Delta Power & Energy (Vales Point) Pty Ltd ACN 162 696 335 v Australian Energy Market Commission - [2025] NSWSC 1087

Supreme Court

New South Wales

Medium Neutral Citation: Delta Power & Energy (Vales Point) Pty Ltd ACN 162 696 335 v Australian Energy Market Commission [2025] NSWSC 1087
Hearing dates: 02 to 03 September 2025
Date of orders: 23 September 2025
Decision date: 23 September 2025
Jurisdiction: Common Law
Before: Griffiths AJ
Decision:
(1) The amended summons filed 19 August 2024 is dismissed.
(2) The plaintiff to pay the defendant’s costs.

Catchwords:
ADMINISTRATIVE LAW — review of decision of Australian Energy Market Commission — status of Compensation Guidelines — whether Commission failed properly to apply Compensation Guidelines — whether plaintiff denied procedural fairness — whether Commission acted in irrational, illogical or unreasonable manner — whether Commission contravened principle in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; [1980] HCA 13

Legislation Cited:
Interpretation Act 1987 (NSW), s 3
National Electricity (New South Wales) Act 1997 (NSW), ss 6, 8
National Electricity (NSW) Law (NSW), ss 2, 3, 70, 90, Sch 2, cll 1, 10, 41, 42
National Electricity Rules, cl 3.14.6
National Electricity (South Australia) Act 1996 (SA), s 6
Workplace Injury Management Act 1998 (NSW), s 376

Cases Cited:
Allianz Australia Insurance Ltd v Cervantes [2012] NSWCA 244; 61 MVR 443
Australian Energy Regulator v Snowy Hydro Ltd (No 2) [2015] FCA 58
Bankstown City Radio Co-Operative Ltd v Australian Communications and Media Authority [2007] FCA 2053
Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47
Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576; [1994] FCA 1074
Darley v City of Parramatta Council [2025] NSWSC 990
Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 197 ALR 389
Fagan v Crimes Compensation Tribunal (1982) 150 CLR 666; [1982] HCA 49
Granville Hotel Operations Pty Ltd v Independent Liquor and Gaming Authority [2023] NSWCA 248; 413 ALR 499
Heise v Employer Mutual Limited [2022] NSWCA 283
Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12
Laming v Electoral Commissioner of Australian Electoral Commission [2025] HCA 31; 99 ALJR 1260
Macedon Ranges Shire Council v Romsey Hotel Pty Ltd (2008) 19 VR 422; [2008] VSCA 45
McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504; [2008] NSWCA 209
MetLife Insurance Ltd v Australian Financial Complaints Authority (No 3) [2022] FCA 849; 411 ALR 163
Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16
R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; [1980] HCA 13
Re minister for Immigration and Multicultural Affairs; Ex Parte Miah (2001) 206 CLR 57; [2001] HCA 22
Sunset Power International Pty Ltd v Australian Energy Market Commission (Supreme Court (NSW), Registrar Hedge, 5 June 2025, unrep)

Texts Cited:
Australian Energy Market Commission, Compensation Guidelines, Final Guidelines, 21 October 2022
M Aronson, M Groves and G Weeks, Judicial Review of Administrative Action and Government Liability (7th ed, 2022, Thomson Reuters)
P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters)

Category: Principal judgment
Parties: Delta Power & Energy (Vales Point) Pty Ltd ACN 162 696 335 (Plaintiff)
Australian Energy Market Commission (Defendant)
Representation:
Counsel:
NL Sharp SC and BD Kaplan (Plaintiff)
RCA Higgins SC and PJ Strickland (Defendant)
Solicitors:
Bartier Perry Lawyers (Plaintiff)
Johnson Winter & Slattery (Defendant)

File Number(s): 2024/00302863
Publication restriction: Nil

JUDGMENT

The plaintiff (Delta) brings a judicial review challenge to a decision dated 16 May 2024. The decision was made by the Australian Energy Market Commission (AEMC), which is the regulator under the national electricity market scheme. The AEMC refused Delta’s claim for opportunity costs compensation under the compensation scheme provided for in cl 3.14.6 of the National Electricity Rules (Rules) and as implemented in the AEMC’s Compensation Guidelines dated 21 October 2021 (Guidelines).
Delta owns and operates two coal-fired electricity generation units at Vales Point near Lake Macquarie and sells electricity into the National Electricity Market (NEM). In broad outline, Delta’s claim for opportunity costs compensation related to a period in mid-2022 when record high wholesale electricity prices resulted from a series of events, including adverse coal mine conditions, bad weather and the war in Ukraine, all of which combined to produce coal scarcity for coal-fired electricity generators, including Delta. This coincided with record high wholesale electricity prices, which caused the Cumulative Price Threshold (CPT) to be exceeded. The Australian Energy Market Operator (AEMO) intervened and imposed an Administered Price Cap (APC) on wholesale electricity prices in the spot market, fixing the level of $300/MWh during an Administered Price Period (APP). Around this time, AEMO also requested Delta to increase its electricity generation to ensure system reliability. Delta was experiencing coal constraints in its coal supply, but it nevertheless managed to bring forward some of its coal deliveries so as to comply with the AEMO’s request. It says that this prolonged its coal scarcity beyond cessation of the APP.
Delta’s case is that it would have preferred to have preserved its scarce coal resources during the APP and then generate more electricity when electricity prices lifted. Instead, it said that it had to purchase electricity from the spot market during the period of the APP in order to meet its wholesale contract obligations and, following the APP, it was forced to reduce its production levels to further conserve coal despite higher spot market prices.
These reasons are structured as follows:

Key issues identified.

Background facts further summarised.

NEM legislative and regulatory scheme summarised.

AEMC’s reasons for decision summarised.

