Penalty for Queensland generator over inability to supply frequency control services

CS Energy has paid $200,000 in penalties for allegedly failing to ensure it could provide frequency control ancillary services (FCAS) it had offered to the market.

FCAS helps manage the stability of the power system and therefore prevent disruption of electricity supply to customers, in this case, Queensland customers.

CS Energy has also repaid $1.13 million to the Australian Energy Market Operator (AEMO) it received as payment to provide the services. The Australian Energy Regulator (AER) requested CS Energy to make this repayment because it was not capable of complying with the FCAS offers it submitted to AEMO.

AER Chair Clare Savage said it was a basic principle that businesses should not keep payment for services they are unable to deliver in line with their offers.

“Inaccurate information about FCAS offers undermines AEMO’s ability to manage frequency deviations that is critical to supporting the integrity of the power grid,” Ms Savage said.

“CS Energy and other FCAS providers must have robust systems and processes in place to ensure it is at all times able to comply with its FCAS offers and that customers pay only for services that are provided."

“The AER will continue to monitor FCAS providers and take action against businesses who do not comply with these crucial obligations.”

CS Energy allegedly failed to ensure it was at all times able to comply with its contingency FCAS offers at certain units at Callide B power station on 25 August 2018 and Gladstone power station in November 2019 and January 2020. 

CS Energy was not capable of complying with its offers due to settings at certain units at the power stations.

CS Energy has made changes to its processes and systems so that it does not make offers for contingency FCAS at Callide B and Gladstone power stations when these settings are in place.

Note to Editors

FCAS are procured by AEMO from FCAS providers to help ensure the stability of frequency in the electricity grid across the National Electricity Market.

Contingency FCAS are a type of insurance service that are required to be delivered when an event in the system causes a major frequency disturbance. Contingency FCAS is one type of service from a suite of tools that assist to manage the power system.

The AER may issue an infringement notice where it has reason to believe a business has contravened a relevant civil penalty provision of the National Electricity Law or the National Electricity Rules. Under clause 4.9.8(d) of the National Electricity Rules, a service provider must ensure that its units are at all times able to comply with its latest market ancillary service offers (including FCAS offers). This is a civil penalty provision.

About the AER

The AER works to make all Australian energy consumers better off, now and in the future.

  • We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
  • We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
  • We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland.
  • We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.
Issued date: 
22 February 2021
AER reference: 
NR 06/21
AER Media 0466 409 921