AGL to pay $3.5 million in penalties for breaching energy rules

Three subsidiaries of AGL Energy Limited (AGL) have been ordered to pay a total of $3.5 million in penalties by the Federal Court for breaches of the National Electricity Rules, following proceedings commenced by the Australian Energy Regulator (AER) in relation to AGL’s conduct during South Australia’s state-wide blackout in 2016.

AGL admitted that its subsidiaries AGL HP1 Pty Ltd, AGL HP 2 Pty Ltd and AGL HP 3 Pty Ltd had failed to obtain written approval for critical system settings at the Hallett 1, 2, 4 and 5 wind farms in South Australia’s mid-north for more than three years, including on the day of the ‘black system’ event.

AGL also admitted that its subsidiaries were operating generating units with low voltage ride through (LVRT) system settings that had been applied without prior written approval from the Australian Energy Market Operator (AEMO) and the network service provider, ElectraNet.

LVRT system settings are required to enable generators to ride-through voltage disturbances to ensure continuity of electricity supply. Non-approved settings create the potential for AEMO to make decisions based on incomplete information.

In his decision, Justice Besanko referred to the conduct as a “serious breach of the NER”.

“A failure by a generator to ensure that accurate and complete information has been provided to AEMO about the technical settings of its wind turbines when connecting to the power system, or anytime thereafter, is a serious breach of the NER, because it compromises AEMO’s ability to maintain the power system in a secure operating state,” he said.”

“The resulting harm of this conduct was that AEMO’s ability to determine the secure operating limits of the power system, and ensure its resilience during abnormal conditions, was compromised. This, in turn, created a risk of impairing AEMO’s ability to maintain the power system in a secure operating state.”

This decision by the Court means that the AER’s investigation and subsequent court action has resulted in four wind farm operators being ordered to pay a total of $6.15 million in penalties by the Federal Court for breaching the National Electricity Rules.

In December 2020 Snowtown Wind Farm Stage 2 Pty Ltd (Snowtown 2 wind farm) was ordered to pay a $1 million penalty, and in July 2021 HWF1 Pty Ltd (Hornsdale wind farm) and Pacific Hydro Clements Gap Pty Ltd (Clements Gap wind farm) were ordered to pay penalties of $550,000 and $1.1 million respectively, for similar breaches.

“More than $6 million in penalties is a significant outcome to make generators take note and ensure they are taking the right measures to support a secure system,” AER Chair Clare Savage said.

“For the whole system to work, accurate information must be provided to the market operator, including the critical LVRT settings.”

The operators of the four wind farms have also each provided the AER with enforceable undertakings. The undertakings require the operators to update their wind farms’ generator performance standards (GPS) and to have the updates reviewed by an independent expert and then approved by ElectraNet and AEMO.

AGL made admissions and agreed with the AER on joint submissions on penalties.

Issued date: 
28 June 2022
AER reference: 
NR 47/22
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