Origin Energy Uranquinty Power Pty Ltd (OEU), a wholly owned subsidiary of Origin Energy Limited (Origin Energy), has paid a penalty of $20 000, following the issue of one infringement notice by the Australian Energy Regulator.
The AER issued the notice because it had reason to believe that OEU failed to follow dispatch instructions from the Australian Energy Market Operator (AEMO) for its four generators at the Uranquinty Power Station in NSW during a dispatch interval on 23 September 2015.
“Failures to follow AEMO dispatch instructions can have serious implications for security of the power system. Compliance with these instructions remains a focus for the AER and we will not hesitate to take appropriate enforcement action to deal with non-compliance,” AER Chair Paula Conboy said.
“Origin Energy self-reported the incident to the AER and cooperated with the AER’s investigation. It has also undertaken a number of actions in response to the breach, including disciplinary action, updating its operating procedure, and providing trading staff and plant operators with additional compliance training. These actions and cooperation were taken into account by the AER in determining to issue an infringement notice in respect of the non-compliance,” Ms Conboy said.
As a result of a trader switching OEU’s Uranquinty Power Station to manually operate at full power, OEU did not comply with a subsequent AEMO dispatch instruction to reduce output to manage network flows. Consequently, the power station generated approximately 170 megawatts above the level specified in the dispatch instruction during a period of high wholesale electricity spot prices in the National Electricity Market and when power flows across the network were limited.
The AER can issue an infringement notice where it has reason to believe a business has contravened a civil penalty provision of the National Electricity Law or National Electricity Rules. The payment of a penalty specified in an infringement notice is not an admission of a breach or an admission of liability.
Background
The National Electricity Market (NEM) is a wholesale market in which generators sell electricity in eastern and southern Australia. Registered generators make offers into the market to produce electricity at various prices in each five minute dispatch period in a day.
AEMO issues dispatch instructions to generators, based on offer prices and other market conditions. AEMO’s instructions ensure supply and demand is safely balanced every minute of the day.
There is a legal obligation upon registered participants to follow dispatch instructions issued by AEMO unless to do so would, in the participant’s reasonable opinion, be a hazard to public safety or materially risk damaging equipment. A failure to comply with a dispatch instruction constitutes a breach of the National Electricity Rules. The AER monitors these requirements and can take enforcement action when appropriate.
Compliance with dispatch instructions is essential to maintain power system security. Market outcomes may also be distorted if these instructions are not followed. Where a generator is advantaged by not following dispatch instructions, one or more other players may be financially disadvantaged.
Origin Energy is a major generator in the NEM with approximately 6 000 MW of installed generation capacity spread across the mainland NEM regions. Origin Energy also produces and supplies natural gas in Victoria, Queensland and South Australia; and retails electricity and natural gas to customers across all mainland NEM regions.