arises punishable by $50,000 plus $10,000 each day (regulation 40). This obligation applies despite any dispute under the market rules unless the rules or the parties agree otherwise (regulation 40(3)). Governance participants (excluding the Minister, the Minister administering the Electricity Corporations Act 2005, the Authority and the Coordinator) must implement accounting arrangements to identify their costs in performing functions under these regulations or the market rules, and submit those costs for approval in accordance with the market rules (regulation 21(1)). The operator must allocate those costs between registered participants (regulation 21(2)). The operator must also maintain a website (regulation 12(3)) and comply with the Authority's directions regarding the secure and reliable operation of the SWIS (regulation 12(6)). The Authority has a duty to notify persons who gave information about a contravention if it decides not to investigate or not to proceed with a civil penalty demand or Board application (regulation 38). Under Part 6, any person whose interests are adversely affected by a reviewable decision has the right to apply to the Board for review within 28 days of receiving notice or publication (regulation 44(1)). The Board may extend that time (regulation 44(4)). On review, the Board may affirm, set aside or vary the decision (regulation 42(2)). For procedural decisions, the Board only reviews whether procedures were followed (regulation 43). A party may apply to the Board for a stay order affecting the operation of a decision (regulation 45(2)). During Board proceedings, a person has a reasonable excuse not to answer a question or produce a document if it might tend to incriminate the person (regulation 50(1)). The Board may prohibit or restrict publication of confidential evidence (regulation 50(3)). The operator must provide information and advice to the Minister on request (regulation 54(3)), but protected information (given in confidence or that would adversely affect commercial interests) must be identified as such (regulation 54(4)). Specified governance participants (AEMO and the Board) have the benefit of a cap on civil monetary liability: the lesser of $100,000 per act or $10 million aggregate for all acts in the preceding 12 months (regulation 52(2)). Their officers and employees have a cap of $1 (regulation 53).

Enforcement is structured primarily through the civil penalty regime in Part 5 Division 3, supplemented by criminal offences for registration and payment failures and by investigation powers in Division 2. The Authority may authorise officers or employees as authorised persons (regulation 23). Those authorised persons may apply to a magistrate for a search warrant if they believe on reasonable grounds that a contravention of these regulations or the market rules has occurred or will occur and that there are things connected with the contravention at a place (regulation 24). The warrant may authorise entry, search, seizure, inspection, photographing, and copying of documents; it must specify the purpose, any conditions, times of entry, and cease to have effect within 7 days (regulation 24(3)). Execution of the warrant requires announcement before entry unless immediate entry is needed for safety or to avoid frustration (regulation 25). Seized documents must be copied and given to the person within 21 days (regulation 27). Retention of seized items beyond 3 months requires a magistrate's order for up to 12 months (regulation 28). Obstructing a person executing a search warrant carries a penalty of $10,000 (regulation 29). For contraventions of civil penalty provisions (Schedule 1), the Authority may demand payment of a civil penalty. The notice of demand must specify the provision, details, amount, and inform the participant of the right to apply to the Board for review within 28 days (regulation 31(5)). If the participant does not pay or apply for review within 28 days, the Authority may apply to the Board within a further 28 days for an order for payment (regulation 31(6)). The Board may make that order if satisfied the demand was made properly and the participant has not paid or applied for review (regulation 31(7)). Alternatively, the Authority may apply directly to the Board for orders under regulation 33 without first issuing a demand (regulation 32). The Board, after determining a contravention, may make one or more orders: requiring payment of a civil penalty (up to Schedule 1 amounts), directing cessation of the conduct, requiring remedial action or a compliance program, suspending or cancelling registration, or ordering disconnection of facilities (regulation 33(1)). The daily amounts in Schedule 1 run from the day specified in a warning notice or the day the warning notice is given (regulation 33(2)). Before making an order the Board must consider the nature and extent of the contravention, loss or damage, circumstances, any prior similar conduct, and the consequences of the order (regulation 33(4)). The Board cannot order the operator or the Authority to pay a civil penalty (regulation 33(5)). A contravention of a market rule is not an offence (regulation 35). However, the regulations create two specific offences: failure to register (regulation 19) and failure to pay amounts due under market rules (regulation 40), each with significant penalties as noted. The Authority may prosecute these offences (regulation 55). Orders of the Board under regulation 31(7) or 33(1) may be enforced by lodging a certified copy with the Supreme Court, whereupon the order becomes a judgment of the court (regulation 34). Civil penalties received by the operator must be distributed in accordance with the market rules (either among participants of a particular class or among persons negatively impacted by the contravention), or if no distribution is provided, credited to the Consolidated Account (regulation 37). A participant cannot be liable to more than one civil penalty in respect of the same conduct even if it contravenes multiple civil penalty provisions (regulation 36).