Consideration and determination of the key issues and the parties’ principal submissions.

Has the AEMC breached the Hardiman principle?

Conclusion.

Key issues

The key issues, broadly stated, are as follows:

What is the legal status of the Guidelines and, in particular, are they subordinate legislation and what are the implications of their status for the task of construing the Guidelines.

Whether the AEMC failed to apply the Guidelines, properly construed, in assessing Delta’s eligibility for opportunity costs compensation by misdirecting itself as to the nature of its task and by asking itself the wrong question (Ground A1).

Whether, in concluding that Delta did not have scarce capacity or resources as a result of a technical limitation because it “provided limited evidence of attempts to restore [its coal] stockpile following the APP”, the AEMC:

misunderstood or misapplied the Rules and/or Guidelines;

denied Delta procedural fairness by not disclosing a critical issue on which the decision might turn or making an adverse finding not obviously open on the material; and/or

acted in an irrational, illogical or unreasonable manner (Ground 1).

Further, or alternatively, whether in concluding that Delta did not have scarce capacity or resources as a result of a commercial limitation, the AEMC:

relied on an erroneous finding it had made in relation to its analysis of whether Delta had demonstrated a technical limitation; and/or

failed to consider or misunderstood Delta’s submissions and evidence on the issue whether Delta had demonstrated the level of its coal stockpiles resulted in financial penalties; and/or

acted unreasonably by insisting on corroboration of Delta’s claims that it suffered a commercial limitation because of the connection between the level of its coal stockpiles and covenants with its financier and, in particular, it’s finding that Delta had not demonstrated that it had exhausted all potential avenues to relieve its coal constraint (Ground 2).

In the alternative to Ground A1, whether in concluding that the imposition of the APC during the APP did not cause the foreclosure of an alternative opportunity for Delta, the AEMC failed to consider or misunderstood Delta’s submissions and evidence, acted irrationally, illogically or unreasonably and/or misunderstood the Rules and Guidelines (Ground 3).

Having regard to the AEMC’s conduct in these proceedings, has it breached the Hardiman principle and, if so, what are the consequences.

It is common ground that to succeed Delta must discharge its onus of establishing jurisdictional error or error of law on the face of the record.

Background facts further summarised

In the period leading up to 10 June 2022, the AEMO reported that the NEM was “experiencing a prolonged period of high electricity prices”. It noted that wholesale spot prices in the NEM and eastern Australian gas markets reached unprecedented average levels and regional markets were close to reaching the CPT for many days leading up to 10 June 2022 (see Australian Energy Market Operator, NEM Markets Suspension and Operational Challenges in June 2022, (August 2022)). (The CPT represents the limit of aggregate dispatch prices over a period of seven days.)
Key factors producing the high and volatile wholesale spot prices were identified by the AEMO as fuel supply constraints, early onset of winter temperatures and associated high demands, transmission network outages, generation availability, and east coast gas market and thermal coal prices.
On 12 June 2022, at 6:50 pm, the regional cumulative price in Queensland exceeded the CPT. This marked the commencement under cl 3.14.2(d1) of the Rules of an APP in the region and the imposition of an APC, which at the time was $300/MWh.
On 13 June 2022, at 6:35 pm, the CPT was exceeded in New South Wales. This marked the commencement of an APP in that region and the imposition of an APC, which at the time was also $300/MWh.
On 15 June 2022, at 2:05 pm, due to difficulties in the NEM operating in accordance with the Rules, the AEMO suspended the spot market in all regions of the NEM under cl 3.14.3 of the Rules. The AEMO also issued directions to market participants in respect of scheduled generation, scheduled load and market network services. During this time, the AEMO requested Delta (as opposed to giving a formal direction) to increase its electricity production.
The APP ended when the CPT was no longer exceeded. In New South Wales and Queensland, this occurred on 23 June 2022. The AEMO lifted the market suspension in all regions from 2:00 pm on 24 June 2022.
On 22 June 2022, Delta notified the AEMC of a claim for compensation for direct and opportunity costs arising from the imposition of an APC during the APP in Queensland and New South Wales between 6:50 pm on 12 June 2022 and 2:00 pm on 15 June 2022 (First Period).
On 30 June 2022, Delta notified the AEMC of a claim for compensation for direct and opportunity costs arising from the imposition of an APC in New South Wales between 2:00 pm on 15 June 2022 and 4:00 am on 23 June 2022 (Second Period).
On 1 July 2022, the AEMC acknowledged receipt of Delta’s claims for compensation and requested that Delta provide supporting information. A checklist for opportunity costs claims prepared by the AEMC drew a distinction between demonstration of scarce capacity or resources as a result of a technical or commercial limitation, on the one hand, and, on the other, calculation of the value of a more profitable alternative opportunity. For further guidance on the topic of scarce capacity or resources, the AEMC referred claimants to [5.3.3] of the Guidelines.
As will emerge, Ground A1 focuses attention on the distinction between technical or commercial limitations and valuing a more profitable alternative opportunity. Delta claims that, properly construed, for it to demonstrate eligibility for compensation the Guidelines did not require it to show that there was a more profitable alternative opportunity because such a finding was necessarily implicit in it demonstrating technical or commercial limitation.
On 6 December 2022, Delta provided further information to the AEMC in support of its claims for compensation (which totalled $14,657,936), including an expert report prepared by Marsden Jacob Associates (that report purported to summarise various trading logs of communications between Delta and the AEMO during both the First and Second Periods and was the subject of a joint post-hearing statement).
Delta told the AEMC that it no longer pursued its claim for direct costs. It summarised its opportunity costs claims as follows (emphasis added):

