Australian Energy Regulator Fines Generator for Heatwave Breaches

This week the Australian Energy Regulator (AER) announced (click here) that a Federal Court had ordered Pelican Point Power Limited to pay a fine of AUD $900,000 for breaching Australia’s National Electricity Rules.

The Pelican Point power station is a 497 MW Combined Cycle Gas Turbine (CCGT) station located in Adelaide, and is majority owned and operated by Engie. The court’s ruling may be found here. The facts of the case are briefly summarised as follows:

• On 8 February 2017 South Australia experienced a heat wave resulting in higher demand and reduced generation capacity;
• In the late afternoon of that day the power system in the region was not stable for over 30 minutes requiring the Australian Energy Market Operator (AEMO) to declare a ‘Lack of Reserve Level 3’ event accompanied by load shedding to restore system stability;
• Australia’s National Electricity Rules require firms to submit Projected assessment of system adequacy (PASA) notifications to AEMO to help it to forecast capacity (supply) in the coming days, months and years;
• In September 2023 the Federal Court found (click here) that Pelican Point had failed to comply with its legal obligation to disclose short term availability information to AEMO;
• The findings in the current order relate to failures to disclose short term availability information as well as the failure to promptly update medium term availability information previously submitted reflecting a known increase in availability;
• The investigation into the event concluded that Pelican Point’s conduct had impaired AEMO’s ability to manage the power system, specifically by breaching:

1. Clause 3.7.3(e)(2) of the National Electricity Rules related to short term PASA; and
2. 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.

The Chairwoman of the AER commented, “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.”

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The announcement also highlights that power system security remains a priority enforcement area for AER under their current enforcement priorities (click here) published in June 2023.