These regulations operate as part of a broader legislative web, and several provisions explicitly manage interactions with other laws. Regulation 18 provides that for the purposes of the Trade Practices Act 1974 (Cwlth) (now the Competition and Consumer Act 2010) and the Competition Code, any arrangement, act, matter or thing made, entered into, engaged in, imposed, carried out, given effect to or done in accordance with the market rules is specifically authorised. This means that conduct that might otherwise contravene competition law (e.g. anti-competitive agreements or coordinated conduct) is exempt if it is undertaken pursuant to the market rules. Regulation 18A declares that short term trading, balancing and reserve capacity operated under the market rules are excluded matters for the purposes of the Corporations Act 2001 (Cwlth) section 5F in relation to Chapter 7 (which deals with financial services and markets). This ensures that the trading of electricity and related instruments under the WEM is not regulated as financial products under the Commonwealth corporations law. The regulations also reference the Energy Coordination Act 1994: the Coordinator is defined by reference to that Act (regulation 3). The Energy Arbitration and Review Act 1998 applies to the Board's functions under Part 7 (regulation 49(2)), specifically Part 6 Division 2 of that Act (except section 50). The Gas Pipelines Access (WA) Act 1998 Schedule 1 section 38(7) and (10) as in force before its deletion are also applied with modifications (regulation 49(4)). The regulations also interact with the Electricity Corporations Act 2005: the Market rules may confer functions on the Minister administering that Act (regulation 10), and the Electricity Generation and Retail Corporation and the Electricity Networks Corporation may have functions under the market rules (regulation 12A). The Gas Services Information Act 2012 is excluded: costs allocated under regulation 21 must not relate to functions under that Act (regulation 21(2A)). The regulations also reference the Electricity Act 1945? No , but note that the Act referred to is the Electricity Industry Act 2004 under which these regulations are made (section 3(1) definitions of prescribed voltage and system voltage are referenced in regulations 55A and 55B). The regulations themselves create a civil penalty scheme that is distinct from criminal offences: contravention of a market rule is not an offence (regulation 35), but the regulations also create specific criminal offences for failure to register and failure to pay amounts. Additionally, the regulations interact with the Wholesale Electricity Market Rules (the market rules themselves), which are incorporated by reference (Schedule 1 and 2 reference specific clauses of those rules as in force at 8 am on 4 June 2025 per regulation 4A). The savings and transitional provisions in regulations 56 and 57 manage the interaction between former and current versions of Schedules 1 and 2 for contraventions and decisions made before the commencement of the 2023 and 2025 amendment regulations. Finally, the Financial Legislation Amendment and Repeal Act 2006 converted references to the Consolidated Fund to the Consolidated Account, and the regulations reflect that change in regulation 37(b).

The regulations were originally made as the Electricity Industry (Wholesale Electricity Market) Regulations 2004 on 30 September 2004 and commenced on 30 September 2004, with certain provisions (rule 4(3)(b)) commencing on 1 October 2004. The citation was later changed to the current Electricity Industry (Electricity System and Market) Regulations 2004. The first significant amendment was the Electricity Industry (Wholesale Electricity Market) Amendment Regulations 2005 (16 August 2005), which inserted Part 5 (Enforcement of the market rules) and Part 6 (Review by the Board), along with Schedules 1 and 2. The Electricity Corporations (Consequential Amendments) Regulations 2006 (31 March 2006, effective 1 April 2006) made changes to various provisions, including regulations 4 and 10. Subsequent amendments occurred regularly: 2006 (No. 2), 2008 (inserting regulation 18A on excluded matters for Corporations Act), 2009 (amending regulation 42 and inserting Part 7 on the Board), 2011, 2012 (two amendments including penalty adjustments effective July 2012), 2013, 2015 (four separate amendment regulations , key changes included conferring functions on AEMO as operator, updating references, and extending the Minister's amending power to 1 July 2018), 2016 (multiple amendments including transfer of functions from IMO to Authority and Rule Change Panel, effective 1 July 2016), 2017 (extending Minister's amending power), 2018 (Energy Regulations Amendment (Independent Market Operator) Regulations 2018 effective 28 July 2018, removing references to IMO), 2019 (extending Minister's power to 31 October 2027), 2020 (amendments relating to Coordinator functions), 2021 (further amendments transferring Rule Change Panel functions to the Coordinator, effective 1 July 2021), 2023 (Energy Regulations Amendment Regulations 2023 , replacing Schedules 1 and 2 with new civil penalty amounts and reviewable decision tables, with transitional provisions, effective 1 October 2023), and 2025 (two sets: the Electricity Industry Regulations Amendment (Distributed Energy Resources) Regulations 2025 effective 6 February 2025, which updated regulation 52 and added Part 10 with voltage provisions; and the Energy Regulations Amendment Regulations 2025 effective 1 January 2026, which further updated Schedules 1 and 2 and added transitional provision regulation 57 for contraventions in the period between the 2025 DER amendments and the commencement of the 2025 amendments). The compilation table also notes a reprint 1 (2007), reprint 2 (August 2013) and reprint 3 (July 2017).

