Introduction

1.1 Energy supply begins with electricity and gas being generated or produced to be sold in wholesale markets. Energy retailers buy electricity and gas in the wholesale markets, and then bundle it with transportation services of transmission and distribution networks to sell to end-use customers. The transport of electricity from generators to consumers is facilitated through a ‘pool’, or spot market, where the output from all generators is aggregated and scheduled at five-minute intervals to meet demand.²

1.2 The retail energy markets allow retailers to supply and sell electricity, gas and energy services to residential and business customers. Retail electricity and gas prices are comprised of costs relating to wholesale, network, retail and environmental schemes, as well as the retailer’s margin.

1.3 Gas prices impact the prices of other fuel sources, including coal. Gas is usually the highest priced generation source in the spot market, and is most likely to be used when demand is high.³

1.4 Over the course of 2022, events in Ukraine resulted in price volatility and price hikes for energy on international markets.⁴ During 2022 wholesale prices for energy increased in Australia due to the links between domestic and export markets, which affected domestic customers and the wider economy.⁵

1.5 The October 2022–23 Federal Budget noted further domestic causes for wholesale energy price increases as ‘temporary domestic electricity market disruptions exacerbated by ageing generation assets and inadequate policy certainty to support investment in new energy infrastructure.’

1.6 The October 2022–23 Federal Budget included the Department of the Treasury’s (Treasury) expectation that:

• retail electricity prices would ‘increase by average of 20 per cent nationally in late 2022’ and ‘by a further 20 per cent in 2023–24’; and
• retail gas price would increase ‘by up to 20 per cent in both 2022–23 and 2023–24’.

1.7 In October 2022 the Australian Energy Regulator’s (AER) estimate for the setting of the Default Market Offer (DMO)⁶ 2023–24 was that retail electricity prices would increase by between 41 and 51 per cent compared to the previous year. In May 2023 the AER’s release of the final determination of the DMO 2023–24 showed an increase of between 20.5 and 24.9 per cent for residential customers compared to the previous year.

Energy Price Relief Plan

1.8 On 9 December 2022 the Prime Minister, the Treasurer, and the Minister for Climate Change and Energy announced a package of measures designed to ‘shield Australian families and businesses from the worst impacts of predicted energy price spikes.’⁷ This package of measures was referred to as the Energy Price Relief Plan (the plan). These measures are outlined in Table 1.1.

Table 1.1: Measures within the Energy Price Relief Plan

Note a: A joule is the unit used to measure energy. A gigajoule equals one billion joules.

Note b: The gas price cap applied in all states and territories apart from Western Australia and the Northern Territory.

Note c: The Gas Market Code applies in all states and territories, apart from Western Australia as it is physically separated from the east coast regulated market.

Source: ANAO summary of public documentation.

1.9 The gas price cap, mandatory gas code of conduct, coal price cap, and bringing forward commencement of reforms to the ADGSM were intended to impact prices in wholesale markets. The targeted electricity bill rebate was intended to impact retail electricity bills.

1.10 The May 2023–24 Federal Budget included the following funding details in relation to the Energy Price Relief Plan:

• $1.5 billion over two years from 2023–24 for targeted electricity bill rebates⁸;
• $14.7 million over 5 years from 2022–23 (and $2.7 million per year ongoing) to the Australian Competition and Consumer Commission (ACCC) for administering and enforcing compliance with the gas price cap and the mandatory gas code of conduct⁹;
• $9.5 million over 3 years from 2022–23 for the AER¹⁰ to monitor coal and gas markets across the National Electricity Market¹¹;
• $0.4 million in 2022–23 to accelerate the reforms to the Australian Domestic Gas Security mechanism¹², and
• an estimate ‘not for publication (nfp) due to commercial sensitivities’ for the coal price cap.

1.11 In August 2023 the Department of Climate Change, Energy, the Environment, Water (DCCEEW) briefed the Minister for Climate Change and Energy that initial estimates for the costs of rebates were between $1.5 billion to $2 billion.

1.12 A timeline of key events in relation to the measures, including commencement and expiry of measures, is available at Figure 1.1. The gas price cap and the coal price cap were required to be implemented soon after the announcement of the Energy Price Relief Plan to have an impact on the DMO.¹³ The price caps were complemented by the other three measures — targeted electricity bill rebates, mandatory gas code of conduct and the bringing forward of the Australian Domestic Gas Security Mechanism. Legislative and governance frameworks that support the Energy Price Relief Plan measures are listed at Appendix 3.

Figure 1.1: Timeline of events in relation to the Energy Price Relief Plan

Source: ANAO analysis.

Targeted electricity bill rebate

1.13 The Commonwealth Government agreed to co-fund the final rebate with state and territory governments, and payments were administered through electricity retailers as a deduction from electricity bills.

1.14 In March 2023, 5.1 million households and small businesses were expected to be eligible to receive the rebate. These recipients and the rebate amount are outlined in Table 1.2.

Table 1.2: Targeted electricity bill rebate recipients and the rebate amount as at April 2023

Source: ANAO analysis of entity documentation.

1.15 In September 2023 the targeted electricity bill rebate was extended to the non-self-governing territories, which included 2,243 households and 265 businesses, and provided:

• $500 per household in Norfolk Island and Jervis Bay Territory;
• $350 per household in the Indian Ocean Territories of Christmas Island and Cocos (Keeling) Islands; and
• $650 per business in all non-self-governing territories.

Gas price cap

1.16 On 22 December 2022 the acting Treasurer issued a Gas Market Emergency Price Order under the Competition and Consumer Act 2010, capping the price of wholesale gas at $12 per gigajoule for a period of 12 months. The gas price cap came into effect on 23 December 2022 and expired on 22 December 2023.

Mandatory gas code of conduct

1.17 To support the implementation of the mandatory gas code of conduct measure, on 11 July 2023 the Competition and Consumer (Gas Market Code) Regulations 2023 (Gas Market Code) commenced. The Gas Market Code is mandatory and builds on the previously existing voluntary code of conduct for the gas industry.¹⁴ The Gas Market Code included:

• a reasonable price for regulated gas, in the form of a price cap set at $12 per gigajoule, which supersedes the 12-month emergency gas price cap;
• a framework for gas producers to seek exemptions from the price cap in return for specified conditions, including enforceable commitments for additional domestic supply;
• transparency and conduct obligations for gas market negotiations to increase the visibility of the amount of uncontracted gas to be produced;
• conduct provisions to establish process standards for commercial negotiations; and
• a requirement for a review of its operation be undertaken no later than 1 July 2025.

Coal price cap

1.18 In December 2022 the Commonwealth Government reached an agreement with the New South Wales and Queensland state governments to implement a cap of $125 per tonne on coal produced in each state, with costs to be shared equally with between the Commonwealth Government and state governments.

1.19 On 21 December 2022 legislation to implement this change was passed in New South Wales. On 23 December 2022 the New South Wales Minister for Energy issued directions to coal mines and power stations to impose the price cap. In late December 2022 the Queensland Government used existing powers to direct state-owned coal generators to implement the price cap. The coal price cap expired on 30 June 2024.

Bringing forward commencement of Australian Domestic Gas Security Mechanism reforms

1.20 The Australian Domestic Gas Security Mechanism (ADGSM) commenced on 1 July 2017. The ADGSM is intended to ensure there is sufficient gas supply to meet the needs of Australian energy users and allows the Minister for Resources to limit gas exports if a gas supply shortfall is forecast.

1.21 In the October 2022–23 Federal Budget the government announced funding to implement reforms to the ADGSM, including enabling the decision to activate the ADGSM to be made quarterly rather than annually. In December 2022 government agreed to bring forward the commencement of these reforms as part of the Energy Price Relief Plan. The reforms came into effect on 30 March 2023.

Roles and responsibilities across Energy Price Relief Plan measures

1.22 DCCEEW is responsible for matters relating to energy policy and the national energy market including electricity, gas and liquid fuels.¹⁵

1.23 Treasury is the Australian Government’s lead economic adviser. Its role is to anticipate and analyse policy issues with a whole-of-government perspective, including providing economic analysis and policy advice on matters such as the economy, budget, taxation, the financial sector, foreign investment, structural policy, superannuation, small business, housing affordability and international economic policy.¹⁶

1.24 The Department of Industry, Science and Resources (DISR) is responsible for matters relating to the resources sector, including Australia’s role as an energy supplier to overseas markets and the role of gas in Australia’s transition to net zero.¹⁷

1.25 The Australian Competition and Consumer Commission (ACCC) is an independent Commonwealth statutory authority responsible for enforcing the Competition and Consumer Act 2010 and other legislation, promoting competition and fair trading, and regulating national infrastructure.¹⁸

1.26 The Australian Government entities involved in the design, establishment and ongoing monitoring of each measure are outlined at Table 1.3.

Table 1.3: Australian Government entities involved in the Energy Price Relief Plan

Note a: On 12 August 2024 DCCEEW advised the ANAO that Treasury were involved in the design to include eligibility criteria. On 12 August 2024 Treasury advised the ANAO that DCCEEW had developed the policy option.

Note b: Services Australia, the Department of Veterans’ Affairs, and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts contributed work to the implementation of the bill rebate.

Note c: Other entities — DCCEEW, DISR, ACCC and Treasury — have administrative functions under the Gas Market Code, such as supporting the operation of the exemptions framework.

Note d: AER is the appointed regulator for the coal price cap in New South Wales. Treasury processes payments from Commonwealth Government to New South Wales and Queensland governments as part of federation funding agreement schedules.

Source: Advice provided to the ANAO from entities and ANAO analysis of entity documentation.

Extension of electricity bill rebates in 2024

1.27 In the 2024–25 Federal Budget the government announced that the targeted electricity bill rebate would be extended in time over three years from 2023–24, costed at $3.5 billion. The May 2024 announcement included that eligibility for the electricity bill rebate would be expanded, providing for all households a $300 credit and $325 credit for around one million small businesses, to apply to electricity bills over 2024–25.

Rationale for undertaking the audit

1.28 The estimated budget for the package of measures under the Energy Price Relief Plan was between $3 billion and $3.5 billion over five years. The government sought urgent advice on options to seek to address energy price increases.

1.29 The audit provides assurance to Parliament on whether the Energy Price Relief Plan was effectively designed and the effectiveness of planned frameworks for implementation and evaluation.

Audit approach

Audit objective, criteria and scope

1.30 The objective of this audit was to assess the effectiveness of the design process for the Energy Price Relief Plan.

1.31 To form a conclusion against the objective, the following criteria were adopted.

• Was the development of the plan informed by sound policy advice?
• Was implementation effectively planned?
• Are the arrangements to assess the achievement of outcomes of the plan effective?

1.32 The audit did not assess:

• the design or implementation of the Capacity Investment Scheme¹⁹ which was also included in the 9 December 2022 announcement;
• the design of the Australian Domestic Gas Security Mechanism reforms agreed to by government in September 2022; or
• the implementation of the extension of the energy bill rebates announced in May 2024.