During the compensation claim period, from the start of the Administered Price Cap (APC) in Queensland on 12 June to 22 July 2022, Delta’s Vales Point power station operations were commercially constrained due to critically low coal stockpile levels and limited coal deliveries. Given the electricity market supply shortages as evidenced by multiple lack of reserve notices and with requests from AEMO for increased production, Delta continued to supply energy into the market above what its commercial strategy and risk assessment dictated. Delta lost the opportunity to earn greater revenues on its finite and scarce coal resource during the higher priced period post the Administered Price Period (APP).
Delta’s claim calculates the opportunity cost in two distinct periods in June 2022 [i.e. Period 1 and Period 2]
… Delta’s claim calculates the amount of energy it produced above its preferred amount during these priced capped periods and values it as if it was produced during the higher priced 28-day period after the APP ended. …

Delta identified its limitations during the APP as follows (emphasis in original):

Delta’s Vales Point power station was already severely fuel constrained when it was regularly requested by AEMO operations to operate above its preferred generation levels over the two periods due to power system reliability concerns. This was while Queensland and subsequently NSW were operating under an Administered Price Cap (APC). Delta therefore suffered financial loss by not being able to generate more after this period when wholesale prices were higher. June 2022 was a period of energy rationing, market interventions and price regulation. Through this, Delta operated to ensure reliable and secure energy supply.
…
Delta’s Operations and Constrained Coal Position
Delta Electricity operates Vales Point power station, a two-unit thermal coal plant proximate to Lake Macquarie in NSW. Vales Point has a maximum output of 1320 MW. It sources a large portion of its coal from a nearby underground coal mine (Chain Valley) which it acquired in 2019. The remainder of its coal is typically acquired under long-term contract from third party mines in the region, supplemented by ad hoc spot purchases as required. As Vales Point is Delta’s only generating asset, it is critical to its commercial viability that the power station [is] in good working order so as to minimise unplanned outages, and that there are diverse and reliable sources of coal.
…
Delta’s coal stockpile at Vales Point has a capacity of about 960 kt and an operating minimum target of 250 kt.⁵ The minimum stockpile target is set based on Delta’s covenants with its financier, and Delta seeks to maintain the coal stockpile above this level. When Delta’s coal stockpile decreases below this target it operates as resource constrained and conserves generation where possible, minimising generation so it can return the stockpile to above the minimum operating target
In the autumn of 2022, many conventional generators in the NEM were exposed to escalating energy shortages. This was the result of a combination of factors led by global energy shortages following the imposition of sanctions on energy exports from Russia. This was exacerbated by local operational conditions: reduced output from some mines, flooding of some mines and local rail networks and reducing output from ageing coal mines.
…
The Chain Valley underground mine had been unable to maintain supply due to challenging geological conditions. The other main source for Vales Point is the nearby Mandalong mine. Exacerbating this fuel scarcity, production at Mandalong over winter was also impacted by geological conditions. Sourcing alternate coal from remote sources was restricted by availability and transport. Heavy rains and flooding had severely impacted alternate coal supplies during the first half of 2022. Rail connections between Hunter Valley mines and Vales Point were also disrupted by heavy rainfall.
Vales Point has been operating as resource constrained since September 2021. Between December 2021 and August 2022 Delta has purchased an additional 710 kt … to supplement the stockpile. After a slight recovery in the volume of coal stored in the stockpile of coal stored over the summer, stored coal declined in autumn 2022: from nearly 200,000 tonnes in mid-May 2022 to below 100,000 tonnes by early June. Vales Point’s coal stockpile was at critically low levels during and after the APP in June 2022. …

Footnote 5 stated that the operating minimum target “is the equivalent of about a month of full capacity production”. (It is common ground that although the minimum target was said at this point to be 250 kt, it was later clarified that the true target was 270 kt, which includes 20 kt at the bottom of the pile containing impurities and constituted wastage.)
During the period between February 2023 and March 2024 there were several meetings between representatives of both Delta and the AEMC to discuss the claim.
The AEMC also sought additional information from Delta on 11 July 2023, which Delta provided on 25 July 2023.
On 14 September 2023, the AEMC released a ‘Draft Opportunity Cost Methodology’ consultation paper (DOCM). Delta responded to the DOCM with further evidence and submissions on 17 and 19 October 2023.
It will be necessary to elaborate upon these matters later in these reasons for judgment.
On 13 December 2023, the AEMC provided Delta with a copy of its draft decision. Delta responded to the draft decision with further evidence and submissions on 19 January 2024.
As noted above, on 16 May 2024, the AEMC published its decision and supporting reasons for refusing Delta’s claims for compensation (Final Report). In brief, the AEMC found that Delta was not eligible for opportunity costs compensation because it did not demonstrate a technical limitation during the APP ([2.2.2] of the Final Report); it did not demonstrate a commercial limitation during the APP ([2.2.3]); and even if it could demonstrate either limitation, it did not forgo value from an alternative opportunity due to the application of the APC ([2.2.4]).

NEM Legislative and regulatory scheme summarised

(a) The National Electricity Law

In May 1996, New South Wales, Victoria, Queensland, South Australia and the Australian Capital Territory entered into the National Electricity Market Legislation Agreement, pursuant to which each jurisdiction agreed to enact a National Electricity Law, with South Australia as the lead jurisdiction. The National Electricity Law (NEL) is set out in a schedule to the National Electricity (South Australia) Act 1996 (SA) (SA Act) and applies as a law of South Australia by reason of s 6 of that Act.
Section 6 of the National Electricity (New South Wales) Act 1997 (NSW) (NSW Act) provides that the NEL set out in the Schedule to the SA Act, as in force for the time being, applies as a law of New South Wales and, as so applying, may be referred to as the National Electricity (NSW) Law (NSW Law). Section 8 of the NSW Act provides that in the NSW Law the expression “Supreme Court” means this Court and “the National Electricity Law” or “this Law” means the NSW Law.