The regulations themselves do not contain text reporting specific litigation outcomes. However, they establish a dedicated dispute resolution mechanism through the Electricity Review Board (the Board). Part 6 (regulations 41-47) and Part 7 (regulations 48-50) create a framework for merits review of reviewable decisions and for the Board to make orders regarding contraventions of the market rules. Regulation 41 provides that decisions under provisions of the regulations or market rules not listed in Schedule 2 clause 1 are specified for the purposes of section 125(1) of the Act, meaning they are reviewable. Schedule 2 clause 1 lists specific provisions (e.g. regulation 31(1) , demand for civil penalty; clause 2.3.8, clause 2.5.6(c), etc.) that are reviewable. The Board's review powers are broad: it may affirm, set aside or vary the decision and exercise the same powers as the original decision-maker (regulation 42(2)). It may refuse to review trivial or vexatious applications (regulation 42(2A)). For procedural decisions, review is limited to whether the required procedures were followed (regulation 43). The Board's determinations have the same effect as if made by the original decision-maker (regulation 42(2B)). The Board also hears applications for orders under regulations 31(7) and 33(1) (Part 5 Division 3). The Board's functions are governed by the Energy Arbitration and Review Act 1998 Part 6 Division 2 (except section 50) (regulation 49(2)), with modifications. The Board may conduct conferences, and agreements reached at conferences may be adopted as Board decisions (regulation 46). The Board may require the operator or Authority to provide information and assistance (regulation 50(5)). Enforcement of Board orders can occur via the Supreme Court: the Authority may lodge a certified copy of an order with an affidavit stating non-compliance, and the order becomes a judgment of the court (regulation 34). While the regulations do not cite any judicial decisions, the reference to the Supreme Court as the enforcement venue indicates that litigation may arise if Board orders are not complied with. The regulations also provide for criminal prosecution of offences (failure to register, failure to pay) by the Authority (regulation 55), which could result in proceedings in the Magistrates Court or higher courts. The maximum penalty for failure to register ($100,000 plus daily) and for failure to pay ($50,000 plus daily) may lead to significant prosecutions. No specific cases are referenced in the source, so no further litigation history can be derived from this text.

Several provisions contain traps for the unwary. First, the definition of under in relation to the market rules includes "by, in accordance with, pursuant to and by virtue of" (regulation 3) , this broad definition means that any action taken by, or because of, the market rules may attract the specific authorisation and protections (e.g. competition law authorisation under regulation 18). Second, references in Schedules 1 and 2 are fixed to a specific time: 8 am on 4 June 2025 (regulation 4A, as inserted and amended). That means any later amendments to the market rules after that time are not captured by the Schedules in these regulations until the regulations themselves are amended. This creates a potential disconnect between the current market rules and the penalty regime. Third, contravention of a market rule is not an offence (regulation 35) , but the regulations create separate criminal offences for failure to register (regulation 19) and failure to pay amounts due (regulation 40). A participant who fails to comply with a market rule might assume they face only civil penalties, but a related failure to pay could trigger criminal prosecution. Fourth, the Authority's power to demand a civil penalty under regulation 31 is time-limited: the demand must be made within 6 years after the day the Authority considers the contravention occurred (regulation 31(4)). However, the Board's power to make orders under regulation 33 on application by the Authority is also limited to 6 years (regulation 32(2)). If the Authority misses those windows, it cannot pursue a penalty through these mechanisms. Fifth, a participant cannot be liable to more than one civil penalty for the same conduct even if that conduct contravenes multiple civil penalty provisions (regulation 36(2)). Participants facing multiple notices should ensure they are not being penalised twice for the same underlying conduct. Sixth, the obligation to pay amounts under the market rules continues despite a dispute, unless the market rules or the parties agree otherwise (regulation 40(3)). A participant who disputes an invoice in good faith may still commit an offence if they do not pay within 28 days of the due date. Seventh, the liability caps for specified governance participants in Part 8 have a complex calculation: the cap is the lesser of $100,000 per act or the amount by which $10,000,000 exceeds the entity's total civil monetary liability from acts or omissions in the preceding 12 months (regulation 52(2)). This means that if AEMO or the Board has already incurred $9.9 million in liability in a 12-month period, the next act is capped at $100,000, but if they have incurred $9.95 million, the next act is capped at only $50,000. For officers and employees, the cap is a mere $1 (regulation 53) , this provides strong protection but also means personal exposure is essentially eliminated. Eighth, the transitional provisions for Schedule 1 in regulations 56 and 57 create a complicated regime: former Schedules apply to contraventions occurring before the relevant commencement dates, and when counting subsequent contraventions, a contravention of a former provision may be taken into account if the substance of the new provision is the same or substantially the same (regulation 56(4)). This requires careful tracking of provision numbering across amendments. Ninth, the Minister may override the market rules' own amendment process: regulation 7(3)(c) requires that rules amending, repealing or replacing provisions conferring functions on the Coordinator must be approved by the Minister; and the Minister retains a power to make amending rules until 31 October 2027 (regulation 7(5)) that operates despite anything in the market rules. This means market participants cannot rely solely on the rule change process specified in the market rules for any amendments that fall within that period and scope.

