Australian Energy Regulator v Snowy Hydro Limited (No 2)

Snowy Hydro Limited, a significant electricity generator in Australia, was found by the Australian Energy Regulator (AER) to have contravened several clauses of the National Electricity Rules (NER), specifically clause 4.9.8(a). This clause mandates that scheduled generators must comply with the dispatch instructions of the Australian Energy Market Operator (AEMO). The AER brought these proceedings under section 44AAG of the Competition and Consumer Act 2010 (Cth) and sought pecuniary penalties, compliance declarations, and compliance orders against Snowy Hydro. The Federal Court of Australia was the forum for this dispute.

The legal issues before the court encompassed whether Snowy Hydro had indeed contravened the specified provisions of the NER, the appropriate level of pecuniary penalties, and whether the declarations and compliance orders sought by the AER were justified. The court also had to consider the factors that should be taken into account in determining the penalties, including Snowy Hydro's cooperation with the AER, its admissions of wrongdoing, and its efforts to rectify its conduct.

The court found that Snowy Hydro had contravened the NER by not complying with the dispatch instructions of AEMO, thus justifying the imposition of penalties. In determining the penalties, the court considered Snowy Hydro’s cooperation during the investigation, its admissions, and the savings achieved by avoiding a trial. The court concluded that the penalties proposed by the AER and agreed upon by Snowy Hydro were appropriate, given the circumstances of the contraventions, the need for deterrence, and Snowy Hydro’s significant cooperation. The court also found that the declarations sought by the AER were necessary and appropriate, serving public interest by recording the court's disapproval, vindicating the AER's claims, and acting as a deterrent to future non-compliance.

The court ordered Snowy Hydro to engage an independent compliance expert to review and amend its internal documents regarding compliance with the NER. It also imposed pecuniary penalties on Snowy Hydro for each contravention, totaling $400,000, and ordered Snowy Hydro to pay a contribution to the AER's costs of $100,000. Snowy Hydro was also granted leave to discontinue its cross-claim without any order as to costs.