Audit methodology

1.33 The audit methodology included:

• examination of entities’ records relating to the design and implementation of measures under the Energy Price Relief Plan;
• meetings with relevant departmental staff from Treasury and DCCEEW; and
• meetings with the ACCC; AER; DISR; Services Australia; the Department of Infrastructure, Transport, Regional Development, Communications and the Arts; the Department of the Prime Minster and Cabinet; and the Department of Veterans’ Affairs to discuss the measures that they were involved in designing and administering.

1.34 The audit team received nine public submissions.

1.35 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $514,000.

1.36 The team members for this audit were Chayathri Kulatunge, Lorcan Stevens, Marcus Newberry, Jacqueline Hedditch and Corinne Horton.

2.1 The Australian Government’s Delivering Great Policy model²⁰ sets out when entities provide policy advice, entities:

• clearly define the intent of a proposed policy, the benefits and impacts;
• demonstrate the best option using evidence, including informing policy through quantitative and qualitative evidence and considering the wider context the proposed policy will exist within; and
• involve key stakeholders within and outside the APS to ensure that government initiatives are reflective of diverse views and have broad support.

2.2 The Commonwealth Risk Management Policy²¹ requires that risk management is embedded into the decision-making activities of the entity, including policy design.

Were appropriate roles and responsibilities, guidance and risk management processes established to support the development of the plan?

Roles and responsibilities for the development of policy options

2.3 On 7 November 2022 the Prime Minister formally requested the Secretary of PM&C establish a Secretaries’ Group on options to address rising gas and electricity prices.²² The Secretaries’ Group was to develop policy options for consideration by government in December 2022, following consultation with relevant ministers in late November 2022. The Prime Minister requested that policy options could commence from as early as 1 January 2023.

2.4 The Secretaries’ Group included the Secretaries of the following departments:

• PM&C (Chair);
• Department of the Treasury (Treasury) (Deputy Chair);
• Department of Finance (Finance);
• Department of Industry, Science and Resources (DISR); and
• Department of Climate Change, Energy, the Environment and Water (DCCEEW).

2.5 Secretaries were to be supported by senior officials from the ACCC, Australian Energy Market Operator (AEMO)²³ and the Australian Energy Regulator (AER). The Secretaries’ Group met twice, on 3 and 21 November 2022²⁴ (Figure 2.1). Key outputs from the group were draft policy options and advice.

Figure 2.1: Key meetings during the development of policy options

Source: ANAO analysis.

2.6 The Terms of Reference for the Secretaries’ Group defined Treasury, DCCEEW and DISR as lead entities for developing preliminary policy options to mitigate the impact of high energy prices.²⁵

2.7 In November 2022 Treasury and DCCEEW developed 20 preliminary policy options, which included both short-term and longer-term options. On 5 December 2022 Treasury and DCCEEW jointly presented preferred options to government.

2.8 A Deputy Secretaries’ Group was also formed as the primary means of coordinating work across agencies and was to meet daily.²⁶ In June 2024, PM&C advised the ANAO that meetings of the Deputy Secretaries’ Group ‘were held daily during the busiest period in the policy development process’ between 1 and 29 November 2022.

2.9 Two meetings of selected ministers and senior officials were held on 4 and 24 November 2022. The meetings were designed to present ministers with progressively more detailed policy options. Overviews of outcomes from meetings were shared with Treasury, DCCEEW, DISR, the Department of Finance and the Department of Foreign Affairs and Trade.

Guidance materials for developing policy advice

2.10 As at September 2024 content on Treasury’s and DCCEEW’s intranet webpages contained links to PM&C’s Cabinet Handbook²⁷, which includes guidance on providing policy advice to government. Treasury’s intranet linked to guidance materials from the Office of Impact Analysis (OIA). DCCEEW’s intranet linked to the Department of Finance’s Budget Process Operational Rules²⁸, which sets out processes for developing policy options. DCCEEW established a checklist, template and internal guidance on the process and content required in drafting policy advice, which were available via the department’s intranet and were not marked as mandatory for staff to follow.

2.11 As at September 2024, learning modules on the Delivering Great Policy model and on basic economic principles needed in applications to policy were available to Treasury staff. Training on the Australian Government budget process was available to DCCEEW staff.

2.12 Economic modelling and analysis informed policy advice that was provided to government in December 2022. At the time policy options were being developed in November and December 2022, Treasury and DCCEEW had guidance material on economic modelling and analysis in November 2022 — such guidance was not readily available via the departments’ intranet.

2.13 Treasury and DCCEEW have not established guidance for staff that may be involved in rapid policy development processes.

Risk management arrangements for the development of policy options

2.14 Treasury’s July 2022 risk management framework specifies a risk category for policy advice and analysis, which includes risk to the ‘ability to provide quality, timely, influential, and accurate policy advice, and analysis.’ Treasury’s risk tolerance guide states that it has a ‘low risk tolerance for not delivering influential advice and analysis and not cooperating with our stakeholders.’

2.15 In August 2022 DCCEEW’s Executive Board²⁹ approved the enterprise risk management frameworks and policies of the former Department of Agriculture, Water and the Environment, and Department of Industry, Science, Energy and Resources for use as interim risk management arrangements ‘in parallel’.³⁰ The Department of Industry, Science, Energy and Resources’ Risk Management Framework 2021 outlined a lower tolerance that its ‘advice will be considered irrelevant, inaccurate or poorly informed’, as well as for ‘failing to keep government and our ministers informed and prepared’.

2.16 Activities that were conducted by APS entities that may assist in reducing risks during rapid policy development included the following.

• Treasury and DCCEEW sought expert implementation advice and experience during the policy development and adjusted the policy options as necessary. For instance, the AER and the AEMO provided advice to the departments and to government in relation to the policy options. (See paragraph 2.30).
• The ACCC engaged with select industry stakeholders to inform its advice to Treasury on the gas market interventions. Engaging stakeholders can identify risks and opportunities for policy development. (See paragraph 2.28).
• PM&C established fit-for-purpose governance and coordination arrangements through the Secretaries’ Group and Deputy Secretaries’ Group, with clearly defined roles and responsibilities. Reporting on the development of policy options was provided to selected ministers and senior officials to assist government decision-making. Senior APS officials were involved in the development of policy options. (See paragraphs 2.3 to 2.9).
• Treasury and DCCEEW mobilised necessary skills and knowledge within each department.

2.17 Within Treasury a project taskforce was established, which was sponsored by the relevant Deputy Secretary. DCCEEW held ‘daily stand-up meetings’ to provide status updates on matters, including with the relevant Deputy Secretary. In April 2024 DCCEEW advised the ANAO that such meetings were attended by officers, senior executive and subject matter experts from across the department. In August 2024, DCCEEW advised the ANAO that subject matter experts from the AEMO and the AER also attended daily meetings to provide input into the design process as relevant.

2.18 Treasury and DCCEEW did not document identification of challenges and risks to rapid policy development, mitigation strategies and did not establish the risk appetite. Rapid policy development may require a different risk appetite and risk mitigation strategies to those adopted in more normal times.³¹

Was appropriate stakeholder consultation undertaken?

2.20 Making ‘practical to implement policy’ entails collaborating with implementers early and evaluating policy options with input from implementers and end users. The Australian Public Service Commission’s guidance on ‘getting stakeholder engagement right’ includes developing a system for recording and incorporating stakeholder feedback into deliverables and providing updates to stakeholders on consultation findings.³²

2.21 Treasury’s program management framework states ‘Effective stakeholder management and engagement can identify risks, and opportunities for program development and delivery.’ The program management framework contains tools and templates for stakeholder management and engagement, including a communications plan, stakeholder engagement plan, stakeholder analysis matrix, and a stakeholder feedback tracker.

2.22 DCCEEW’s business planning toolkit includes guidance on understanding relationships with key stakeholders. The tool is designed to assist staff in analysing the expectations of key stakeholders and the implications for strategy, and to help develop a clear understanding of how key stakeholders present challenges, opportunities and risks to strategy and how to work with stakeholders. DCCEEW’s project management intranet page includes a link to the Australian Public Service Commission’s guidance on stakeholder engagement as ‘other things to consider’.

2.23 Through the terms of reference for the Secretaries’ Working Group (see paragraphs 2.3 to 2.7) Secretaries were required to, among other things, engage in confidence with key stakeholders including to ensure the workability of options under consideration.

Stakeholder consultation prior to providing policy advice to government in December 2022

2.24 In December 2022 Treasury and DCCEEW developed an impact analysis³³, which covered three of the five measures — the gas price cap, mandatory gas code of conduct, and bringing forward the commencement of Australian Domestic Gas Security Mechanism reforms (see paragraph 2.89). The policy options were developed through consultation within government and in targeted industry discussions.

2.25 The impact analysis set out that:

The market sensitivities associated with the measures considered in this Impact Analysis, as well as the urgency in which they need to be developed and implemented reduced the viability of extensive, public consultation on specific options for Government action thus far. There will however be future opportunity to consult stakeholders prior to the implementation of some of the options highlighted.

2.26 The impact analysis identified stakeholder groups, their impact on energy price relief options, and the potential impacts of the policy options on each stakeholder group.³⁴

2.27 Table 2.1 outlines consultation activities that occurred before policy advice was provided to government in December 2022, within and outside the APS.

Table 2.1: Consultation before policy options were provided to government in December 2022, by measure

Note a: A forum for consultation within the APS was the Secretaries’ and Deputy Secretaries’ groups (see paragraph 2.3 to 2.8).

Note b: In December 2022 the AER estimated the amount required to compensate customers for some or all of the projected price rises for the targeted electricity bill rebate measure. Key implementation partners — Services Australia, DVA and DITRDCA — were not consulted until after policy advice was provided to government in December 2022.

Note c: DCCEEW’s consultation activities included the engagement of two external consultants (see paragraph 2.30).

Source: ANAO analysis of entity documentation.

2.28 For two of the five measures, stakeholder consultation was undertaken outside the APS — the gas price cap and mandatory gas code of conduct. On 22 October 2022 the Treasurer requested the ACCC work with Treasury to develop advice by mid-November 2022 on options to improve the functioning of the east coast gas market, including a mandatory code of conduct and consideration of a reasonable price. Between 31 October and 8 November 2022, the ACCC met with eight industry stakeholders — three of the eight meetings were also attended by DISR. On 11 November 2022 the ACCC Chair provided advice to the Treasurer, following which a summary of the ACCC’s advice was published on Treasury’s website.³⁵

2.29 The impact analysis noted that earlier consultations had been held on the reforms to the Australian Domestic Gas Security Mechanism and that:

stakeholder consultation on the design of the ADGSM reforms before implementation will also be necessary to avoid early design flaws and any unintended consequences with other options to provide energy price relief.

