AER Australian Energy Regulator : AGL and EnergyAustralia pay penalties for alleged failure to follow electricity market dispatch and offer rules

AGL has paid a penalty of $20 000, and EnergyAustralia has paid total penalties of $40 000, following the issue of infringement notices by the Australian Energy Regulator (AER).

The AER issued two infringement notices to EnergyAustralia because it had reason to believe that EnergyAustralia had breached the National Electricity Rules (NER) by failing to follow Australian Energy Market Operator (AEMO) dispatch instructions, at EnergyAustralia's electricity generating units at Hallett Power Station in South Australia and Yallourn Power Station in Victoria.

The AER issued one infringement notice to AGL because it had reason to believe AGL had breached the NER by failing to ensure its electricity generating unit at Somerton Power Station in Victoria was able to perform at the capability offered to AEMO for dispatch.

These alleged breaches occurred on 13 January 2016, when electricity spot prices in SA and VIC exceeded the $5000/MWh regulatory price threshold, which triggers an AER review.

The AER's detailed review indicated that during the high price events, EnergyAustralia's Hallett Power Station and Yallourn Power Station increased output without having regard to dispatch instructions from AEMO. The review indicated that an error in AGL's systems resulted in an incorrect offer for the Somerton generating unit being submitted to AEMO.

'Our review of the high price events identified incidences where the AER considered that generators owned by EnergyAustralia and AGL did not comply with dispatch instructions issued by the Australian Energy Market Operator,' AER Board member Jim Cox said.

'The AER's compliance work plays an important role in protecting the efficiency and security of the National Electricity Market,' Mr Cox said.

'System security may be compromised when dispatch offers made by generators are not accurate and where generators fail to comply with dispatch instructions given by the Australian Energy Market Operator,' Mr Cox said.

'The reliable supply of electricity to consumers depends upon the power system being operated in a secure manner,' he added.

The AER can issue infringement notices where it has reason to believe a generator has breached a civil penalty provision of the NER. The payment of a penalty specified in an infringement notice is not an admission of a breach or an admission of liability by the relevant participant.

The AER's full report into the high price events can be accessed here.