Section 2(1) of the NSW Law defines the “National Electricity Rules” and the word “Rules” as, relevantly, “the initial National Electricity Rules” (that is, those made by the relevant minister administering the SA Act: see s 90 of the NSW Law) and “Rules made by the AEMC under this Law, including Rules that amend or revoke … the initial National Electricity Rules”. Provision is made in s 70 of the NSW Law for a person aggrieved by a decision of the AEMC under the Rules to apply for judicial review in this Court.
In Australian Energy Regulator v Snowy Hydro Ltd (No 2) [2015] FCA 58 at
[9]–[10], Beach J described the NEM as follows:

The National Electricity Market (NEM) is a wholesale electricity market, which electrically connects Victoria, South Australia, Queensland, New South Wales, Tasmania and the Australian Capital Territory. It operates to facilitate the exchange of electricity between generators and retailers, who resell electricity to businesses and householders. The Australian Energy Market Operator (AEMO) operates the NEM. The Australian Energy Market Commission (AEMC) makes and amends the National Electricity Rules (s 34 and Sch 1 of the National Electricity Law) …

(b) Compensation under the Rules and Guidelines

Clause 3.14.6(e) of the Rules requires the AEMC to publish guidelines for the making and assessment of claims for compensation. The relevant guidelines are the Guidelines dated October 2021.
Clause 3.14.6(c) of the Rules states the objective of paying compensation relevantly as, “to maintain the incentive for: (1) Scheduled Generators … to supply energy; … during price limit events”.
The amount of compensation payable in respect of a claim under cl 3.14.6 “must be based on direct costs and opportunity costs”: cl 3.14.6(d).
Clause 3.14.6(e) requires the AEMC to publish guidelines consistent with cll 3.14.6(c) and 3.14.6(d) that (emphasis in original):

(1) define the types of opportunity costs in relation to which a person can make a claim under this clause 3.14.6;
(2) outline the methodology to be used to calculate the amount of any compensation payable in respect of a claim under this clause, including the methodology for calculating direct costs and opportunity costs; and
(3) set out the information AEMO and a claimant must provide to enable the AEMC to make a determination as to compensation under this clause 3.14.6.

Although the Guidelines must define the types of opportunity costs for which claims can be made, the Rules define the essential nature of such costs, being “the value of opportunities forgone by the claimant due to the price limit event as defined in the compensation guidelines”: cl 3.14.6(a).
The process for making a claim is described in cll 3.14.6(h) and 3.14.6(i). In particular, “[a] person who is eligible under paragraph (b) may make a claim for compensation by providing the AEMC and AEMO with written notice of its claim in the form required by the compensation guidelines”: cl 3.14.6(h).
The initial steps the AEMC must take upon receiving a claim for compensation are described in cll 3.14.6(j) to 3.14.6(k). The process by which the AEMC must determine a claim that is not a “direct cost only claim” (i.e., a claim that includes opportunity costs) is described in cll 3.14.6(o)–3.14.6(s) of the Rules as follows (emphasis in original):

(o) In relation to a claim other than a direct cost only claim, the AEMC must, as soon as practicable but not later than 35 business days after publication of the notice under paragraph (k) publish:
(1) the claimant’s proposed methodology for determining the claimant's opportunity costs;
(2) the methodology the AEMC proposes to use in determining the claimant's opportunity costs (draft opportunity cost methodology); and
(3) an invitation for written submissions to be made to the AEMC on the draft opportunity cost methodology by a date not less than 20 business days after the invitation is made (submission closing date).

(p) Any person may make a written submission to the AEMC on the draft opportunity cost methodology by the submission closing date.
(q) Not later than 35 business days after the submission closing date the AEMC must publish its final decision on:
(1) the methodology it will use in determining the claimant's opportunity costs; and
(2) whether compensation should be paid by AEMO in relation to the claim; and
(3) if so, the amount of compensation that should be paid.

(r) Before making its decision on the matters referred to in paragraph (q), the AEMC must consult with the claimant.
(s) In making its final decision as to the matters referred to in paragraph (q), the AEMC must:
(1) take into account the submissions made in response to the invitation to in subparagraph (o)(3); and
(2) apply the compensation guidelines unless it is satisfied that there are compelling reasons not to do so.

The AEMC emphasises the following two features of these provisions. First, the only express mandatory consideration that the AEMC must take into account under cl 3.14.6 are submissions received in response to its published DOCM: cl 3.14.6(s)(1). Secondly, in making its final decision, the AEMC must apply the Guidelines, unless there are compelling reasons not to do so. It is common ground that the AEMC purported to apply the Guidelines here.
Paragraph 5.3 of the Guidelines concerns opportunity costs. It commences by stating that it “sets out the definition of opportunity cost, the criteria that the AEMC may consider in assessing a compensation claim for opportunity costs and the methods of valuing opportunity costs” (emphasis added). Thus, while the Guidelines describe the definition, and the methods for valuing, opportunity costs, the use of “may consider”, by reference to the criteria for assessing such costs, indicates that these criteria are neither exhaustive nor mandatory even when the Guidelines are applied.
Paragraph 5.3.1 is important. It defines opportunity costs “[f]or the purposes of the compensation guidelines” as follows (emphasis added):

Opportunity cost is the value of the best alternative opportunity for eligible participants during the application of a price limit event or at a later point in time. The opportunity cost is the foreclosure of this alternative opportunity to use scarce capacity or resources more profitably at the same point in time or at a later point in time.