2.30 Within the APS, consultation with most stakeholders was undertaken for the five measures.

• Targeted electricity bill rebate — during November and December 2022 the Australian Energy Regulator (AER) estimated the amount required to compensate customers for some or all of the electricity price rises projected in scenarios based on from inputs and assumptions provided by DCCEEW. APS delivery agencies were not consulted during the design process (see paragraph 2.34).
• Gas price cap and mandatory gas code of conduct — in November 2022 APS entities — including AEMO, AER, DISR, and the Attorney-General’s Department — provided comments to Treasury on the policy options for the gas market interventions. On 28 November 2022 AEMO provided DCCEEW with considerations on the gas price cap.
• Coal price cap — in December 2022 the AER provided advice on the potential impact of the coal price cap on the Default Market Offer outcomes (see Appendix 4). To inform advice to government DCCEEW worked with the AER and had engaged two external consultants, Ernst & Young³⁶ and ACIL Allen³⁷, to provide expert advice on electricity market analysis and economic modelling (see Appendix 4). The external consultants signed deeds of confidentiality.
• Bringing forward the commencement of the Australian Domestic Gas Security Mechanism reforms — DISR provided the policy advice on the measure. In November 2022 DISR received feedback from the Department of Home Affairs³⁸ on the drafting of amendments to the Customs (Prohibited Exports) Regulations 1958. The December 2022 impact analysis identified key stakeholders (see paragraph 2.26) and stated that the government was consulting with companies subject to the Australian Domestic Gas Security Mechanism regulations, as well as consulting with market advisory bodies on reform implementation.

Targeted electricity bill rebate

2.31 The December 2022 policy advice to government noted that targeted households and small businesses, electricity retailers, as well as state and territory governments would be affected by the policy option. The rebate was to be delivered through electricity retailers. Unlike the state and territory governments, the Commonwealth Government did not have existing administrative arrangements with electricity retailers. Therefore, the targeted electricity bill rebate was designed to be delivered by state and territory governments, with costs to be reimbursed by the Commonwealth Government through federation funding agreement schedules.³⁹

2.32 The design of the targeted electricity bill rebate did not identify arrangements for the following as recipients of the rebate:

• hardship customers⁴⁰ — policy advice to government in April 2024 on the extended targeted energy bill rebate included the expansion of the bill rebate to 100,000 hardship customers; and
• non-self-governing territories⁴¹ (see paragraph 2.58).

2.33 On 27 August 2024 DCCEEW advised the ANAO that the hardship customer cohort was identified and considered in the design of the 2023–24 round of the targeted electricity bill rebate, and that the decision was made to use the concessions framework⁴², including for the following reasons:

• ‘the bill rebate was designed around systems already in place and systems that had documentation around concession holders for states and territories’; and
• ‘in the very short timeframe available … creating new structures based on hardship status could have jeopardised delivery’.

2.34 In the development of policy advice, Treasury and DCCEEW did not consult delivery agencies — Services Australia, DVA and the DITRDCA.⁴³ After the announcement the three delivery APS agencies contacted Treasury (see paragraphs 2.50, 2.56 and 2.58). The rebate was delivered through electricity retailers and applied to household and small business electricity bills. To deliver the rebate to households, electricity providers needed to know whether customers were eligible for the rebate.

• To deliver the rebates to households considered as part of an ‘expanded cohort’, customers were required to share their consent for their nominated electricity provider to check their concession status for eligibility. Services Australia became the initial point of contact to collect consent from customers and share confirmation of customers’ eligibility with the customers’ nominated electricity provider (see paragraphs 2.50 to 2.54).
• The involvement of DVA identified that 12,000 of the agency’s clients needed to be prompted to contact their energy provider, or state or territory government, to give consent and to have the rebate applied to their electricity bills (see paragraphs 2.56 and 2.57).
• DITRDCA identified that the targeted electricity bill rebate needed to be extended to non-self-governing territories and assisted in the administration of the bill rebate to the non-self-governing territories (see paragraphs 2.58 and 2.59).

2.35 The importance of providing quality advice was highlighted in an independent review of government processes for implementing large public programs and projects.⁴⁴ The report observes that:

The development of a policy and its delivery are inextricably linked. Implementation should be integral to policy design. A policy cannot be elegant if its execution is poorly communicated, ineptly administered or inadequately evaluated. The proof of the pudding is in the eating.⁴⁵

2.36 During November and December 2022, the AER estimated the amount required to compensate customers for some or all of the electricity price rises projected in scenarios, based on inputs and assumptions provided by DCCEEW.

Stakeholder consultation following the announcement of the Energy Price Relief Plan

2.38 Treasury and DCCEEW continued consulting stakeholders within and outside the APS after the announcement of the Energy Price Relief Plan, including on elements of design for all measures.

Energy Price Relief Plan stakeholder engagement strategies

2.39 Advice to government in December 2022 on options to provide energy price relief included a stakeholder engagement strategy and an international engagement strategy. The strategies related to all measures, except for the targeted electricity bill rebate. Stakeholders considered under the strategies included industry entities and international partners, industry energy market participants, industry peak bodies, electricity retailers, energy market bodies (AER and AEMO), and the ACCC.

2.40 In accordance with the stakeholder engagement strategy, on 12 and 19 December 2022 DCCEEW provided the AER and AEMO with briefings on the advice that was provided to government on the Energy Price Relief Plan. Treasury advised the ANAO on 12 August 2024 that it did not provide a separate briefing to the ACCC ‘given they were deeply involved in the process’.

2.41 In December 2022 government agreed that the relevant ministers would develop a communications strategy on the approach to addressing energy prices for government approval by 1 March 2023.

2.42 In May 2023 DCCEEW established communications principles and objectives to support communications on the Energy Price Relief Plan, which were developed based on research and findings from an external consultant.⁴⁶ The external consultant was commissioned to undertake research on community awareness, understanding and sentiment on changes in energy prices, and to bring together recommendations for the communications on the Energy Price Relief Plan.⁴⁷ Recommended activities, related to the principles and objectives established by DCCEEW, included a strong communications and media strategy, update to website content with background information on relevant measures and consideration of paid advertising to increase social media posts.

2.43 On 25 May 2023 the Minister for Climate Change and Energy noted the communications principles and recommended activities from DCCEEW, and the research findings from the external consultant. DCCEEW updated the energy.gov.au website for information on the Energy Price Relief Plan, which included links to other relevant websites.⁴⁸ DCCEEW did not undertake the other recommended activities.

Targeted electricity bill rebate

2.44 At meetings of the Prime Minister, Premiers and Chief Ministers on 9 December 2022 and 3 February 2023, it was agreed that Commonwealth Government, state and territory Treasurers would develop and finalise the targeted electricity bill rebate measure. Between May and December 2023 federation funding agreement schedules were signed with all states and territories.

2.45 For the first round of the targeted electricity bill rebate in 2023–24, Treasury did not develop a stakeholder consultation plan. Between March and June 2023 Treasury organised retailer information sessions, workshops, and received queries from electricity retailers. Treasury did not document its engagement with state and territory government departments, and electricity retailers using a structured approach. The risk of not recording stakeholder feedback in a structured manner is that lessons learned may not be comprehensively incorporated into future policy and implementation decisions.

2.46 Treasury worked with DCCEEW to update the energy.gov.au website as a central source of information for the targeted electricity bill rebate across all jurisdictions. Treasury had liaised with Services Australia and DVA on providing eligible recipients with targeted letters and messages.

2.47 In advice to government in April 2024 on the extension of the electricity bill rebate measure, Treasury and DCCEEW noted the ‘lower than expected’ take-up of the rebate reduced its effectiveness to deliver relief to households.

2.48 Treasury and DCCEEW’s advice to government on the extension of the targeted electricity bill rebate measure outlined elements of a consultation and communication plan, including engagement activities with stakeholders outside the APS and APS delivery agencies. The plan included the provision of $7 million contingency reserve for mailouts to improve awareness and uptake of the electricity bill rebates. As at 5 November 2024 Treasury has drafted a stakeholder engagement log and commenced drafting of a program plan, which includes a stakeholder engagement strategy.

Services Australia

2.49 The targeted electricity bill rebate was delivered through electricity retailers and applied to household and small business electricity bills. To deliver the rebate to households, electricity providers needed to know whether household customers were eligible for the rebate.⁴⁹

2.50 On 27 November 2023 Services Australia advised the ANAO that initial contact by the Department of Social Services regarding the implementation of the Energy Price Relief Plan was made on 15 December 2022.

2.51 In April 2023 a total of 5.6 million customers were expected to be eligible for the rebate. Of the total, around 4.6 million (75 per cent) customers already received concessional rates or rebates from their energy retailers, and whose eligibility details could be confirmed by approved energy retailers using existing arrangements via Services Australia’s Centrelink Confirmation eServices.⁵⁰ These customers were considered part of the ‘existing cohort’. Customers in the existing cohort were able to have their eligibility confirmed from July 2023.

2.52 The remaining 960,000 (25 per cent) customers eligible for the rebate did not already receive rebates from their energy retailers and were considered part of an ‘expanded cohort’.⁵¹ To deliver the rebates to households in the expanded cohort, customers were required to share their consent for their nominated electricity provider to check their concession status for eligibility. Services Australia became the initial point of contact to collect consent from customers and share confirmation of customers’ eligibility with the customers’ nominated electricity provider via Services Australia’s existing Centrelink Confirmation eServices system.

2.53 Services Australia provided a solution to deliver the rebate, which included:

• expanding the existing Centrelink Confirmation eServices system⁵² to include recipients in the ‘expanded cohort’, to make it easier for state, territory governments, and energy retailers to determine household eligibility and administer the rebate; and
• building a workflow within the existing customer online services platform to collect customer consent for the expanded customer cohort, with a staff assisted solution as customer support. Services Australia contacted customers in the expanded cohort via a mailout with instructions on how to provide consent.

2.54 Customers in the expanded cohort were able to provide consent to Services Australia from September 2023 to have their eligibility confirmed for electricity retailers to apply the rebate.

2.55 In July 2023 to guide its stakeholder consultation approach, Services Australia established a communication snapshot, which:

• outlined roles for Treasury, DCCEEW, Services Australia, and state and territory governments, along with electricity retailers;
• set out a communication approach for different customer segments; and
• identified target audiences and key messages.

Department of Veterans’ Affairs

2.56 On 16 December 2022 DVA contacted Treasury to ensure that eligible veterans and their families on a low income were included, noting the announcement of the targeted electricity bill rebate measure. As at April 2023, approximately 151,000 DVA clients were eligible for the rebate, most of whom did not have to take any action to receive the rebate. Of the 151,000 DVA eligible clients, there were approximately 12,000 (8 per cent) DVA clients in the ‘expanded cohort’, who were required to contact their energy provider, or state or territory government to give consent and to have the rebate applied to their electricity bills.

2.57 In August 2023 DVA established a project management plan which detailed its communication approach. To deliver the rebate to DVA clients, DVA had planned to communicate with DVA clients via SMS or hard copy letter, to prompt clients to provide consent.

Department of Infrastructure, Transport, Regional Development, Communications and the Arts

2.58 In March 2023 the DITRDCA contacted Treasury requesting a ‘way for Norfolk Island, Christmas Island, Cocos (Keeling) Islands and Jervis Bay Territory (non-self-governing territories) to have access to programs and funding other states and territories do for their communities.’ In August 2023 Treasury advised the Treasurer that the initial design of the targeted electricity bill rebate measure did not specifically provide for households and businesses in the non-self-governing territories.

