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The Australian Energy Regulator (AER) has begun proceedings against AGL Energy subsidiaries for alleged breaches of the National Electricity Rules regarding failing to provide services during frequency disturbances.

The AER’s  proceedings in the Federal Court are against subsidiaries of AGL Energy – AGL Macquarie Pty Ltd (AGLM) and AGL Loy Yang Marketing Pty Ltd (AGLL).

AGLM and AGLL made offers to the Australian Energy Market Operator (AEMO) and were paid to be on standby to provide contingency frequency control ancillary services (FCAS in response to frequency disturbances. 

AGLM and AGLL admitted that they did not comply with dispatch instructions given to them by AEMO in relation to their FCAS offers and did not ensure their relevant generating units were able to comply with those FCAS offers at all times.

AGLM engaged in this conduct during periods between September 2018 and August 2020 for two generating units at its Bayswater power station, and AGLL during periods between December 2019 and May 2020 for two generating units at its Loy Yang A power station.

The AER considers the conduct created a risk to power system security by undermining AEMO’s ability to prepare for and respond to frequency disturbances.

Under the National Electricity Rules, electricity generators can offer to be on standby to provide market ancillary services to stabilise network frequency when there is a power system disturbance. Contingency FCAS is a type of market ancillary service and is essential to keeping the lights on following a frequency disturbance in the power system.

AGLL and AGLM have cooperated with the AER in relation to the proceedings and have admitted to the contraventions. The parties intend to make joint submissions to the Court in relation to the appropriate relief.

AER Board Member Justin Oliver said it is important for generators to comply with their market ancillary services offers and AEMO dispatch instructions.

“Electricity generators must do what they say they will do if we are to keep the lights on through the market’s transition to variable renewable generation,” Mr Oliver said.

“When generators are not able to provide promised standby services, it creates a risk to power system security and stability.

“Generators receive payment from AEMO to be on standby to provide the FCAS services they have offered. We expect them to ensure that they provide those services when called upon,” Mr Oliver said.

The AER had previously released guidance for electricity market participants on their obligations when offering and delivering contingency FCAS in 2022.

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