In proceedings brought by the Australian Energy Regulator (AER), Callide Power Trading admitted that on 25 May 2021 it failed to ensure the Callide C4 generating unit met or exceeded its performance standards in breach of rule 4.15(a)(1) of the NER. It also admitted that it failed to plan and design its facilities and ensure they were operated to comply with its performance standards, in breach of clause 5.2.5(a)(1) of the NER.
With a maximum penalty of $10 million, today’s $9 million penalty is the highest ever imposed for a failure to comply with performance standards under the NER.
The plant damage resulted in Callide C4 being out of service for nearly two years. It remained offline until 30 August 2024 due to unrelated incidents.
In his judgment Justice Derrington said: “Though the contraventions appear, at first blush, to be minor technical breaches, they were, in fact, serious. In broad terms, they arose as a result of a substantive failure of major infrastructure to operate with the Callide C4 unit. The consequences included the destruction of valuable equipment, the potential loss of life, loss of power to the grid, and significant, long-term and wide-ranging impacts on the National Electricity Market (NEM).”
AER Chair Clare Savage said the Court’s decision reflected the seriousness of the breach by Callide Power Trading.
“In the immediate aftermath of the event, the energy supply for almost half a million customers was disrupted and the spot price for electricity in Queensland and New South Wales significantly increased. The generator itself was offline for nearly two years.
“This significant penalty reinforces the importance of generators and Registered Participants, who are responsible for generators, complying with performance standards to ensure the security and safety of the power system.
“Those responsible for generators must have appropriate systems, processes and protocols in place to ensure they and their operators can comply with their regulatory obligations,” said Ms Savage.
Justice Derrington said: “… the penalty of $9,000,000… should be understood by others in the industry as reflecting the seriousness with which the Court regards the two contraventions admitted by CPT.”
Improving market participants’ compliance with performance standards is one of the AER’s 2024-25 Compliance and Enforcement Priorities.
The requirement for generators and facilities to comply with their performance standards is critical to power system security, particularly when this conduct can cause or exacerbate market events.
In addition to ordering Callide Power Trading to pay the penalty, the Court ordered it to pay $150,000 towards the AER’s legal costs.
ENDS
Notes to editors
Background
On the afternoon of 25 May 2021, an event occurred during a planned procedure to replace the battery charger for the Callide C4 generating unit.
This event caused the catastrophic failure and destruction of the Callide C4 generating unit, and was followed by significant, long-term and wide-ranging impacts on the National Energy Market and on energy consumers in Queensland and northern New South Wales.
Approximately 3,045 MW of generation was lost, and 2,300 MW of customer load was disconnected from the power system resulting in widespread blackouts to households and businesses across Queensland.
After conducting a thorough investigation, on 9 February 2024 the AER instituted proceedings in the Federal Court against Callide Power Trading Pty Ltd for failing to comply with its performance standards for the Callide C power station.
Judgment
The penalty decision was handed down on 4 February 2025. A copy can be found on the Federal Court website.
Registered Participants
Callide Power Trading is the Registered Participant for the Callide C Power Station. A Registered Participant is registered with the Australian Energy Market Operator (AEMO) and must ensure it and the generator it is responsible for, complies with all obligations under the NER, such as generator performance standards.
Joint submissions
The AER and Callide Power Trading filed a Statement of Agreed Facts and Joint Submissions on penalty prior to today’s judgment.