Australian Energy Regulator: Court finds Pelican Point Power failed to disclose plant capability during heat wave conditions

Pelican Point Power Limited failed to disclose the full capacity of its Pelican Point Power Station during heat wave conditions in February 2017. The Federal Court found that Pelican Point breached the National Electricity Rules by not disclosing the plant capability to the Australian Energy Market Operator (AEMO). South Australia experienced heat wave conditions on 8 February 2017, resulting in high customer demand and reduced generation capacity.

Key Highlights:

* The Australian Energy Regulator (AER) had concerns that Pelican Points conduct impaired AEMOs ability to manage the power system.

* AER Chair Ms Clare Savage emphasized the importance of generators providing timely and accurate information to AEMO for power system security.

* Failure to provide complete, accurate, and up-to-date information to AEMO can risk power system security and contribute to major market events.

Original Press Release:

Sept. 21 -- Australian Energy Regulator issued the following news release:

The Federal Court has found that Pelican Point Power Limited (Pelican Point) breached the National Electricity Rules by failing to disclose to the Australian Energy Market Operator (AEMO) the full capacity of its Pelican Point Power Station that was available during heat wave conditions in February 2017.

In proceedings brought by the Australian Energy Regulator (AER), the Federal Court found that Pelican Point failed to comply with its legal obligation to disclose short term availability information to AEMO.

On 8 February 2017, South Australia experienced heat wave conditions which resulted in high customer demand and reduced generation capacity. In the late afternoon of that day, the power system in the region was not in a secure operating state for over 30 minutes, which required AEMO to declare an actual ‘Lack of Reserve Level 3’ event and direct an interruption of customer supply (also known as ‘load shedding’) in order to restore power system security.

Following an investigation into the event, the AER had concerns that Pelican Point’s conduct impaired AEMO’s ability to manage the power system.

AER Chair Ms Clare Savage was pleased with the Federal Court’s decision and said it reinforces the critical importance of generators providing timely and accurate information to the market operator, and the AER’s ongoing work to support power system security in the context of the energy transition.

“Generators must provide complete, accurate and up-to-date information to AEMO so it can manage the power system and ensure safe and reliable power supply to consumers. Failure to do so can unnecessarily risk power system security and contribute to major market events.

“It remains one of our compliance and enforcement priorities to support power system security by focusing on generators’ compliance with obligations concerning offers, bids and capability information. We will continue to monitor the market, investigate conduct by generators that contributes to these events and take enforcement action where warranted,” Ms Savage said.

In his decision, Justice Besanko found that the central issue in this case was the availability of gas transport to deliver gas to the power station.

“By early February 2017, it ought to have been clear to [Pelican Point] that it could reasonably expect to obtain sufficient gas transport to operate [the power station] on 8 February 2017,” said Justice Besanko.

However, the Court found that Pelican Point did not contravene the National Electricity Rules in relation to its obligation to submit medium term availability information to AEMO about its Pelican Point Power Station in South Australia.

Commencement of court proceedings

The AER commenced proceedings in the Federal Court against Pelican Point Power Limited in August 2019 following an investigation into the events of 8 February 2017.

Projected assessment of system adequacy

The ‘projected assessment of system adequacy’ (PASA) obligations in the National Electricity Rules require certain generators to submit to AEMO details of physical plant capability available in a particular period, including any physical plant capability that can be made available on 24 hours’ notice in that period. PASA submissions are used by AEMO to forecast capacity (supply) in the market over the coming days, months and years.

The National Electricity Rules require AEMO to prepare PASA in two time frames:

* medium term PASA (MT PASA) which covers 24 months from the Sunday after the day of publication, and

* short term PASA (ST PASA) which covers 6 trading days from the end of the current trading day.

Penalties

A separate hearing on penalty will be held at a later date. No date has been set at this point.

Judgment

The decision was handed down on 20 September 2023. A copy of the decision can be found on the Federal Court website.

Source: Australian Energy Regulator

[Category: Energy Equipment & Services, Energy, Regulatory and Legal]