The Australian Energy Regulator (AER) has issued a $67,800 infringement notice to CS Energy, and has also initiated proceedings in the Federal Court against Santos Direct. 

The notice issued to CS Energy was for an alleged breach of the National Electricity Law for operating a generating system without regulatory approval. 

The alleged breach was discovered as part of the AER’s ongoing investigation into the power system event involving the trip of multiple generators and high voltage transmission lines in Queensland following an initial plant issue at the Callide C Power Station on 25 May 2021.

This alleged breach is distinct from the AER’s ongoing investigation into the events that led to the 25 May 2021 power system event.

Any entity that owns, controls or operates an electricity generator must apply to the Australian Energy Market Operator (AEMO) to be a Registered Participant for the activity or for an exemption from registration.

It’s alleged that CS Energy breached section 11(1) of the Electricity Law by operating the Callide C Power Station without being a Registered Participant or having an exemption from registration. CS Energy has been operating Callide C Power Station for a number of years, including on 24 May 2021, but only submitted an application for exemption following the AER’s investigation.

CS Energy subsequently obtained this exemption in September 2023.

AER Board Member, Justin Oliver, said that it’s important for market participants to seek registration or exemption so AEMO can maintain the National Electricity Market (NEM).

“Failure to obtain the appropriate registration and exemptions can impede AEMO’s ability to track changes in the control or operation of a generating system,” Mr Oliver said. 

“This reduced visibility could cause operational issues for AEMO including its ability to contact the appropriate staff that are responsible for the operation of generating systems to raise important matters including compliance issues and activities.” 

The AER is continuing its investigations into the 25 May 2021 power system event.

The proceedings brought against Santos Direct are for alleged breaches of important record keeping obligations in the National Gas Rules relating to the Day Ahead Auction for gas pipeline capacity.

The Day Ahead Auction commenced in 2019 and was designed to improve competition in the gas market by providing access to contracted but unused capacity on gas pipelines. The AER alleges that on 4,701 occasions between March 2019 and June 2021, Santos failed to keep the required records of its material renominations for the Day Ahead Auction across six different auction facilities, contravening Rule 666(1) of the National Gas Rules.

Mr Oliver said that these record keeping obligations are critical for transparency and reinforced calls for gas market participants to have the necessary checks and balances in place to maintain the Day Ahead Auction.

“The Day Ahead Auction is vital to moving gas between markets on the east coast and relies on market participants providing accurate information to AEMO to operate efficiently.

“This includes maintaining contemporaneous records to enhance the AER’s ability to monitor, investigate and ensure compliance with the National Gas Rules in the wholesale gas market.”

The AER is seeking pecuniary penalties, declarations, an order requiring the implementation of a compliance program, and costs.

These actions follow separate action the AER has taken against EnergyAustralia, Incitec Pivot and Jemena for alleged breaches of the National Gas Rules, highlighting the AER’s commitment to compliance in downstream gas markets to ensure their efficient operation for the benefit of energy consumers.

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