Overview
On 4 June 2024, the Federal Court ordered that Santos Direct Pty Ltd, a subsidiary of Santos Limited, pay a pecuniary penalty of $2,750,000 for breaches of record keeping obligations in the National Gas Rules relating to the Day Ahead Auction for gas pipeline capacity.
In proceedings brought by the Australian Energy Regulator (AER), Santos admitted that between March 2019 and June 2021, it contravened rule 666(1) of the National Gas Rules on 4,701 occasions by failing to keep the required records of its material renominations for the Day Ahead Auction across six different gas auction facilities.
The Federal Court made declarations that Santos contravened rule 666(1) of the National Gas Rules, as well as an order requiring Santos to appoint an independent reviewer to undertake an assurance program to ensure compliance, and to pay $100,000 towards the AER’s costs.
Background
To facilitate the Day Ahead Auction, companies that have existing entitlements to capacity make a nomination a day in advance of when they intend to move gas from one location to another, specifying how much capacity they intend to use the next day. Any spare capacity is then made available in the auction.
A renomination is a request made, after the nomination cut-off time, to vary an earlier nomination for the use of transportation capacity. Renominations can only be made in limited circumstances and transportation facility users, such as Santos Direct, are required to make contemporaneous records of material renominations in order to clearly state the reason for each renomination, when the event giving rise to each renomination occurred and when the transportation facility user became aware of this event.