The Australian Energy Regulator (AER) has instituted proceedings in the Federal Court against AGL Macquarie Pty Ltd (AGLM) and AGL Loy Yang Marketing Pty Ltd (AGLL), subsidiaries of AGL Energy Ltd, for alleged breaches of the National Electricity Rules.
AGLL and AGLM have cooperated with the AER in relation to these proceedings and have admitted to the contraventions. The parties intend to make joint submissions to the Court in relation to the appropriate relief.
AGLM and AGLL made offers to the Australian Energy Market Operator (AEMO) and were paid to be on standby to provide contingency frequency control ancillary services (FCAS) in response to frequency disturbances.
AGLM and AGLL have admitted that they did not comply with dispatch instructions given to them by AEMO in relation to their FCAS offers and did not ensure their relevant generating units were at all times able to comply with those FCAS offers.
AGLM engaged in this conduct during periods between September 2018 and August 2020 for two generating units at its Bayswater power station, and AGLL during periods between December 2019 and May 2020 for two generating units at its Loy Yang A power station.
The AER considers the conduct created a risk to power system security by undermining AEMO’s ability to prepare for and respond to frequency disturbances.
Under the National Electricity Rules, electricity generators can offer to be on standby to provide market ancillary services to stabilise network frequency when there is a power system disturbance. Contingency FCAS is a type of market ancillary service and is essential to keeping the lights on following a frequency disturbance in the power system.
AER Board Member Justin Oliver said it is important for generators to comply with their market ancillary services offers and AEMO dispatch instructions.
“Electricity generators must do what they say they will do if we are to keep the lights on through the market’s transition to variable renewable generation,” Mr Oliver said.
“When generators are not able to provide promised standby services, it creates a risk to power system security and stability.
“Generators receive payment from AEMO to be on standby to provide the FCAS services they have offered. We expect them to ensure that they provide those services when called upon,” Mr Oliver said.
In 2022 the AER released guidance for electricity market participants on their obligations when offering and delivering contingency FCAS.
Note to Editors
Provision of contingency services
The AER’s instituting of proceedings against AGL subsidiaries follows action it took last year against Hornsdale Power Reserve (Hornsdale) for breaches of the National Electricity Rules related to providing back up contingency services.
This action resulted in the court ordering Hornsdale to pay a fine of $900,000.
Supporting power system security
Supporting power system security and an efficient wholesale electricity market is one of the AER’s Compliance and Enforcement Priorities for 2023–24.
The AER will do this by focusing on generators’ compliance with offers, dispatch instructions, bidding behaviour obligations and providing accurate and timely capability information to AEMO.