2.59 In September 2023 the Commonwealth Government agreed to deliver electricity bill rebates to all households and businesses in the non-self-governing territories of Norfolk Island, Christmas Island, Cocos (Keeling) Islands and Jervis Bay Territory. Between March and June 2023, Treasury and the DITRDCA negotiated arrangements to administer the bill rebate to the non-self-governing territories.

Energy bill relief governance meetings

2.60 The energy bill relief governance meeting forum was established in February 2023 and was co-chaired by Treasury and Services Australia. Its purpose included providing visibility of eligibility and policy and identifying delivery solutions. Between February 2023 and November 2023, 34 energy bill relief governance meetings were held. Attendees included DCCEEW, Services Australia, and DVA, and the Australian Energy Council⁵³ attended once in February 2023.

2.61 Key activities discussed at the energy bill relief governance meetings were implemented, including the release of a consent workflow, publishing of website materials, and the sending out of targeted letters.

Gas price cap and mandatory gas code of conduct

2.62 On 14 December 2022 Treasury outlined to the Treasurer that the legislation — Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022, which includes the enabling framework for a gas price order, creating the gas market codes and introducing the targeted electricity bill rebate — had been ‘drafted and cleared in extremely compressed timelines.’ The legislation to administer the gas price cap commenced on 23 December 2022.

Public consultation commencing December 2022

2.63 In November and December 2022 Treasury drafted a consultation paper, a draft instrument for the gas price cap and an exposure draft for the framework that provided for the mandatory gas code of conduct, with input from DCCEEW, DISR, ACCC, AER, and the Australian Government Solicitor, as well as the Office of International Law. Treasury provided drafting instructions to the Office of Parliamentary Counsel in the Attorney-General’s Department.

2.64 Treasury published the consultation paper on its website seeking input on the design of the gas elements of the Energy Price Relief Plan, which was accompanied by the draft instrument for the gas price cap and the exposure draft for the framework to underpin the mandatory gas code of conduct.⁵⁴ Public consultation on the gas price cap was open from 9 December 2022 to 15 December 2022. For the mandatory gas code of conduct public consultation was open from 9 December 2022 to 7 February 2023.

2.65 On the gas price cap Treasury received submissions from 29 entities and had a structured approach for recording issues raised on the draft legislative instrument. It did not document how the issues raised were addressed. Treasury did not provide updates to stakeholders on consultation findings. On 12 August 2024 Treasury advised the ANAO that it did not publish a separate consultation update following consultation noting that the Competition and Consumer (Gas Market Emergency Price) Order 2022 was registered shortly after consultation was closed.

2.66 On the mandatory gas code of conduct Treasury received submissions from 63 entities. Neither Treasury nor DCCEEW established a system for recording and incorporating stakeholder feedback. On 26 April 2023 an update to stakeholders on consultation findings was provided in the consultation paper developed for the second round of public consultation on the mandatory gas code of conduct (see paragraph 2.70).

Gas Code Ministerial Advisory Committee and gas code working group

2.67 The Gas Code Ministerial Advisory Committee was established to provide guidance on key policy and administrative processes, including supporting ministerial decisions on applications for conditional exemption under the Competition and Consumer (Gas Market Code) Regulations 2023 (Gas Market Code).⁵⁵ Its membership comprised of Senior Executive Service (SES) Band 3 representatives from DCCEEW, DISR and Treasury — DCCEEW and DISR co-chaired the committee. The terms of reference stated that the ACCC was a technical adviser to the Gas Code Ministerial Advisory Committee. The Gas Code Ministerial Advisory Committee met for the first time on 27 March 2023.

2.68 A gas code working group was set up to provide support to the Gas Code Ministerial Advisory Committee. Its member entities mirrored that of the Ministerial Advisory Committee and was made up of SES Band 1 representatives.

2.69 The terms of reference for the Gas Code Ministerial Advisory Committee stated that it would meet as required. DCCEEW served as the secretariat for the Gas Code Ministerial Advisory Committee and gas code working group. The Gas Code Ministerial Advisory Committee met 18 times between March 2023 and May 2024; meeting outcomes were recorded for 10 meetings and outcomes from eight meetings were not recorded. During three meetings in March 2023, the committee discussed advice from the ACCC, the design of the mandatory gas code of conduct and drafting of policy advice.

2.70 The gas code working group met 17 times between January and June 2023; minutes were documented for six meetings and were not available for 11 meetings. Minutes that were available for the six meetings show that the AER attended all six meetings and two external consultants⁵⁶ joined three meetings. Discussions of the working group covered drafting of the code, as well as overviews of submissions received from the first and second rounds of public consultation on the mandatory gas code of conduct (see paragraph 2.64 and 2.71).

Public consultation in April 2023

2.71 In April 2023 DCCEEW created a stakeholder engagement and consultation plan for the second round of consultation on the development of the mandatory gas code of conduct. Between 26 April 2023 and 12 May 2023⁵⁷, DCCEEW held a second round of public consultations, seeking views on a consultation paper and an exposure draft for the mandatory code of conduct.⁵⁸ DCCEEW received 51 submissions from 43 entities.

2.72 DCCEEW conducted 26 consultation meetings with key stakeholders between 3 and 12 May 2023 during which information on the mandatory gas code of conduct was presented by DCCEEW.

2.73 While minutes were not recorded, DCCEEW created documents to summarise feedback raised on the mandatory gas code of conduct. DCCEEW established a spreadsheet to record the actions taken and outcomes in relation to matters raised through feedback — outcomes were recorded for 32 of the 212 (15 per cent) matters raised.

2.74 In June 2023 Treasury and DCCEEW produced an addendum to the December 2022 impact analysis, which highlighted for the public the updates that had been made to the mandatory gas code of conduct as a result of consultation findings. The addendum was published on the OIA’s website.

2.75 In June 2023 government agreed to the final design of the mandatory gas code of conduct. The advice to government noted feedback received during the second round of consultation on the code of conduct.

Coal price cap

2.76 Advice to the Commonwealth Government on options to provide energy relief in December 2022 stated that coal producers and coal generators in New South Wales and Queensland would be affected, and that households and businesses purchasing electricity from retailers in these states would benefit from lower electricity prices. The Commonwealth Government agreed to negotiations with New South Wales and Queensland governments. On 9 December 2022, coal price caps were noted as actions being undertaken by the Commonwealth Government, New South Wales and Queensland governments at a meeting of the Prime Minister, Premiers and Chief Ministers.

2.77 DCCEEW met with the New South Wales and Queensland Governments and with Queensland power station operators in December 2022, following the announcement of the Energy Price Relief Plan. DCCEEW advised the ANAO on 10 October 2024 that engagement with power station owners and operators was left to state governments due to their closer relationships with these groups.

2.78 The Commonwealth Government and the New South Wales Government negotiated a federation funding agreement schedule⁵⁹, which was signed on 18 May 2023. The federation funding agreement schedule between the Commonwealth Government and the Queensland Government was signed by the Minister for Climate Change and Energy on 21 May 2024 and by the Queensland Premier on 27 July 2024.⁶⁰

Bringing forward commencement of Australian Domestic Gas Security Mechanism reforms

2.79 On 5 December 2022 DISR held meetings with three liquefied natural gas (LNG) exporters to discuss the implementation of the Australian Domestic Gas Security Mechanism reforms. On 9 December 2022 the Minster for Resources wrote to LNG exporters to discuss the announcement of the Energy Price Relief Plan. On 20 December 2022, referencing the government’s announcement of the reforms to improve the Australian Domestic Gas Security Mechanism on 25 October 2022, the Minister for Resources wrote to gas producers, ACCC and AEMO, inviting views on areas of improvement for proposed arrangements to implement the reforms.

2.80 DISR incorporated stakeholder engagement processes into its project planning documentation. DISR conducted a round of public consultation seeking feedback on reforms to the Australian Domestic Gas Security Mechanism. Consultation was open between 9 February 2023 and 23 February 2023.

2.81 DISR received feedback via email, letters and meetings from 25 entities within and outside the APS between 18 January 2023 and 10 March 2023, and 29 formal submissions between 17 and 23 February 2023. DISR maintained a consultation log spreadsheet for recording and incorporating stakeholder feedback into deliverables. DISR’s responses to the matters raised through email, letters and meetings were recorded in the spreadsheet for 48 of the 68 (73 per cent) matters raised. DISR’s responses regarding matters raised through the formal submissions were not recorded in the spreadsheet. DISR provided an update to stakeholders on consultation findings by including on its public consultation website a link to the outcomes — the commencement of the ADGSM reforms.

Did policy advice assess the costs and benefits of different policy options?

2.82 The Australian Government’s Regulatory Impact Analysis Framework 2020 required entities that present policy options to government to complete an impact analysis.⁶¹ An impact analysis is intended to answer seven questions: what is the policy problem you are trying to solve; why is government action needed; what policy options are you considering; what is the likely net benefit of each option; who did you consult and how did you incorporate their feedback; what is the best option from those you have considered; how will you implement and evaluate your chosen option? The impact analysis is a key mechanism for communicating the policy problem to be solved, the need for government action, as well as the costs and net benefits of a policy option.

Development of policy options

2.83 Treasury and DCCEEW used market modelling and data, as well as advice from other government entities, to support its policy advice (see Appendix 4). Modelling and analysis were conducted by Treasury and DCCEEW, with input from the AER. In developing its policy advice to government, Treasury and DCCEEW also relied on advice from the ACCC and DISR for three of the five measures — the gas price cap, mandatory gas code of conduct, and bringing forward commencement of the ADGSM reforms. Key information on potential impacts of the proposed policy options included in the December 2022 policy advice to government was supported by evidence.

2.84 Advice to government was informed by quantitative evidence and Treasury conducted a high-level qualitative analysis to identify international policy responses to high energy prices. The December 2022 advice to government reflected the context within which the proposed policy options would exist, including short term and medium-to-long term government programs⁶² that intend to address energy affordability.

2.85 To guide consideration of preliminary options, the Secretaries’ Group terms of reference (see paragraphs 2.3 to 2.7) provided criteria⁶³ to present and assess options against.

2.86 On 2 November 2022 DCCEEW documented its assessment of 20 preliminary options against the criteria, which included four of the five final preferred policy options — the measure to bring forward the commencement of the Australian Domestic Gas Security Mechanism reforms was not included.

• The assessment identified that 11 of the 20 options were aligned with the criteria and nine of the 20 options were poorly aligned with the criteria. The four of the five final preferred policy options that were assessed by DCCEEW had been identified as aligning with the criteria.
• A consideration of complexity, Australian Government capacity to implement, timing of implementation, requirements for legislation and which relevant stakeholder would incur costs was included in the assessment.
• Indicative implementation costs were considered in the assessment for 10 of the 20 options, which included two of the final preferred policy options — targeted electricity bill rebate and coal price cap.

2.87 On 24 November 2022 DCCEEW summarised implementation issues for seven policy options, covering all final preferred policy options. The fiscal impacts were considered for two of the five final preferred policy options — targeted electricity bill rebate and coal price cap.

