Four Jemena subsidiaries (collectively, Jemena) have been ordered by the Federal Court to pay a penalty of $5.5 million for breaches of the National Gas Rules related to the Day Ahead Auction (DAA).
Established in 2019, the DAA is a central platform facilitated by the Australian Energy Market Operator (AEMO) that allows companies that transport gas to bid for available pipeline capacity. The auction is finalised a day in advance.
In court proceedings brought by the Australian Energy Regulator (AER), Jemena has admitted that between 1 March 2019 and 22 February 2022 it breached rules 649(1) and 653(1)(a) of the National Gas Rules by failing to determine Auction Quantity Limits (AQLs) in accordance with the procedures developed by AEMO and the Part 24 information standard.
The AQLs determine how much capacity is available to be won at auction.
On 10 April 2025, Justice Anderson declared that Jemena contravened rule 649(1) on 2,604 occasions and contravened rule 653(1)(a) on 3,019 occasions. On the basis of the contraventions of rule 649(1), the Court ordered that Jemena pay a penalty of $5.5 million.
In his judgment, Justice Anderson said: “… the contravening conduct resulted in incorrect AQLs being provided to AEMO and had the potential to result, in some instances, in auction participants paying above what they otherwise would have paid. The operation of the capacity auction relies on the quality, accuracy and timeliness of participant reporting in order to achieve its objective of enhancing access to capacity on a more flexible and efficient basis.”
AER Deputy Chair Justin Oliver said the judgment reinforced the importance of gas market participants having the necessary checks and systems in place to support the Day Ahead Auction.
“The Day Ahead Auction plays a vital role in making sure spare pipeline capacity can be used to transport gas throughout eastern Australia, but it relies on accurate and timely information to work effectively.
“This judgment is a reminder to all gas market participants of their important responsibility to provide accurate information so that the Day Ahead Auction can continue to support the efficient use of natural gas services for the long-term interest of consumers,” Mr Oliver said.
In addition to ordering Jemena to pay the penalty, the Court ordered the appointment of an independent expert to conduct a review of the Jemena subsidiaries’ controls, and for Jemena to pay $300,000 towards the AER’s legal costs.
ENDS
Notes to editors
Judgment
The penalty decision was handed down on 10 April 2025. A copy can be found on the Federal Court website.
Joint submissions
The AER and Jemena subsidiaries filed a Statement of Agree Facts, Statement of Further Agreed Facts and Joint Submissions on penalty prior to judgment.
Jemena subsidiaries
The four Jemena subsidiaries who are respondents in the proceedings are Jemena Eastern Gas Pipeline (1) Pty Ltd, Jemena Queensland Gas Pipeline (1) Pty Ltd, Jemena VicHub Pipeline Pty Ltd, and Jemena Darling Downs Pipeline (3) Pty Ltd.
Part 24 information standard
Participants are required to calculate and submit Auction Quantity Limits in accordance with the Part 24 information standard. To meet the standard, participants must display:
- the practices, methods and acts that would reasonably be expected from an experienced and competent person engaged in the ownership, operation or control of a transportation facility of the applicable type acting with all due diligence, prudence and foresight and in compliance with all applicable legislation (including these rules), authorisations and industry codes of practice.