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The Federal Court has issued $1.1 million in penalties to Pacific Hydro Clements Gap (Pacific Hydro) and $550,000 to HWF 1 (Hornsdale), for breaching the National Electricity Rules by failing to obtain written approval for critical system settings in their wind farms. 

Both proceedings were brought after an investigation by the Australian Energy Regulator (AER) into the circumstances of the Black System Event, which resulted in loss of power to 850,000 customer connections across South Australia on 28 September 2016.

AER Chair, Clare Savage, said that breaches of the rules have the potential to affect system security and are taken very seriously.

“As we become increasingly reliant on new forms of generation with different technical characteristics, it is more important than ever that all generators comply with the rules so households and businesses can keep the lights on,” Ms Savage said.

“It is paramount that generators obtain written approval for system settings on their generating units from the Australian Energy Market Operator (AEMO) to ensure power system security and the effective operation of the wholesale energy market.”

Pacific Hydro admitted that, from August 2013 to October 2016, it applied repeat low voltage ride-through (LVRT) system settings to the generating units of the Clements Gap Wind Farm without prior written approval from AEMO and ElectraNet.

LVRT system settings, amongst other things, are required to enable generators to ride-through voltage disturbances to ensure continuity of electricity supply.

Hornsdale admitted that, from June 2016 to October 2016, it applied LVRT system settings to the generating units of the Hornsdale Wind Farm without prior written approval from AEMO and ElectraNet.

In his judgment in each case, Justice White said that the generators’ “use of non-approved settings in the present case compromised AEMO’s ability to discharge its responsibility, because it meant that it was making important decisions concerning the secure operating limits of the power system on the basis of incomplete information.”

The court also ordered Pacific Hydro and Hornsdale to pay a contribution to the AER’s costs and to implement programs to ensure compliance with the National Electricity Rules.

Pacific Hydro and Hornsdale have also provided the AER with enforceable undertakings acknowledging the AER’s concerns that their wind farms did not ride through low voltage network disturbances in accordance with their Generator Performance Standards (GPS).

The undertakings provide for Pacific Hydro and Hornsdale to update their GPS for the wind farms, to have the updates reviewed by an independent expert, then approved by ElectraNet and AEMO.

Past penalties issued by AER 

AER brought proceedings in 2019 to the Federal Court against four wind farm operators in South Australia, including Pacific Hydro and Hornsdale, for alleged breaches of the National Electricity Rules.

Snowtown 2 Wind Farm, which was also subject to proceedings arising from the investigation by the AER into the circumstances of the Black System Event, was ordered by the Federal Court to pay a $1 million penalty in December 2020.

The fourth and final litigation arising from the investigation by the AER into the circumstances of the Black System Event is in relation to subsidiaries of AGL Energy and has been listed for a penalty hearing on 9.45am (ACST) Friday 20 August 2021.

The provision of timely and accurate information to AEMO was the relevant enforcement and compliance priority for the AER in 2020-21. 

The AER recently released five compliance and enforcement priorities for 2021-22 to continue protecting consumers and signal the key areas where behavioural change in the energy industry is required.

New oral examination powers and increased penalties for breaches of the National Energy Laws came into effect on 29 January 2021. 

The maximum penalties for contraventions of certain provisions are now the greater of $10 million, three times the benefit if it can be ascertained, or 10 per cent of annual turnover.

The penalties imposed against Pacific Hydro and Hornsdale were imposed pursuant to the earlier penalty regime.

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