Australian Energy Regulator v Pacific Hydro Clements Gap Pty Ltd

The Australian Energy Regulator (AER) brought proceedings against Pacific Hydro Clements Gap Pty Ltd (Pacific Hydro) in the Federal Court of Australia, alleging breaches of the National Electricity Rules (NER) and seeking pecuniary penalties under the Competition and Consumer Act 2010 (Cth) (CC Act). The primary issues before the Court were whether Pacific Hydro contravened specific provisions of the NER and, if so, whether the Court should issue a declaration of contravention and impose penalties. The Court also had to consider whether to order a compliance program to be implemented by Pacific Hydro.

The Court found that Pacific Hydro had contravened the NER by operating its wind farm without the necessary approvals for its repeat low voltage ride-through protection system settings. The Court noted that although the AER did not claim that this was a contributing factor to the South Australian blackout, the contravention was significant. The Court then considered the appropriateness of a declaration and the utility of the proceedings, determining that they were necessary due to the public importance of the issues and the need to deter future non-compliance. In line with the parties' agreement, the Court issued a declaration of contravention and ordered a compliance program to be implemented by Pacific Hydro. This included engaging an independent compliance professional to review and report on Pacific Hydro's compliance program, with specific recommendations for improvement. The Court also ordered Pacific Hydro to pay a pecuniary penalty of $1,100,000 and the AER's costs of $200,000. All other claims were dismissed.