Compliance requires a layered approach that addresses registration, active participation in the market rules framework, payment obligations, record-keeping, and responsiveness to enforcement actions. First, any person who engages in the activities listed in regulation 14 must ensure they are registered with the operator (AEMO) as a registered participant or hold an exemption or derogation under the market rules (regulation 19). Failure to do so exposes the person to a penalty of $100,000 and $10,000 per day after notice from the Authority. The operator issues certificates that are evidence of registration or exemption (regulation 16). Second, participants must familiarise themselves with the current market rules. These rules are voluminous and cover dispatch, pricing, settlements, metering, security, reliability, capacity procurement, and more. The regulations require the Coordinator to make a copy of the current market rules available on a website (regulation 8). Participants must also comply with market procedures, which are developed by the Authority, operator or Coordinator depending on the function (regulations 11(2), 12(2A), 12C(2)). Third, participants must comply with directions given by the operator or the Authority (regulation 15(2)). These directions may relate to any of the matters covered by the market rules. Fourth, payment obligations under the market rules must be met by the due date. Regulation 40 makes it an offence to fail to pay an amount within 28 days after the due date (or after a notice to pay if no due date is specified). The penalty is $50,000 plus $10,000 per day. Payment must be made even if the amount is disputed under the market rules, unless the rules or the parties agree otherwise (regulation 40(3)). Fifth, governance participants (other than the Minister, the Electricity Corporations Act Minister, the Authority or the Coordinator) must implement accounting arrangements to identify their costs under these regulations, the Australian Energy Market Operator (Functions) Regulations 2015 or the market rules, and submit those costs for approval in accordance with the market rules (regulation 21(1)). The operator allocates those costs, and they are recovered from registered participants through fees. Sixth, if the Authority considers that a participant has contravened a civil penalty provision (listed in Schedule 1), it may issue a warning notice followed by a demand for payment. The participant must pay the demanded amount within 28 days or apply to the Board for review (regulation 31). If they do neither, the Authority may apply to the Board for an order, and the Board may make that order. If the participant wishes to challenge the demand, they should apply to the Board for review within 28 days of receiving the notice. Seventh, participants should cooperate with authorised persons executing search warrants under Division 2. Obstruction carries a $10,000 penalty (regulation 29). If documents are seized, the participant is entitled to certified copies within 21 days (regulation 27). If property is retained beyond 3 months, the participant may apply to a magistrate for its return. Eighth, if a participant discovers evidence of a contravention by another participant, they may provide that information to the operator, who must pass it to the Authority (regulation 38(1)). If the Authority decides not to pursue the matter, it must notify the informant. Ninth, if a participant's interests are adversely affected by a reviewable decision, they have 28 days to apply to the Board for review (regulation 44). They should be specific about how they are adversely affected. They may also apply to be made a party to a review initiated by someone else (regulation 47). Tenth, participants should maintain robust compliance programs. The Board can order a participant to implement a specific compliance program as part of a penalty (regulation 33(1)(d)). Preventive compliance is preferable to remediation. Finally, network operators must ensure system voltage at distribution points complies with the prescribed bands: 207-254 V for single-phase connections and 360-440 V for three-phase connections, unless an agreement specifies otherwise, and must take all reasonable steps to limit voltage excursions (regulation 55B). This requirement became effective from 6 February 2025.