Paragraph 5.3.2 is headed “Valuing opportunity costs”. It states that, to make a claim for opportunity costs, the claimant must:

1. demonstrate that its plant … has scarce capacity or resources as a result of a relevant limitation(s), as outlined in section 5.3.3 below; and
2. calculate the value of the more profitable alternative opportunity using the principles for selecting a method of valuing opportunity costs, as outlined in section 5.3.4 below.

I see no reason why the “usual approach” should not apply so as to read the words of those definitions into the Guidelines themselves (see Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12 at [103] per McHugh J as applied to documents in addition to legislation, as to which see P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [3.40] and the need for caution in applying that approach inflexibly).
Paragraph 5.3.3 is headed “Criteria for assessing whether opportunity costs can be claimed”. Despite their length, it is desirable to set out the relevant parts of the body of this provision (footnotes omitted):

As described above, opportunity costs only arise where capacity or resources are scarce. In order to demonstrate scarcity to justify a claim for opportunity costs, the claimant will need to demonstrate that its plant has relevant technical and/or commercial limitations that applied over the relevant period(s):
1. Technical limitations may relate to physical limitations on an eligible participant’s available capacity or resources, that restricts its ability to supply energy, wholesale demand response or market ancillary services during a price limit event (same period of time) or at a later period of time. The capacity that is available to be provided to a particular market, instead of another market, may be limited at a point in time. The replenishment of inputs, such as water or gas, may limit output over a particular period of time; and
2. Commercial limitations such as penalties on the available capacity or resources. These may include commercial incentives or disincentives on using capacity or resources during a price limit event (same period of time) or at a later period of time.

In assessing these technical and commercial limitations, the AEMC may consider factors such as:
1. The operational capacity of the plant under the conditions at the time, including the time required for the unit start-up, ramp rates and maximum available capacity. Such operational limits may prevent a claimant from increasing the output of its plant above a certain limit or decreasing its output below certain limits;
2. The available resources of the plant under the conditions at the time, including starting resource level, potential rate of resource inflows and minimum resource storage limits;
3. Commercial incentives or disincentives, including resource input costs and price differences between markets;
4. The prevailing conditions in the NEM during the relevant period of time, including the application or potential application of network constraints;
5. The actual dispatch of plant into the NEM during the price limit event;
6. Available alternative resources, which may be determined by the demand-supply balance in the market. Opportunity costs may reflect the value of deploying these alternatives;
7. Uncertain events that may affect supply, for instance:
a. the breakdown of a gas processing plant or gas pipeline; and
b. outages of other generators or transmission interconnectors.

In addition to the factors above, the following guidance is noted in relation to opportunity costs claims from demand response service providers:
1. The AEMC may consider additional factors including (but not limited to) whether the price and quantity response points and other information provided in dispatch, pre-dispatch and short term projection of system adequacy (ST PASA) during the administered price period are consistent with the typical information and operation of the wholesale demand response unit during the normal function of the market. For example if, during a price limit event, the DRSP bids to provide wholesale demand response at a price of $275/MWh, and is dispatched, but it usually offers wholesale demand response only at significantly higher prices, the DRSP would need to explain why it should be eligible for any compensation.
2. Commercial losses resulting from lower production of products other than wholesale demand response or market ancillary services (eg if the wholesale demand response unit is a factory, reduced production of goods by the factory), while dispatched during an administered price period, can only be claimed at price and quantity response points that are consistent with the typical operation of the relevant wholesale demand response units when it is providing wholesale demand response during the normal function of the wholesale market when there is not a price limit event.

The claimant will need to provide sufficient evidence justifying its claim in relation to the factors above. The Commission notes that it will assess claims on a case-by-case basis with the ability not to follow the guidelines if there is sufficient reason not to.
…
A claimant may not make a claim relating to opportunity costs if it does not have any technical or commercial limitations that might apply during a price limit event.

Paragraph 5.3.3 is important in considering Ground A1 and some of the other grounds. The AEMC contends that the clause identifies one necessary condition of opportunity costs arising (i.e., scarcity of capacity or resources). It claims, however, it does not identify a sufficient condition for identifying such costs. It submits that the second necessary condition involves showing the foreclosure of an opportunity to use such scarce capacity or resources more profitably due to the APC event. The AEMC’s position is that satisfaction of each of these conditions is sufficient to demonstrate opportunity costs.
Paragraph 5.3.4 of the Guidelines is headed “Principles for selecting a method for valuation of opportunity costs” and identifies three potential valuation methodologies. The preferred methodology is a market-based valuation using a counterfactual based on “what would have occurred in the market had the claimant’s behaviour changed and it had chosen the more profitable alternative opportunity”.
As noted above, one of the key issues is the legal status of the Guidelines. In brief, the AEMC contends that the Guidelines are not, and do not have the effect of, subordinate legislation. Although Delta initially shared that view, as the hearing of this proceeding progressed it changed its position and asserted that the Guidelines have the effect of delegated legislation (see further at [62] below).

The AEMC’s reasons for decision summarised

The reasons in the Final Report dated 16 May 2024 are relatively brief considering the volume of the documentary material generated during the decision-making process both internally and externally. This relative brevity is relied upon by Delta in support of its claims that the AEMC either misunderstood one or more questions which it had to address or determine, or it overlooked and/or misunderstood Delta’s position and supporting information.
The AEMC emphasises, however, that Delta claimed confidentiality in respect of much of the material it provided to the AEMC, which material necessarily could only be referred to “in a general form” in the Final Report so as not to breach confidentiality requirements (see [1.2] and [1.3] of the Final Report).
Paragraph 2.2 of the Final Report deals with Delta’s eligibility to claim compensation. The AEMC identified the following three questions regarding such eligibility:

Has Delta demonstrated that it is an eligible party? This question was answered affirmatively and nothing more needs to be said about it.

