Australian Energy Regulator v AGL HP 1 Pty Ltd

The Australian Energy Regulator (AER) brought proceedings against AGL HP 1 Pty Ltd, AGL HP 2 Pty Ltd, and AGL HP 3 Pty Ltd (collectively, the respondents) for contraventions of the National Electricity Rules (NER) by operating wind turbines at the Hallett wind farms without the necessary approvals for the settings of the repeat low voltage ride-through protection system (LVRT protection system). The respondents, who were Registered Participants in the National Electricity Market and Generators with respect to the Hallett wind farms, had not been aware of the LVRT protection system or the settings applied to it, which were installed by the supplier of the wind turbines. The respondents had agreed to the declaration sought by the AER, the amount of pecuniary penalties, the terms of an order for the engagement of a compliance expert, and an order for costs. The primary legal issue the court had to decide was whether it was appropriate to make a declaration that the respondents contravened clauses 4.4.3 and S5.2.2 of the NER by operating the generating units of the Hallett wind farms and allowing them to supply electricity to the power system when the settings for the repeat LVRT protection system had not been approved in writing by the Network Service Provider or the Australian Energy Market Operator.

The court found that the respondents had contravened clauses 4.4.3 and S5.2.2 of the NER by operating the wind turbines at the Hallett wind farms without the necessary approvals for the settings of the repeat LVRT protection system. The court noted that the respondents were required to provide protective systems to protect their plant and associated facilities against abnormal voltage excursions of the power system and were only permitted to apply settings to control systems or protection systems if approved in writing by the Network Service Provider and the Australian Energy Market Operator. The court considered the agreed facts and the submissions of the parties and found that the respondents had committed serious breaches of the NER, which compromised the Australian Energy Market Operator's ability to maintain the power system in a secure operating state.

The court imposed pecuniary penalties on the respondents in the amount of $1,166,666.67 for each contravention of clause 4.4.3 of the NER and ordered the respondents to pay the AER's costs of the proceeding in the amount of $300,000. The court also ordered the current registered participant for each of the Hallett wind farms, AGL SA Generation Pty Ltd, to engage a suitably independent compliance professional with expertise in compliance with Generator Performance Standards to review and assess its compliance program, identify any gaps or non-conformities, and provide recommendations to remedy any such gaps or non-conformities. The court considered the relevance of the statutory maximum in fixing the civil penalty in accordance with the decision of the High Court of Australia in Australian Building and Construction Commissioner v Pattinson.

The court made a declaration that the respondents contravened clauses 4.4.3 and S5.2.2 of the NER between 6 August 2013 and 23 December 2016, by operating the generating units of the Hallett wind farms and allowing them to supply electricity to the power system when the settings for the repeat LVRT protection system had not been approved in writing by the Network Service Provider or the Australian Energy Market Operator. The court also ordered the respondents to pay the pecuniary penalties and the AER's costs and to engage a compliance expert to review and assess its compliance program. The court dismissed all of the remaining claims in the proceeding.