The Australian Energy Regulator today imposed infringement penalties totalling $60,000 on Braemar Power Project Pty Ltd.
The penalties relate to the alleged failure of Braemar's power station to ensure its offers to supply generation capacity into the National Electricity Market accurately reflected its capability and its alleged failure to follow dispatch instructions issued by the market operator.
Braemar offers energy into the National Electricity Market from its 450MW gas-fired power station, 200km west of Brisbane. The three 150MW generating units are separately registered with the market operator, NEMMCO (the National Electricity Market Management Company).
On 4 November 2007, with one Braemar unit running at near full capacity, a planned electricity network outage reduced the transfer capability of the south west Queensland network. As a result, Braemar was instructed to reduce the output from that unit but failed to do so. A second Braemar unit, after receiving a NEMMCO instruction to start, was later instructed to reduce output but also failed to do so. In relation to both units the AER alleges that Braemar did not provide NEMMCO with the units' accurate capabilities.
This conduct occurred during a period of almost five hours between 5.40 a.m. and 10.30 a.m. during which Braemar failed to follow normal market instructions issued by NEMMCO.
The AER believes that as a result of this conduct Braemar has committed several breaches of clauses 4.9.8(a) and 4.9.8(b) of the National Electricity Rules. The AER has decided to issue three $20,000 infringement notices for this conduct.
"NEMMCO is required to ensure that the power system is operated in a safe and secure manner," AER Chairman, Mr Steve Edwell, said today.
"In order to achieve this, NEMMCO must be assured that participants submit offers that accurately reflect each generating unit's capability and that units will follow dispatch instructions issued by NEMMCO. NEMMCO is then able to assess its security management options, particularly at times where the network is constrained.
"Providing accurate information to NEMMCO and following dispatch instructions are critical responsibilities for all market participants. Failure to do so can compromise system security. For this reason, the AER believes it appropriate to rigorously enforce this area of the Rules to ensure that any threat to the safe and secure operation of the power system is minimised.
"In this instance, the AER has opted to issue infringement notices rather than seek higher penalties in court. This decision recognises that Braemar has co operated with the AER's inquiries and has expressed a willingness to put in place the necessary arrangements to ensure compliance in the future."
Under the Law, payment of the penalty does not entail an admission by Braemar that it breached the Rules. If Braemar pays the infringement penalty, the matter will be closed. If, however, the penalty is not paid, the AER has the power to institute court proceedings.
The relevant provision of the National Electricity Rules is set out in clause 4.9.8. Clause 4.9.8(a) of the Rules requires a Registered Participant to comply with a dispatch instruction unless, in the Registered Participant's reasonable opinion, to do so would be a hazard to public safety or would materially risk damaging equipment. Clause 4.9.8(b) of the Rules requires a Scheduled Generator to ensure that each unit is at all times able to comply with the latest generation dispatch offer submitted in respect of that unit.
The AER has issued three infringement notices pursuant to section 74 of the National Electricity Law (Law). The first notice alleges that Braemar breached clause 4.9.8(a) of the Rules with respect to Braemar unit three at 5.40am, 5.50am and between 6.20am and 6.40am by failing to follow dispatch instructions. The other notices allege breaches of clause 4.9.8(b) with respect to Braemar unit one between 7.20am and 7.45am and unit three between 8.10am and 8.35am for not ensuring that at all times it was able to comply with the latest offer with respect to its generating units.
Clauses 4.9.8(a) and 4.9.8(b) are both civil penalty provisions within the meaning of section 73 of the Law. The infringement penalty for a breach of these clauses is $20,000.
The AER issued a Compliance Bulletin in December 2006* to provide guidance on generator obligations with respect to following dispatch instructions. The Bulletin indicated that the AER would investigate and consider all available enforcement options where a generator fails to follow instructions including, where appropriate, issuing infringement notices or initiating legal proceedings. The AER's enforcement tools range from the infringement notice used in this case, to legal action seeking penalties of up to $100,000 for each breach of the Rules.