Has Delta demonstrated that it has scarce capacity or resources as a result of a relevant limitation (first question)?

If yes to the first question, has Delta suffered the foreclosure of an alternative opportunity to use that scarce capacity or resource more profitably at the same point in time or at a later point in time, due to the imposition of the APC (second question)?

The controversy in the present proceeding largely focuses on the AEMC’s analysis and finding that the first question should be answered in the negative and, although it was strictly unnecessary for the AEMC to proceed to answer the second question, it did so and also answered it in the negative. Delta challenges the AEMC’s analysis and findings relating to both the first and second question.
The AEMC’s position, as stated at [34] of its outline of written submissions, is that the first question reflects the criterion in [5.3.3] of the Guidelines, while the second question reflects both the definition of “opportunity costs” in cl 3.14.6(a) of the Rules and the more expansive definition of that concept in [5.3.1] of the Guidelines.
As to Delta’s claimed technical limitation, the AEMC reasoned that Delta believed that its coal supply was or could soon be technically limited during the APP. But the AEMC then gave the following four reasons why it was not satisfied that Delta had demonstrated any such limitation:

Although the AEMC accepted that Delta’s coal deliveries were not fulfilled by one of its suppliers during the period 11 to 14 June 2022 and there was evidence of more widespread challenges procuring coal, the AEMC noted that the information provided by Delta regarding its coal stockpile levels demonstrated that Delta’s coal stockpile grew during the APP and after the APP. The AEMC said that this was illustrated in the following figure:

While noting Delta’s arguments that it brought forward coal deliveries during July and August 2022 to June 2022 with a view to ensuring that there was sufficient coal available during the APP to meet AEMO’s requests for more energy production and that this meant that Delta’s stockpile levels in July were lower than planned, the AEMC found that Delta had provided limited evidence of attempts to restore the stockpile following the APP. In particular, the AEMC found at [2.2.2] that:

Despite demonstrating that it could potentially bring forward deliveries of coal as it did in 2022 and that it had a policy to purchase spot market coal when needed, Delta had not “evidenced that it attempted to restore the stockpile following the APP by either bringing forward additional deliveries or purchasing spot market coal”; and

Delta purchased less coal than was made available to it through a procurement it conducted in late June 2022.

The AEMC also noted that these reservations concerning Delta’s claimed technical limitation were also supported by a submission it had received on Delta’s claim for compensation from the Energy Users Association of Australia.

The AEMC also confirmed at [2.2.2] that, contrary to Delta’s submission, it was not the AEMC’s position that Delta needed to demonstrate that it had no coal at all to substantiate a technical limitation.

As to Delta’s claimed commercial limitation, the AEMC gave the following two reasons why it found that Delta had not demonstrated that it had incurred penalties or commercial disincentives on its available capacity or resources during or following the APP (at [2.2.3]):

While the AEMC accepted that Delta had procured energy on the spot market at high prices to meet its contractual commitments, this did not demonstrate a commercial limitation in circumstances where the AEMC was not satisfied that Delta had exhausted all potential avenues to relieve its coal constraint.

While noting Delta’s claim that it would conserve generation if its coal stockpile decreased below a set minimum target of 270 kt based on covenants with its financier, those claims were not substantiated by any evidence (noting that [5.3.3] of the Guidelines stated that a claimant must provide sufficient evidence to justify its claim). In addition, as to Delta’s minimum coal stockpile target, the AEMC noted that Delta did not have an internal policy which outlined a coal stockpile minimum which must not be breached. Hence the target was not binding.

In [2.2.4] of the Final Report, the AEMC explained why it was not satisfied that Delta had foregone value from an alternative opportunity due to the application of the APC even if, contrary to the above, Delta had demonstrated the existence of a relevant technical limitation. The AEMC said that Delta would also have to demonstrate that it:

suffered the foreclosure of an alternative opportunity to use its scarce capacity or resource more profitably at the same point in time or at a later point in time; and

forewent the value of that opportunity due to the imposition of the APC.

The AEMC said that it found Delta’s submissions on this issue to be “inconsistent” and that it was not clear that Delta’s generation behaviour would have been different had the APC not applied. Its reasons are reflected in the following parts of [2.2.4] of the Final Report:

The Commission has considered the breadth of submissions made by Delta, EUAA and AEC, and determined that the imposition of the APC during the APP did not cause the foreclosure of an alternative opportunity for Delta.
The explanations provided by Delta to the Commission have been inconsistent on this point. In its original claim documents provided to the Commission in December 2022, Delta argued that it would have preferred to generate at a lower level during the APP to conserve its scarce coal so that it could generate in a future period for higher, uncapped, prices. However, in its submission in response to the DOCM, Delta argued that:

• the prices at which it was dispatched during the APP were considered by Delta to be sufficiently high for it to bid its units in at normal generation levels
• the only reason Delta would conserve generation during the APP was because of scarce coal.
Delta’s submission to the Commission’s draft decision adopted a different position. In the submission Delta argued that under normal circumstances, a spot price of $300/MWh would be sufficient for Delta to bid its generation at normal levels. However, due to the conditions prevailing during the APP where prices were capped at $300 and Delta claimed it was coal-constrained, it elected to lower its generation levels.
In the Commission’s view, based on these arguments, it is not clear that Delta’s generation behaviour would have been different had the price cap not been applied. We are unable to conclude, based on the evidence available, that the price cap caused the foreclosure of an alternative, more profitable, opportunity during or after the APP for Delta.
Further, as noted in section 2.2.2, there are opportunities for thermal plants to procure coal, including access to a spot market. While the Commission notes there were periods in which Delta and its contracted coal suppliers experienced challenges in delivering coal to Vales Point, these challenges did not prevent Delta from increasing its coal stockpile during and following the APP.
Therefore, while Delta may have had scarce coal supplies during the APC, and even if this did constitute a relevant limitation, the APC did not impact its ability to generate more energy following the APP (in the period Delta is claiming its forgone opportunity).

