The Australian Energy Regulator (AER) has broad powers to investigate suspected breaches of the National Electricity Rules (NER) including to issue section 28 notices to produce documents and information and to obtain search and seizure warrants. These powers may be used by the AER in investigating conduct such as false or misleading rebidding.
This update focusses on section 28 notices and includes the below a flowchart outlining key steps in this process and a list of key Do’s and Don’ts in preparing a response.
KEY STEPS IN RESPONDING TO SECTION 28 NOTICES
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Section 28 notices: The AER obtains information both voluntarily (by requests) and pursuant to notices issued by it under section 28 of the National Electricity Law (NEL) (section 28 notices) which are mandatory and require the recipient to produce documents or information, or both. Understanding whether a request for information is mandatory (i.e. issued under section 28) or voluntary may be important in considering the degree of flexibility that the company may have in responding to the request. Section 28 notices are the primary method by which the AER exercises its coercive information gathering powers.
Is your company the focus of the investigation: A critical first step is to identify whether your company is the focus of the AER’s investigation. This may or may not be apparent from the face of the notice. However, even if your company is not the AER’s initial focus, it could still become a focus. Investigations into conduct by one company often expand into a broader investigation of conduct by multiple companies.
Focus of response: In responding, there are a variety of possible strategies including offence (notices can be challenged), conciliation, education, minimalist or kitchen sink. The right strategy will depend on the situation and may not be clear until a thorough internal investigation has been completed. Although it may be disruptive to business, taking the appropriate time at the start of the process, and preparing an thorough, considered response can shorten an AER investigation and may even help to avert litigation. Time spent upfront is likely to ultimately be recognised as a good investment. Although section 28 notices are issued relatively infrequently, there are a number of lessons to be learnt, and a significant body of precedent, from section 155 notices (see below) which may be applicable.
Meeting with the AER: The AER does not have the power to require persons to appear at an interview. In this regard, the AER’s power under section 28 of the National Electricity Law is more limited than the Australian Competition and Consumer Commission’s (ACCC) power under section 155 of the Competition and Consumer Act 2010. As such, in responding to a section 28 notice it is not strictly necessary to do more than provide the required documents and information. However, once a company has determined its strategy, it may be that a meeting with the AER will assist. In some circumstances face to face communication in combination with written correspondence may be more effective than written correspondence alone.
Click here to view do's and don'ts.
A company’s response to a section 28 notice can be critical in determining the investigation’s eventual outcome. As such, upfront time spent planning a response strategy and, if necessary, discussing that strategy with external solicitors, is likely to pay dividends in the long term.