2.88 Under Australian Government policy entities should provide all necessary costing information to the Department of Finance for agreement.⁶⁴ For all measures, costs had yet to be finalised at the time policy advice was presented to government in December 2022. Government agreed that costs would be finalised through ministerial correspondence and the 2023–24 federal budget process. These final policy costings for all five measures included information on assumptions, departmental costs, the time span of the measure, and relevant data.

Impact analysis

2.89 In December 2022 Treasury and DCCEEW produced an impact analysis that covered three of the five measures of the announced Energy Price Relief Plan — gas price cap, mandatory gas code of conduct and bringing forward commencement of the Australian Domestic Gas Security Mechanism reforms. For two of the five announced measures — the targeted electricity bill rebate and the coal price cap — an impact analysis was not submitted to the OIA. The OIA’s website noted that the announcement of the Energy Price Relief Plan ‘included decisions of National Cabinet on complementary policies that were outside the scope of the Impact Analysis, including the announcement of New South Wales and Queensland government’s work on a temporary cap on the price of coal’.

2.90 For the three measures covered within the impact analysis, Treasury and DCCEEW set out the regulatory burden costs for businesses and considered the net benefits and reasons for selecting the options that were announced. For the other two announced measures — targeted electricity bill rebate and the coal price cap — options were prioritised during a meeting of select ministers and senior officials on 4 November 2022 (see paragraph 2.9).

2.91 The impact analysis stated the policy problem to be solved, including that ‘Global energy market disruptions are leading to large price increases for households and businesses … domestic prices are expected to be unacceptably high in the absence of intervention.’ The impact analysis presented clear recommendations and alternative policy options.

Office of Impact Analysis’s assessment

2.92 The Australian Government’s Regulatory Impact Analysis Framework states that all assessments of costs and benefits should be based on evidence, with data sources and assumptions clearly identified. Any limitations relating to methodology and estimates from analytical techniques or issues of data quality should be disclosed and any potential for these to have an impact on conclusions must be acknowledged.

2.93 The OIA’s assessment was that the quality of analysis in the December 2022 impact analysis was ‘adequate and therefore sufficient to inform a decision’.⁶⁵ The OIA commented on the presentation of analysis, adding that to be considered ‘good practice’ that the impact analysis would have benefited from ‘Additional detail on the impact modelling available at time of decision, including method, assumptions and detailed results.’

2.94 For the two measures that were not subject to an impact analysis — targeted electricity bill rebate and the coal price cap — details on methodology⁶⁶, assumptions and results were included in policy advice to government.

• For the coal price cap measure, summary results from DCCEEW’s market modelling on the potential impact of gas and coal price caps, and the comparison against market modelling outputs were included in policy advice.⁶⁷ Assumptions used in the modelling undertaken by DCCEEW, Ernst & Young and ACIL Allen were outlined in policy advice.
• For the targeted energy bill rebate measure details on key results from modelling undertaken to estimate impacts were included. High-level details on the method and assumptions were included for establishing the fiscal costs.
• In relation to both measures, AER advice included details on methodology, assumptions and results for the indicative effects of the price caps on the Default Market Offer and estimated the total amount required to compensate customers for some or all of the projected electricity price rises through a consumer rebate were presented to government.

3.1 Formal risk assessments during policy development establish what additional planning is required. The Commonwealth Risk Management Policy (2022) seeks to embed risk management into the decision-making of an entity, particularly into an entity’s activities, including program and policy implementation. This includes the requirement for entities to collaborate to manage shared risks.

3.2 The Australian Government’s Delivering Great Policy model involves entities providing a practical plan for implementation when providing policy advice. An implementation plan creates a shared understanding among those who execute the proposal and ensure its success.

Did the policy advice include an appropriate assessment and management of risks to support implementation?

3.3 Treasury’s July 2022 risk management framework includes formal assessments of risk to assess ‘new and emerging risks’, such as risk in relation to new programs. Similarly, the risk management frameworks and policies that applied within DCCEEW at the time — the Department of Agriculture, Water and the Environment’s enterprise risk management policy August 2020 and Department of Industry, Science, Energy and Resources risk management framework 2021 — required a risk assessment be undertaken for new programs.

3.4 The Treasury and applicable DCCEEW frameworks and policies set out requirements and guidance for factors to consider when implementing risk management, including: assessing the impact and likelihood of a given risk; considering risk tolerance; identifying shared risks; monitoring and reviewing risk; and reporting on risk.

Consideration of risk in the options presented to government

3.5 Measures under the Energy Price Relief Plan were designed to work together to mitigate risks present in individual measures implemented in isolation. Policy advice to government in December 2022 on options to provide energy price relief clearly identified risks for four of the five measures. Risks related to bringing forward the commencement of Australian Domestic Gas Security Mechanism reforms were not specifically identified in policy advice. On 1 November 2022 the Department of Industry, Science and Resources (DISR) provided a briefing to the department’s Secretary in preparation for the Secretaries’ Group (see paragraphs 2.3 to 2.7), which outlined risks associated with bringing forward the commencement of Australian Domestic Gas Security Mechanism reforms. On 29 May 2024 DISR advised the ANAO that risks were considered ‘low’:

Risks related to the acceleration of these reforms were considered ‘low’ as implementation of the reforms had been previously communicated to stakeholders as part of Budget 2022-23. These changes were considered not to pose any significant additional administrative burden on the industry.

3.6 Policy advice on the targeted electricity bill rebate measure included risks associated with: suppressing benefits of a competitive market; consumer expectation that price relief would continue after the proposed end date; and that the measure could be abused by retailers considering increasing prices on the assumption that customers can afford to pay more as a result of receiving the rebate. The measure relied on state and territory governments and energy retailers providing confirmation to Treasury that recipients were eligible for the rebate (see paragraphs 4.5 and 4.6). Policy advice to government did not identify payment integrity risks (risk that payments are made to ineligible recipients). In April 2024 policy advice to government to extend the electricity bill rebate, Treasury and DCCEEW requested dedicated resources to manage risks to the Australian Government, including fraud risks.

3.7 On 17 June 2024 Treasury engaged an external consultant⁶⁸ to develop risk materials to support program delivery for the electricity bill rebate extension 2024–25, including a risk strategy, risk and fraud assessment and monitoring risks. On 11 September 2024 the external consultant facilitated a workshop to obtain Treasury’s input into the design of the risk framework and to identify risks to the delivery of the 2024–25 electricity bill rebate extension. A risk framework and risk assessment are in draft as at 5 November 2024.

3.8 For the four measures where risks were identified in policy advice, risk mitigation strategies were identified for most risks — 12 of the 17 risks identified for the coal price cap measure had a related risk mitigation noted, and the other three measures identified mitigations for all associated risks.

3.9 Policy advice to government on risks was well informed. Legal risks and risk ratings related to the targeted electricity bill rebate, gas price cap, mandatory gas code of conduct and coal price cap measures in advice by the Australia Government Solicitor were included in the policy advice to government. The likelihood and impact of specific risks were recorded in the impact analysis for two measures — gas price cap and the mandatory gas code of conduct.

Risk assessments and management after government consideration of policy options

3.10 After the December 2022 government decision on policy options, DCCEEW undertook a detailed risk assessment for the mandatory gas code of conduct and the coal price cap measures. Treasury did not undertake a risk assessment for the targeted electricity bill rebate and gas price cap measures.

3.11 Risks for the mandatory gas code of conduct were reviewed in December 2023, May 2024 and June 2024. DCCEEW advised the ANAO that risks were reviewed monthly. In June 2024 risks associated with the coal price cap were reviewed — prior to this DCCEEW had not clearly documented its consideration of risk tolerance levels and whether shared risks were identified. Treasury did not document the identification of shared risks or consideration of risk tolerances in relation to the two measures led by Treasury — targeted electricity bill rebate and the gas price cap.

3.12 Monitoring of risks was conducted in relation to three measures — the targeted electricity bill rebate, coal price cap, and mandatory gas code of conduct. For the targeted electricity bill rebate measure, risks were discussed at six of the 33 meetings conducted between February 2023 and November 2023 (see paragraph 2.60 to 2.61). Treasury did not monitor risks for the gas price cap measure.

3.13 Reporting on risks was available for two measures — the targeted electricity bill rebate and mandatory gas code of conduct. Reports on the implementation of the targeted electricity bill rebate measure, that included risk reporting, were provided to government three times during 2023–24 (August 2023, September 2023 and March 2023). Reports identified two risks⁶⁹ and associated mitigation for one of the risks and noted that there was a ‘medium’ level of risk to delivery. DCCEEW included risks relating to the mandatory gas code of conduct in the relevant division’s risk register from December 2023. On 15 April 2024, DCCEEW prepared a briefing to the Energy Minister on risks associated with the end of coal price caps in New South Wales. Treasury and DCCEEW did not report on risks for the gas price cap.

3.14 For the targeted electricity bill rebate measure, Services Australia produced a project risk report on 22 September 2023, which identified 16 risks, related to activities conducted by Services Australia (see paragraph 2.50 to 2.54). The project risk report identified associated risk ratings and controls. The Department of Veterans’ Affairs (DVA) established a project management plan in August 2023, which outlined a risk management approach, for its contribution to the implementation of the measure (see paragraph 2.56 and 2.57). The approach identified six risks, as well as the associated risk ratings and risk mitigation activities. DVA produced a project closure report in November 2023, which noted the steps that were taken to manage a specified risk and an issue.⁷⁰

3.15 Risks associated with bringing forward the commencement of Australian Domestic Gas Security Mechanism reforms were considered low (see paragraph 3.5) and DISR did not establish a formal risk assessment.

Was the policy advice supported by plans for implementation?

Implementation planning

3.17 Advice to government in December 2022 included details regarding implementation of individual measures under the Energy Price Relief Plan, such as key deliverables, delivery mechanisms, and timelines. Advice to government outlined that for the:

• targeted electricity bill rebate — the Prime Minister may agree elements of the mandate to negotiate with state and territory governments, following consultation with other relevant ministers;
• gas price cap — the Treasurer and the Minister for Climate Change and Energy, including that the Treasurer would lead on the near-term implementation;
• gas mandatory code of conduct — the Treasurer and the Minister for Climate Change and Energy, including that the Minister for Climate Change and Energy would lead on the code of conduct;
• coal price cap — the Minister for Climate Change and Energy would negotiate with New South Wales and Queensland governments; and
• bringing forward the commencement of the Australian Domestic Gas Security Mechanism reforms would be the responsibility of the Minister for Resources.

3.18 Policy advice did not specify which entity would be responsible for the implementation of the targeted electricity bill rebate and the coal price cap measures (see Table 1.3).

3.19 In relation to the targeted electricity bill rebate, on 12 August 2024 Treasury advised the ANAO that at the time the advice to government was being developed it had considered that:

DCCEEW would be responsible for implementing the program, given it developed the proposal, is responsible for energy policy under the Administrative Arrangements Orders⁷¹ and has existing relationships with energy retailers and jurisdictions through Energy Ministers.