Consideration and determination

Each of Delta’s grounds of judicial review raise in one way or another the proper construction of the Guidelines. Therefore, it is desirable to address that matter at the outset, with reference to the legal status of the Guidelines and the implications of that for the task of construction and reviewing the AEMC’s application of the Guidelines in this instance.

(a) What is the legal status of the Guidelines and how does that affect construction?

After the issue was raised by the Court during oral address, the parties provided supplementary submissions on the legal status of the Guidelines. The AEMC pointed out that the NSW Law contains its own miscellaneous provisions relating to interpretation (see s 3 and Sch 2). The application of Sch 2 to the National Electricity Law, the Regulations or any other statutory instrument (other than the Rules) may be displaced, wholly or partly by the manifestation of a contrary intention in the NSW Law, the Regulations or that other statutory instrument (see Sch 2, cl 1(1)). Furthermore, the application of Sch 2 to the Rules (apart from particular specified clauses) may be displaced, wholly or partly, by a contrary intention appearing in the Rules (see Sch 2, cl 1(2)).
The AEMC drew attention to the fact that the definitions in Sch 2, cl 10 of the NSW Law provide that “instrument includes a statutory instrument” and that “statutory instrument means the Regulations or an instrument made or in force under this Law” (emphasis in original). But reference also should be made to cl 41, which is included in Pt 9 of Sch 2 to the NSW Law, which is headed “Instruments under this Law”. Clause 41 provides (emphasis in original):

41 Schedule applies to statutory instruments
(1) This Schedule applies to a statutory instrument, and to things that may be done or are required to be done under a statutory instrument, in the same way as it applies to this Law, and things that may be done or are required to be done under this Law, except so far as the context or subject matter otherwise indicates or requires.
(2) The fact that a provision of this Schedule refers to this Law and not also to a statutory instrument does not, by itself, indicate that the provision is intended to apply only to this Law.
(3) In this clause—
statutory instrument includes the Regulations, a reliability instrument, the rate of return instrument or the Rules.

Thus, the definition of “statutory instrument” for the purposes of cl 41 is broader than the definition of “statutory instrument” in cl 10. But despite that broader definition in cl 41, I do not consider that it extends to cover any instrument made under the Rules, as opposed to the Rules themselves. Insofar as the Rules are concerned (which are included in the definition of “statutory instrument” in cl 41), they are required to be construed as operating to the full extent of, but so as not to exceed, the legislative power of the Legislature or the power conferred by the NSW Law under which they are made (see Sch 2, cl 42(1)).
As previously mentioned, the Guidelines are made under cl 3.14.6(e) of the Rules. I accept the AEMC’s contention that the Guidelines are not statutory instruments within the meaning of cl 10 (or cl 41) of Sch 2 of the NSW Law. Nor are they statutory instruments to which the interpretation rules in Sch 2 of the NSW Law apply.
As previously noted, although the Rules oblige the AEMC to apply the Guidelines in making a decision in response to an opportunity costs compensation claim, there is no obligation to do so if the AEMC is satisfied that there are compelling reasons not to do so (cl 3.14.6(s)(2)). This conferral of discretion on the AEMC not to apply the Guidelines is a powerful indicator that the Guidelines are not given the force of law by the Rules or otherwise (see later below).
Delta contended that the Interpretation Act 1987 (NSW) is not disapplied in terms by s 3 of, and Sch 2 to, the NSW Law. After noting that the word “instrument” is defined in s 3(1) of the Interpretation Act as an “instrument … made under an Act, and includes an instrument made under any such instrument”, Delta submitted that the Rules are an instrument made under the NSW Law and, because the Guidelines are made under cl 3.14.6(e) of the Rules, they can fairly be characterised as an “instrument made under any such instrument”, thereby attracting the Interpretation Act. I strongly doubt that this is correct. Subject to displacement of Sch 2 by contrary intention, as provided for in cl 1 of Sch 2, it appears the very purpose of that Schedule is to substitute for the Interpretation Act the provisions relating to interpretation set out in Sch 2 (noting also that it is made clear in s 8(2) of the NSW Act that the Acts Interpretation Act 1915 (SA) does not apply).
Ultimately, however, Delta submitted that the Guidelines were not delegated legislation but were nevertheless an instrument to which the Interpretation Act applies and, to that extent, could be described as having the effect of delegated legislation.
The issue whether or not the Interpretation Act applied to a Ministerial Guideline was raised in Granville Hotel Operations Pty Ltd v Independent Liquor and Gaming Authority [2023] NSWCA 248; 413 ALR 499, in a different context to that here. The issue had some potential significance in that case because, if the Interpretation Act applied, s 8(c) provided that (subject to a contrary intention) “a reference to a word or expression in the plural form includes a reference to the word or expression in the singular form”, which provided some support to the appellant’s construction of the Ministerial Guideline. Ultimately, however, the issue did not need to be resolved in that appeal.
Nor is it necessary to resolve the issue here. That is partly because Delta did not point to any particular provision in the Interpretation Act which would lead to a different conclusion when compared with what I consider to be the preferred approach to construction of the Guidelines, which focuses on text, context and purpose. As Kirk JA stated in Granville Hotel at [41] (with reference to the construction of different guidelines made in a different context but where the general observations are nevertheless apposite):

[T]he issue of construction at hand must be resolved by taking account of the text, context and purpose of what is being construed. That approach is inherent in the task of legal interpretation of documents. Thus, for example, it is applied to contracts: Simic v New South Wales Land and Housing Corp (2016) 260 CLR 85; [2016] HCA 47 at [78].

