Issue date
AER reference
NR 31/21

The Australian Energy Regulator (AER) has instituted proceedings in the Federal Court against Hornsdale Power Reserve (HPR) for alleged breaches of the National Electricity Rules.

Between July and November 2019, HPR made offers to the Australian Energy Market Operator (AEMO) and was paid to provide market ancillary services which allegedly it could not in fact provide, including when required to provide those services after a frequency disturbance.

The services are known as contingency frequency control ancillary services (FCAS) and they are required to keep the lights on following a power system disturbance.

AEMO first brought the alleged conduct to the AER’s attention following a power system disruption at Kogan Creek Power Station in Queensland in October 2019.

The AER alleges that HPR’s failure to be capable of providing the FCAS in accordance with its offers and AEMO’s dispatch instructions, over the four months, undermined AEMO’s ability to maintain frequency within the Frequency Operating Standard limits, creating a risk to power system security and stability.

AER Chair Clare Savage said the AER was sounding the alarm on concerning behaviour in the frequency control market, making registered generators’ behaviour with FCAS rules a top compliance and enforcement priority this year.

“It is vital that generators do what they say they can do if we’re going to keep the lights on through the market’s transition to variable renewable generation,” Ms Savage said.

“AEMO relies on accurate information and compliance with offers and dispatch instructions to ensure it can effectively stabilise frequency deviations.

“Contingency FCAS providers receive payment from AEMO to be on standby to provide the services they offer.

“We expect providers to be in a position, and remain in a position, to respond when called upon by AEMO.”

“Failure to comply with the latest market ancillary service offer and AEMO dispatch instructions is in breach of the National Electricity Rules and may result in AER enforcement action.”

The AER is seeking pecuniary penalties, declarations and costs.