3.20 Treasury had agreed to negotiate terms for the targeted electricity bill rebate, which was settled through federal funding agreement schedules signed with all states and territories (see paragraph 2.44). Between January 2023 and August 2023 Treasury sought to clarify which department would be responsible for the ongoing implementation of the measure and whether responsibility would be transferred to DCCEEW. On 4 August 2023 the Treasurer confirmed that the responsibility for the targeted electricity bill rebate would not be transferred to DCCEEW and would remain with Treasury.

3.21 The December 2022 advice to government included details that the gas and coal price caps would commence in December 2022, and that the remaining three measures — the targeted electricity bill rebate, mandatory gas code of conduct and bringing forward the commencement of the Australian Domestic Gas Security Mechanism reforms — would commence within the first half of 2023.

Implementation plans and other planning activities

3.22 In November 2020, a Treasury internal audit on risks related to the rapid design of policy and deployment of programs, recommended that Treasury develop and share a short suite of planning templates to assist staff in detailing arrangements they have designed and implemented for managing governance, risk and delivery.⁷²

3.23 Treasury has a program management framework available on its intranet and a program plan template to assist staff, which involves identifying approaches for governance, design, delivery approach, information management, and resourcing. Treasury did not use the template for the delivery of the Energy Price Relief Plan measures.

3.24 DCCEEW has internal guidance on project management available to staff, including templates for project plans. These templates were not used for measures under the Energy Price Relief Plan. Table 3.1 outlines a summary of planning documentation.

Table 3.1: Summary of implementation planning documentation by Treasury, DCCEEW and DISR

Note a: Plans were established by supporting entities (Services Australia and the Department of Veterans’ Affairs).

Note b: Existing implementation plans were updated in response to the accelerated time frame.

Source: ANAO analysis of entity documentation.

3.25 For three of the five measures, implementation plans were established or updated by the lead entity.

• DCCEEW established a project plan for the mandatory gas code of conduct in January 2023. Revised timelines were established reflecting the mandatory code of conduct being implemented later than originally planned.
• DCCEEW established an implementation plan for the coal price cap in January 2023, which was updated over time.
• DISR updated existing implementation planning arrangements to reflect the change in the commencement date of the reforms from 1 July 2023 to 1 April 2023.

3.26 For the remaining two of the five measures, other implementation planning activities were undertaken (see paragraphs 3.28 to 3.38).

3.27 There were 17 implementation meetings held between 13 January 2023 and 28 April 2023, which were attended by staff from the Department of the Prime Minister and Cabinet (PM&C), DCCEEW, Treasury, DISR, the Department of Finance and the Department of Foreign Affairs and Trade. These meetings included discussion of the targeted electricity bill rebate, mandatory gas code of conduct, coal price cap, and ADGSM reforms. Meeting minutes were not recorded for the implementation meetings.

Targeted electricity bill rebate

3.28 Implementation of the targeted electricity bill rebate involved APS delivery agencies, state and territory governments, and electricity retailers (see paragraphs 2.31 and 2.34). Advice to government in December 2022 stated that the rebates would commence in 2022–23. Treasury was confirmed as the responsible entity on 4 August 2023 (see paragraph 3.20). Roles and responsibilities for APS delivery agencies, state and territory governments, and electricity retailers were not set out.

3.29 Treasury provided activity reporting to government on the progress of implementation of the targeted electricity bill rebate three times in 2023–24 (August 2023, September 2023, and March 2024). Activity reporting contained elements of implementation planning, including key activities, milestones and delivery dates, and progress assessments.

3.30 In April 2024 Treasury and DCCEEW requested from government additional resourcing to develop governance frameworks for the extended electricity bill rebate 2024–25. On 17 June 2024 Treasury engaged an external consultant⁷³ for the development of governance frameworks and associated documents to support program delivery. The delivery of governance related outputs were due in August 2024. As at 12 August 2024 Treasury has commenced drafting program planning documents for the extension of the electricity bill rebate 2024–25. As at 10 September 2024 Treasury has a draft governance framework.

Implementation planning by supporting entities

3.32 Services Australia and Department of Veterans’ Affairs (DVA) developed plans to support the implementation of their roles in the measure.⁷⁴

3.33 Services Australia agreed to provide a delivery solution by expanding the existing Centrelink Confirmation eServices system to include all eligible recipients for the rebate, and building an online workflow within the existing customer online services platform to collect customer consent (see paragraphs 2.51 to 2.56). In April 2023 a project management plan for the work it performed in relation to the targeted electricity bill rebate measure was approved by a Services Australia national manager.

3.34 DVA was responsible for facilitating communications to DVA clients in the ‘expanded cohort’ who were required to contact their energy provider or state or territory government to access the rebate (see paragraphs 2.56 and 2.57).

3.35 In August 2023 DVA’s Policy and Research Division Board approved a project plan for the implementation of the targeted electricity bill rebate for DVA members.

3.36 Services Australia and Treasury co-chaired 33 energy bill relief governance meetings attended by Treasury, DCCEEW, Services Australia, and later DVA personnel, between 17 February and 17 November 2023 (see paragraph 2.60 to 2.61). The meetings provided updates on the progress of work involved in implementing the measure. The meetings discussed the development and implementation of the customer consent workflow within the existing customer online services platform developed by Services Australia, negotiations with individual states and territories, negotiations with energy retailers, and ongoing updates to timeframes for implementation.

Gas price cap

3.37 The Australian Competition and Consumer Commission (ACCC) advice to the Treasurer in November 2022 on gas market intervention noted the ‘urgent need for policy measures’. In mid-November 2022 the Office of Parliamentary Counsel with instruction from Treasury commenced drafting of the legislation required to implement this measure. On 22 November 2022 Treasury advised the Treasurer that it had instructed the Office of Parliamentary Counsel to develop a Bill to amend the Competition and Consumer Act 2010, focused on the gas price cap and the mandatory gas code of conduct. Treasury requested the Treasurer’s agreement to progress the amendments to the Competition and Consumer Act 2010. The request was noted by the Treasurer through their office in January 2023.

3.38 On 15 December 2022 the enabling legislation Treasury Laws Amendment (Energy Price Relief Plan) Act 2022 was passed by Parliament. Following consultation from 9 to 15 December 2022, on 22 December 2022 the acting Treasurer made the Competition and Consumer (Gas Market Emergency Price) Order 2022, which commenced on 23 December 2022.

4.1 The Department of Finance’s Resource Management Guide 130 Evaluation in the Commonwealth December 2021, also referred to as Commonwealth Evaluation Toolkit (the Toolkit) states that:

Effective monitoring and evaluation provides assurance that government activities and programs are delivering outcomes as intended and that performance is tracked. It allows for corrections to occur, while informing future policy and program design.⁷⁵

4.2 The Toolkit describes good practice as undertaking activities to:

• plan how government activities and programs will be monitored and evaluated from the start; and
• collect robust performance information that supports continuous improvement, risk management, accountability and decision-making at all policy stages.⁷⁶

Has an oversight and monitoring framework been designed and established for the implementation of the plan?

4.3 To support an evaluative culture, entities should plan to conduct fit for purpose monitoring and evaluation activities, including identifying timeframes, resources, baseline data and performance information, including ensuring appropriate monitoring of implementation and the impact on performance and outcomes.⁷⁷

4.4 Table 4.1 outlines whether monitoring frameworks and activities were identified for each measure under the Energy Price Relief Plan.

Table 4.1: Summary of monitoring arrangements for measures under the Energy Price Relief Plan

Note a: The Australian Domestic Gas Security Mechanism (ADGSM) has not been activated as at 30 June 2024. The ANAO did not assess the monitoring arrangements of the ADGSM. The audit focused on arrangements to bring forward the commencement of the ADGSM reforms to commence 1 April 2023 instead of mid-2023.

Source: ANAO analysis of entity documentation.

Targeted electricity bill rebate

4.5 Federation funding agreement schedules⁷⁸ to implement the targeted electricity bill rebate were signed with all states and territories between May and December 2023. The federation funding agreement schedules require states and territories to provide Treasury with statements of assurance on a quarterly or monthly basis. The statements of assurance are required to include:

• the number and value of rebates paid to households and small businesses;
• details of payments made to households or small businesses subsequently found to have been ineligible, and funding recovered; and
• confirmation that retailers, or in the Australian Capital Territory and South Australia, the state or territory government where applicable, have verified that recipients were eligible for the rebate.

4.6 Treasury uses the statement of assurance from states and territories to determine that retailers have checked all recipients for eligibility criteria — the Australian Capital Territory and South Australian governments will also check that recipients of the rebate met the eligibility criteria.

4.7 Between 1 July 2023 and 30 June 2024, a total of 24 payments were made by the Commonwealth Government to states and territories in relation to the targeted electricity bill rebate. All states and territories had received at least one payment by 30 June 2024. Prior to each payment, the relevant state or territory had provided a signed statement of assurance to Treasury. In each case, a Treasury officer prepared a review of the statement of assurance, and the review was then checked by another Treasury officer. The review included checks whether:

• payments were consistent with agreement terms and legislation; and
• reasonable evidence has been provided to support the calculation.

4.8 On 5 September 2023 the Commonwealth Government agreed to extend the measure to all households and businesses in Australia’s non-self-governing territories (see paragraph 2.58 and 2.59). Treasury received advice from the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) on 15 February 2024 on the number of customers who received the bill rebates, and the value of the rebates provided, for Jervis Bay Territory, Indian Ocean Territories and Norfolk Island.

Gas price cap

4.9 The gas price cap was established under the Competition and Consumer Act 2010, which is administered by the Australian Competition and Consumer Commission (ACCC).

4.10 The ACCC reports publicly on gas price trends through its gas inquiry⁷⁹ interim reports. The ACCC reported in June 2024 that the price cap was complied with during the period from December 2022 to December 2023.⁸⁰

4.11 Treasury provided briefings to the Treasurer on the ACCC’s gas inquiry interim reports between January 2023 and June 2024.

Mandatory gas code of conduct

4.12 The final design of the code of conduct was approved by government in June 2023, and the Competition and Consumer (Gas Market Code) Regulations 2023 (Gas Market Code) commenced on 11 July 2023, with a two-month transition period.⁸¹

4.13 On 15 August 2023 the ACCC published compliance and enforcement guidelines on the new Gas Market Code.⁸² On 17 August 2023 a compliance and enforcement strategy for the Gas Market Code was endorsed by the ACCC’s enforcement committee. The strategy included:

• monitoring and compliance priorities;
• an intended approach to monitoring compliance;
• a proposal for an online portal to facilitate anonymous provision of information; and
• timeframes for planned compliance monitoring work.

4.14 On 29 November 2023 the ACCC implemented an online portal to allow potential breaches of the Gas Market Code to be anonymously reported to the ACCC. In a speech to the Australian Domestic Gas Outlook Conference on 27 March 2024, the ACCC Chair reflected that ‘we’ve observed generally good compliance with the Code to date’.⁸³

4.15 Between 31 January and 27 June 2024, DCCEEW prepared briefings for the Minister for Climate Change and Energy on six occasions on ACCC, Australian Energy Regulator (AER) or Australian Energy Market Operator (AEMO) reporting in relation to gas markets. These briefings covered trends and forecasts for gas prices, supply and demand and discussed where reports commented on the impact of the Gas Market Code.

