The Australian Energy Regulator (AER) today welcomed the Federal Court’s order that Pelican Point Power Limited (Pelican Point) pay a pecuniary penalty of $900,000 for breaches of the National Electricity Rules (Rules).
The Federal Court today found that Pelican Point breached the Rules by failing to comply with its legal obligation to disclose short term availability information relating to its gas-fired power station to the Australian Energy Market Operator (AEMO) during heat wave conditions in February 2017.
Further, the Court found that Pelican Point breached the Rules by failing to promptly notify AEMO that the medium term availability information previously submitted for the power station had increased.
In his judgment, Justice Besanko said “[I]t must be acknowledged and taken into account that the nature of the obligations breached are important and are intended to enable AEMO to manage the reliability of the power system.”
AER Chair Ms Clare Savage welcomed the Court’s decision following Court proceedings that commenced in 2019 after the non-payment of an infringement notice issued by the AER to Pelican Point for an alleged breach of the Rules.
Ms Savage noted that the provision of accurate and timely availability information is key to AEMO’s management of the power system and to ensure safe and reliable power supply to consumers.
“The outcome is a timely reminder of the important overarching obligation to notify AEMO of any changes to submitted information and has broad applicability for a range of participants.
“It is not a matter of set and forget when it comes to information submitted to AEMO – participants must continually monitor market conditions, plant capabilities and other relevant factors and notify AEMO promptly of relevant changes,” Ms Savage said.
The penalty comes as the AER continues to focus on power system security as part of its Compliance and Enforcement Priorities 2023–24.
Note to Editors
Background
On 8 February 2017, South Australia experienced heat wave conditions which resulted in high customer demand and reduced generation capacity.
In the late afternoon of that day, the power system in the region was not in a secure operating state for over 30 minutes, which required AEMO to declare an actual ‘Lack of Reserve Level 3’ event and direct an interruption of customer supply (also known as ‘load shedding’) in order to restore power system security.
Following an investigation into the event, the AER had concerns that Pelican Point’s conduct impaired AEMO’s ability to manage the power system.
Projected assessment of system adequacy (PASA) submissions are used by AEMO to forecast capacity (supply) in the market over the coming days, months and years.
Court proceedings
In proceedings brought by the Australian Energy Regulator (AER), the Federal Court found in September 2023 that Pelican Point failed to comply with its legal obligation to disclose short term availability information to AEMO.
The declarations made today relate to failures to disclose short term availability information to AEMO as well as a failure to promptly update medium term availability information previously submitted for the power station to reflect a known increase in availability.
Judgment
The decision on penalty was handed down on 27 March 2024. A copy of the decision can be found on the Federal Court website.
Contraventions of the National Electricity Rules
Justice Besanko ordered that Pelican Point pay a penalty of $900,000 for contravening:
- clause 3.7.3(e)(2) of the National Electricity Rules related to short term PASA, and
- clause 3.13.2(h) of the National Electricity Rules related to Pelican Point’s obligation to notify AEMO of changes to the medium term PASA information it had previously submitted.
Costs
On 27 March 2024 the parties agreed that Pelican Point pay $950,000 in costs.