Coal price cap

4.16 The New South Wales and Queensland governments issued directions to relevant coal mines and power stations requiring them to comply with a price cap of $125 per tonne on the price of coal. A federation funding agreement schedule between the Commonwealth Government and New South Wales was signed on 18 May 2023. The federation funding agreement schedule between the Commonwealth Government and the Queensland Government was signed by the Minister for Climate Change and Energy on 21 May 2024 and by the Deputy Queensland Premier on 27 July 2024.⁸⁴ The Commonwealth Government agreed to reimburse the state governments for up to 50 per cent of the cost of rebates paid to coal producers to facilitate the price cap.

4.17 DCCEEW is the responsible Commonwealth Government entity for monitoring arrangements for the coal price cap in New South Wales and Queensland. The AER was appointed under New South Wales legislation as the regulator to monitor compliance with and enforcement of the directions to New South Wales coal suppliers and power stations (see Appendix 3).

4.18 In May 2023 for New South Wales and in May 2024 for Queensland, the Minister for Climate Change and Energy authorised specified DCCEEW staff to:

• assess project-based performance reporting; and
• determine where a project payment should be paid.

New South Wales

4.19 The federation funding agreement schedule between the Commonwealth Government and New South Wales Government outlines quarterly performance milestones. At each milestone the New South Wales Government is required to provide the Commonwealth Government with specified information in order to receive reimbursement for rebates paid to Eligible Participants (operators of coal-fired power stations who have entered into funding agreements with the New South Wales Government). The federation funding agreement schedule requires the New South Wales Government to verify rebate claims made by Eligible Participants before making payments, and to provide the Commonwealth Government with a summary report detailing the verifications made.

4.20 The New South Wales Government is required to notify the Commonwealth Government of any proposed changes to its directions to coal producers or other relevant legislation, changes in authorisations allowing coal to be sold above the price cap, and any proposed new funding agreements with Eligible Participants or variations to existing agreements.

AER reporting

4.21 Under the New South Wales federation funding agreement schedule, the AER is required to advise the Commonwealth Government and New South Wales Government on a quarterly basis on ‘Eligible Participant bidding behaviour’⁸⁵ and New South Wales and the Commonwealth Government are required to review this advice to determine compliance with requirements.

4.22 DCCEEW has received three forms of monthly reporting from the AER, which are shown in Table 4.2.

Table 4.2: Reporting on New South Wales coal price cap received by DCCEEW

Note a: November and December 2023 reports were presented as a combined report.

Source: ANAO analysis of entity documentation.

Energy Oversight Committee

4.23 Energy Oversight Committee meetings took place monthly between DCCEEW and its New South Wales Government equivalent from March 2023 to June 2024, apart from January and March 2024.⁸⁶ Minutes were not retained for these meetings. Draft records show that six meetings recorded action items in relation to the coal price cap.

Internal reporting arrangements

4.24 DCCEEW engaged an external consultant⁸⁷ to provide expert advice in relation to coal markets. The external consultant reviewed the Monthly Wholesale Market Reports provided by the AER and provided additional analysis of market dynamics for each month from May 2023 to March 2024, apart from October 2023.

4.25 Monthly reports to the relevant DCCEEW Senior Executive Service (SES) Band 1 on ‘Coal Cap Monitoring and Reporting’ were informed by: the AER monthly wholesale market report; the AER New South Wales Coal Market Price Emergency Report — reporting summary; the AER New South Wales Coal Market Price Emergency Report — Generator offer summary; and analysis provided by the external consultant. Reports were provided every month from August 2023 to March 2024, apart from October 2023.

Payments made to New South Wales

4.26 As at 30 June 2024 two payments had been made to the New South Wales Government under the federation funding agreement schedule. For each payment a decision minute was approved by the relevant SES Band 1 within DCCEEW.

4.27 Treasury is responsible for administering Commonwealth–state financial relations and the Federal Financial Relations Act 2009 provides for the Commonwealth Treasurer to determine national partnership payments to the states. DCCEEW is required to provide approval to Treasury to make payments to New South Wales through the Federal Payment Management System.

Queensland

4.28 Under the federation funding agreement schedule with Queensland, the Commonwealth Government will provide reimbursement to Queensland Government for payments made to CS Energy, the Queensland Government owned company which trades electricity in the wholesale electricity market on behalf of Gladstone Power Station.⁸⁸ The Commonwealth Government is set to make a payment to the Queensland Government ‘as soon as practicable’ following verification of an interim payments report from Queensland received on 31 August 2024, with the final report from Queensland due by 15 March 2025. The Queensland Government is required to provide reporting to the Commonwealth Government on the directions it has made to CS Energy and the value of rebate payments made.

4.29 DCCEEW reviewed documentation it received from the Queensland Government covering the period between July 2023 and June 2024.

Did the policy advice contain plans for assessing the achievement of outcomes?

Collective impacts of the Energy Price Relief Plan

Estimated impacts

4.30 The objective of the Energy Price Relief Plan was to ‘shield Australian families and businesses from the worst impacts or predicted energy price spikes’. Treasury and DCCEEW outlined in the impact analysis objectives of the Energy Price Relief Plan and how they would be measured (see Box 1).

Source: Department of the Treasury and Department of Climate Change, Energy, the Environment and Water, Options to Provide Energy Price Relief — Impact Analysis, December 2022, available from https://oia.pmc.gov.au/sites/default/files/posts/2022/12/Impact%20Analysis.pdf [accessed 4 July 2024].

4.31 Estimated impacts of the plan were outlined in the joint media release of the Prime Minister, Treasurer, and Minister for Climate Change and Energy announcing the Energy Price Relief Plan on 9 December 2022⁸⁹, which stated that:

Combined, these gas and coal measures⁹⁰ are estimated to:

• Dampen predicted gas price increases by two percentage points in 2022-23 and 16 percentage points in 2023-24.
• Reduce the impact of forecast electricity price increases of 36 per cent in 2023-24 by 13 percentage points, preventing a $230 increase that the average Australian household would have seen if these actions were not taken.
• Reduce expected inflation in 2023-24 by around an estimated half percentage point.

4.32 Implementing the targeted electricity bill rebate was also estimated to reduce retail electricity price increases by a further 10 per cent on top of the gas and coal related measures.

4.33 Treasury and DCCEEW stated in the impact analysis presented to government in December 2022 that:

Given the suite of options identified, isolating the impacts of specific options for evaluation may be challenging. The success of the suite of options could be collectively evaluated using AER and ACCC data on wholesale and retail energy prices to monitor if there are reductions to consumer energy prices and positive shifts in behaviour of energy market participants following introduction of the policies.

Establishment of plans to assess the achievement of outcomes

4.34 Treasury’s Program Management Framework May 2022 contains templates to establish a benefits management and realisation plan for a program lifecycle to track and ensure delivery of benefits that were established at the start of a program. The program management framework materials were not used in administering measures for the Energy Price Relief Plan.

4.35 DCCEEW’s project plan templates contain steps for identifying project benefits, including identifying quantifiable outcomes of the project and the desired state that the project will achieve. DCCEEW has not developed any plans to track the collective benefits of the Energy Price Relief Plan measures. DCCEEW’s internal guidance for drafting policy advice states that ‘proposals must outline how the proposal’s outcomes will be measured and assessed over time’.

4.36 While the impact analysis outlined how objectives of the Energy Price Relief Plan may be measured, key measurable targets or measures of success were not established for the whole-of-package Energy Price Relief Plan. The Office of Impact Analysis’ assessment⁹¹ of the impact analysis in December 2022 noted that the impact analysis would have benefited from ‘a description of the key metrics that will be used to monitor the performance of the policy against its objectives and help to manage unintended consequences.’

4.37 Although estimated impacts of the collective measures were identified, tolerances or margins of success against these estimates were not defined.

Reported collective impacts of Energy Price Relief Plan measures

Reporting in the Federal Budget

4.38 In the impact analysis — which covered the gas price cap, mandatory gas code of conduct and bringing forward the commencement of the ADGSM reforms — Treasury and DCCEEW stated that energy retail prices can also be compared to expected future price increases forecast in the October 2022–23 Federal Budget to assess the relative success of the recommended policies.

4.39 The May 2023–24 Federal Budget⁹² reported on the Energy Price Relief Plan, which updated estimated impacts since the December 2022 announcement of the Energy Price Relief Plan, including that as at May 2023:

• retail gas price increases in 2023–24 were expected to be around 16 per cent smaller than expected prior to the Energy Price Relief Plan;
• retail electricity price increases in 2023–24 were expected to be around 25 per cent lower than in December 2022; and
• inflation was expected to reduce by 0.75 of a percentage point in 2023–24, as a direct result of the measures.

Reporting to the Minister for Climate Change and Energy

4.40 On 25 June 2024, DCCEEW provided a brief for the Minister for Climate Change and Energy on the ‘outcomes and impacts of the Energy Price Relief Plan, assessing impact and effectiveness of the intervention’, which incorporated AER data. The briefing noted that because of the Energy Price Relief Plan:

• the 2023–24 Default Market Offer rose by 20 to 25 per cent, which was lower than the AER estimated retail electricity prices would increase by 40 to 50 per cent prior to government intervention; and
• consumer price index (CPI) electricity prices were reduced by 12.9 per cent in between the June 2023 and March 2024 quarters.

4.41 In addition to outlining collective impacts, the DCCEEW briefing to the Minister for Climate Change and Energy reported on the impacts of the coal price cap, mandatory gas code of conduct and targeted electricity bill rebates using ACCC, AER, AEMO and Australian Bureau of Statistics data.

Reporting on changes to the Default Market Offer

4.42 Both Treasury and DCCEEW have referred to the AER Default Market Offer to demonstrate the impact of the Energy Price Relief Plan. In a May 2023 briefing provided to the Minister for Climate Change and Energy, DCCEEW noted that the final Default Market Offer 2023–24 increased by less than forecast before the announcement of the Energy Price Relief Plan. The briefing noted that a key driver was wholesale costs, which declined since October 2022 in response to the government intervention.⁹³

4.43 Treasury and DCCEEW contributed analysis to a joint media release on 25 May 2023⁹⁴ by the Treasurer and the Minister for Climate Change and Energy, which showed the impact of the targeted electricity bill rebate, and the gas and coal price caps. The analysis leveraged the AER Default Market Offer 2023–24 to estimate household electricity bills in 2023–24 for New South Wales, Queensland and South Australia. The media release reported three scenarios for impacts on electricity bills, including that electricity bills:

• would have increased between 40 to 51 per cent across the states, had no government intervention (targeted electricity bill rebate, gas and coal price caps) taken place;
• increased by less, between 21 and 24 per cent across states, when gas and coal prices caps were in place; and
• reduced by between 3 and 8 per cent across states, when the targeted electricity bill rebate was applied along with the gas and coal price caps.

4.44 Reporting on the impact of the Energy Price Relief Plan was provided to the Energy and Climate Change Ministerial Council⁹⁵ between 23 February 2023 and 19 July 2024. Reporting indicated that gas and coal price caps had contributed to a decrease in wholesale electricity prices, and that the full impacts of the mandatory gas code of conduct had yet to be observed.⁹⁶

Cumulative impacts from gas market interventions on industry stakeholders

4.45 On 17 April 2023 the Department of the Prime Minister and Cabinet (PM&C) and Treasury provided advice to government on the impacts of gas market policy interventions, which included three of the five measures under the Energy Price Relief Plan: the gas price cap; mandatory gas code of conduct; and reforms to the Australian Domestic Gas Security Mechanism.⁹⁷

Post implementation review

4.46 The Office of Impact Analysis’s (OIA) assessment of the impact analysis on options to provide energy price relief noted the difficulties of predicting and measuring the likely impacts of the measures. The OIA advised the Treasury and DCCEEW that a post implementation review is required within five years of the implementation of the Energy Price Relief Plan due to the economic impacts which ‘are likely to be widespread and substantial’. The OIA suggested Treasury and DCCEEW commence the post implementation review approximately 18 months after the policy has been fully implemented.

4.47 Treasury and DCCEEW have not established a whole-of-package plan for a post implementation review. Review activities are planned for individual measures. On 11 April 2024 DCCEEW advised the ANAO that the statutory review of the Gas Market Code scheduled for mid-2025 would satisfy the requirement for a post implementation review for the mandatory gas code of conduct measure.

4.48 Treasury and DCCEEW have not documented when the Energy Price Relief Plan policy will be ‘fully implemented’.

• On 16 April 2024 DCCEEW advised the ANAO that the mandatory gas code of conduct was expected to move into a ‘business-as-usual’ by June 2024, at which point the code could be considered fully implemented.
• On 25 June 2024 DCCEEW advised the ANAO that it considers the Energy Price Relief Plan ‘fully implemented’ when core elements (such as the coal price cap and targeted electricity bill rebate measures) conclude.

Targeted electricity bill rebate

4.49 In December 2022 government received advice from Treasury and DCCEEW on the estimated impacts of the targeted electricity bill rebate. This advice did not include plans or measures to assess the achievement of the desired outcomes of the targeted electricity bill rebate. The federation funding agreement schedule signed with each state and territory did not include this information.

4.50 The finalised details of the targeted electricity bill rebate, as agreed with state and territory governments in 2023, differed from the details which informed the estimates provided in the initial advice. On 12 August 2024 Treasury advised the ANAO that the initial estimated impacts were updated to inform economic forecasts and projections to reflect the final agreed details as part of the May 2023–24 Federal Budget.

4.51 The reported impacts of the targeted electricity bill rebate, based on analysis using the AER’s Default Market Offer, are discussed at paragraph 4.43.

4.52 On 25 June 2024 DCCEEW briefed the Minister for Climate Change and Energy on the impact of the Energy Price Relief Plan, including the impact of the targeted electricity bill rebate. The brief reported on Australian Bureau of Statistics analysis stating that the introduction of the rebates moderated the expected increase in electricity bills.

4.53 On 17 June 2024 Treasury engaged an external consultant⁹⁸ to undertake program evaluations to assess the delivery of the 2023–24 targeted electricity bill rebate measure, and its 2024–25 extension. Delivery of an evaluation report for the 2023–24 targeted electricity bill rebate was due in October 2024. In September 2024 the external consultant provided Treasury with a draft evaluation plan and draft lessons learned report⁹⁹ for the 2023–24 targeted electricity bill rebate measure.

4.54 The April 2024 advice to government on the extended targeted electricity bill rebate proposes a review of the extension in late 2024–25 and establishes metrics and timelines against which to measure success. It states an evaluation approach would be developed which could combine process evaluation and outcome evaluation.¹⁰⁰ The April 2024 advice to government did not recommend an impact evaluation¹⁰¹ citing the short-term nature of the measure.

Gas price cap

4.55 Advice to government in December 2022 included potential timeframes for review of the gas price cap in 2023.

4.56 The responsible government department for reviewing the gas price cap was not defined. The December 2022 impact analysis states that ‘the effectiveness of the price cap will be measured by comparing the realised retail energy prices to those forecast by Treasury for the status quo scenario.’

4.57 In April 2023 PM&C and Treasury provided advice to government that included that initial signs were that the price cap was having the desired effect as gas contracts in the wholesale market were made at the $12 per gigajoule price cap level. The advice provided a summary of the impacts from the gas price cap on stakeholders and policy objectives.

4.58 A review of the gas price cap was not undertaken in 2023. On 20 May 2024 DCCEEW advised the ANAO that the intended scope of the review was undertaken through the consultation and design of the mandatory gas code of conduct (see paragraph 2.67 to 2.74). DCCEEW also advised the ANAO that a discrete review was not undertaken as the actual implementation process did not align with the original timeframe. The final design of the mandatory gas code of conduct was approved approximately three months after the timeframe given in the December 2022 policy advice.

4.59 The design process in 2023 for the mandatory gas code of conduct did not assess the appropriateness of the gas price cap separately to the establishment of the reasonable price mechanism for the mandatory gas code of conduct.

ACCC advice

4.60 On 27 March 2023 the ACCC’s gas market branch prepared internal advice to its Energy Markets Board on feedback on the proposed approach to review the gas price cap. The advice outlined that ACCC staff understood Treasury would lead a review of the price cap, which may be informed by information published in the ACCC’s Gas Inquiry 2017–2030 mid-year interim report.¹⁰²

4.61 To inform the gas price cap review, the ACCC:

• proposed to report on data and analysis on the impact of the price cap on matters including on wholesale gas prices, supply outlook for 2023, investment in new supply, gas prices paid by end users¹⁰³;
• considered potential collaboration with the AER, including data sharing, and providing Treasury with information gathered under the Competition and Consumer Act 2010; and
• contemplated for inclusion in the review the implications for the ACCC’s role in enforcement.

4.62 In April 2023 advice to government on the mandatory gas code of conduct included ACCC commentary on wholesale gas prices, the supply outlook for 2023 and investment in new supply.

Mandatory gas code of conduct

4.63 The December 2022 impact analysis stated that an evaluation of the code could be informed by usual monitoring and reporting of energy market participant behaviour conducted by the ACCC — for example through the ACCC’s gas inquiry reports (see paragraphs 4.10 and 4.11). For the mandatory code of conduct to be considered successful, a positive shift in behaviour would be observed from gas suppliers in negotiating wholesale gas contracts. The impact analysis noted that ‘isolating the impacts of specific options for evaluation may be challenging’.

4.64 The ACCC reported in the December 2023 and June 2024 interim reports of its gas inquiry that it remained too early to draw conclusions about the Gas Market Code’s impact on prices.¹⁰⁴

4.65 In December 2022 government agreed to a proposed review of the gas price cap and transition to the reasonable price mechanism in 2023 (see paragraph 4.55). Neither Treasury nor DCCEEW undertook a review of the transition to the mandatory gas code of conduct in late 2023.

4.66 A legislative requirement for the review was established under the finalised Gas Market Code.¹⁰⁵ In September 2024, DCCEEW developed a monitoring and evaluation plan outlining ongoing monitoring activities for the Gas Market Code. As at 10 October 2024, this plan has not been approved by the Gas Code Working Group (see 2.67 to 2.70). This monitoring will inform the statutory review required to commence by 1 July 2025. The monitoring and evaluation plan includes:

• intended roles and responsibilities in relation to monitoring activities, both internal and external to DCCEEW;
• focus areas for monitoring;
• monitoring and evaluation risks; and
• a program logic for the gas market code.

Coal price cap

Reviews under federation funding agreement schedule

4.67 The federation funding agreement schedule signed with New South Wales is required to be reviewed on a six-monthly basis to determine whether it is achieving its intended policy goals. The federation funding agreement schedule with Queensland is required to be reviewed at the end of the schedule — 30 June 2025 or the point the funding limit is reached — which will assess whether the measure achieved the intended policy goals.

4.68 In March 2024 under the federation funding agreement schedule with the New South Wales Government, a mid-term review was jointly delivered by DCCEEW and the New South Wales Government (Office of Energy and Climate Change), with input from AER staff.¹⁰⁶

4.69 The scope of the mid-term review included to:

• estimate the benefits of the coal price cap within the National Electricity Market¹⁰⁷;
• understand the likely impacts of the price caps ending; and
• consider whether any additional measures were necessary.

4.70 The mid-term review made three recommendations, including to allow the New South Wales Directions¹⁰⁸ to end as planned.¹⁰⁹ On 4 April 2024 the Minister for Climate Change and Energy was briefed by DCCEEW on the mid-term review.

Australian Domestic Gas Security Mechanism

4.71 A statutory review is required to be undertaken during 2025.¹¹⁰ As at 29 May 2024 the Department of Industry, Science and Resources (DISR) had begun planning for the review and had developed a preliminary scoping document in April 2024 for its review of the Australian Domestic Gas Security Mechanism, which listed deliverables for the review, project risks, key dependencies and included a timeline for the review.

Appendix 1 Entity responses

Department of the Treasury

Department of Climate Change, Energy, the Environment and Water

Australian Energy Regulator

Department of Industry, Science and Resources

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s corporate plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. In this context, the below actions were observed by the ANAO during the course of the audit. It is not clear whether these actions and/or the timing of these actions were planned in response to proposed or actual audit activity. The ANAO has not sought to obtain assurance over the source of these actions or whether they have been appropriately implemented.

• As at August 2024 Treasury has drafted a stakeholder engagement log and commenced drafting of a program plan, which includes a stakeholder engagement strategy (see paragraph 2.48).
• In June 2024 Treasury engaged an external consultant¹¹¹ to:
  • develop risk materials to support program delivery for the targeted electricity bill rebate extension 2024–25 (see paragraph 3.7);
  • create governance frameworks and associated documents to support program delivery for the targeted electricity bill rebate extension 2024–25 (see paragraph 3.30), and as at September 2024 Treasury have a draft governance framework; and
  • undertake an evaluation of the 2023–24 targeted electricity bill rebate measure and the 2024–25 extension (see paragraph 4.53), and in September 2024 the external consultant provided Treasury with a draft evaluation plan and draft lessons learned report for the 2023–24 measure.
• In June 2024 DCCEEW briefed the Minister for Climate Change and Energy on the impacts of the Energy Price Relief Plan and each of the measures under the plan (see paragraph 4.41). As part of this briefing an updated risk register was provided (see paragraph 3.11).
• Advice to government in April 2024 on the extension of the targeted electricity bill rebate measure included targets and metrics against which to measure success (see paragraph 4.54).
• In early 2024 DCCEEW began drafting a monitoring and evaluation plan for the mandatory gas code of conduct (see paragraph 4.66).

Appendix 3 Relevant legislation and governance frameworks

Source: ANAO summary of public and entity documentation.

Appendix 4 Summary of analysis conducted

Source: ANAO analysis of entity documentation.