Another reason relates to the relationship between the Rules (which plainly do have a legislative status) and the Guidelines. The AEMC acknowledged that, in making its final decision as to the matters referred to in cl 3.14.6(q) of the Rules, there is an implied condition that such a decision has to be made within the bounds of reasonableness (referring by analogy to Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30). This acknowledgement was made notwithstanding the AEMC’s contention that the Guidelines are not subordinate legislation.
I also understood the AEMC to accept that, having regard to the terms of cl 3.14.6(s) of the Rules, it was obliged in making a final decision to both take into account submissions it received on the DOCM (and, implicitly, also the outcome of its consultation with the claimant as required by cl 3.14.6(r)), as well as apply the Guidelines (unless it was satisfied that there were compelling reasons not to do so).
In my view, the mandatory obligation on the AEMC to apply the Guidelines (unless the exception was engaged which is not the case here), necessarily required the Guidelines to be applied by the AEMC based on their proper construction. As noted above, this task involves taking into account considerations of text, context and purpose, matters which I will develop further below.

(b) Alleged misunderstanding of the AEMC’s task (Ground A1)

As previously noted, Delta claims that by asking and answering the second question described above at [49(c)], the AEMC failed to apply the Guidelines as required by cl 3.14.6(s)(2) of the Rules and that this constitutes jurisdictional error or error on the face of the record.
As also previously noted, the AEMC addressed the second question as part of its analysis of Delta’s eligibility to claim opportunity costs compensation, as opposed to assessing the value of Delta’s opportunity costs. Delta’s position is that foreclosure of a more profitable opportunity to use scarce capacity or resources is not a precondition to eligibility. Moreover, it claims that, properly construed, [5.3.2] and [5.3.3] of the Guidelines merely require a claimant for compensation to demonstrate scarce capacity or resources due to a technical or commercial limitation and that the foreclosure of an alternative opportunity is necessarily implicit in a finding favourable to a claimant on this matter.
The alleged jurisdictional error or error on the face of the record is reflected in the following extract from Delta’s outline of submissions dated 21 July 2025 (footnotes omitted):

The AEMC fundamentally misunderstood the task it was required to perform. Whether Delta lost an alternative opportunity to use scarce capacity or resources more profitably as a result of the imposition of the APC was not a precondition to eligibility for opportunity costs compensation under the Guidelines. All that the Guidelines required for a claimant to demonstrate eligibility was that they had scarce capacity or resources as a result of a technical or commercial limitation (Sections 5.3.2 [Question 1] and 5.3.3 of the Guidelines). Whether a claimant lost an opportunity to use scarce capacity or resources more profitably as a result of an APC is a question that can only be answered if that opportunity has been valued, such as on the basis of a market-based valuation (see Section 5.3.4). But the AEMC eschewed any need to engage with Delta’s evidence and submissions regarding the value of its lost opportunity.

Ground A1 assumed that decisions purportedly made under the Guidelines are amenable to judicial review for jurisdictional error or error of law on the face of the record as apply to judicial review of decisions made under primary or subordinate legislation. For reasons set out above, I strongly doubt Delta’s contention that the Guidelines have the effect of delegated legislation. Rather, I consider that they are probably better characterised as “soft law”: their purpose is to provide non-binding guidance rather than commands (see M Aronson, M Groves and G Weeks, Judicial Review of Administrative Action and Government Liability (7th ed, 2022, Thomson Reuters) at [4.120]). Assuming, without deciding, that familiar grounds of jurisdictional error such as misunderstanding the task required and asking the wrong question are available grounds in Delta’s judicial review challenge to the decision and the AEMC’s purported application of the Guidelines, I will now explain why I am not persuaded in any event that these grounds have been established.
Those grounds essentially turn on the proper construction and application of the Guidelines. That task involves an objective consideration of text, context and purpose (see generally, P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [19.60]–[19.80]). I consider that those three matters are relevant whether or not the Guidelines are properly characterised as subordinate legislation.
Returning to the task of construction and focusing for the moment on text, the need to demonstrate foreclosure of an alternative opportunity to use scarce capacity or resources is implicit in the definition of “opportunity costs” in both the Rules and Guidelines. Hence, in cl 3.14.6(a) of the Rules, “opportunity costs” are defined as “the value of opportunities foregone by the claimant due to the price limit event as defined in the compensation guidelines” (emphasis added). The notion of a claimant having foregone opportunities is an element of that definition.
A broader but still consistent definition is then set out in [5.3.1] of the Guidelines (which is reproduced at [40] above).
Once again, the notion of foreclosure of an alternative opportunity forms part of the definition of opportunity cost. The second part of the definition in the Guidelines refers to both the foreclosure element and the scarcity element, which indicates that both elements must be demonstrated before consideration is to be given to placing a value on the foregone profitable opportunity.
Secondly, I do not accept Delta’s submission that demonstration of the existence of a technical or commercial limitation per se constitutes the sole criterion of eligibility to claim opportunity costs compensation. Rather, as explained immediately above, there are two elements to such eligibility, which are reflected in the questions posited by the AEMC in [2.2] of the Final Report. I accept the AEMC’s submission that nothing in [5.3.2] or [5.3.3] of the Guidelines undercuts the requirement in [5.3.1] to demonstrate the foreclosure element of what constitutes an opportunity cost.
Thirdly, and consistently with the analysis above, the distinction between demonstrating scarce capacity as required by [5.3.3] and valuing the opportunity costs does not gainsay the need to show foreclosure of a more profitable opportunity to establish eligibility. It is only after a claimant has demonstrated to the AEMC’s satisfaction that it has suffered both scarce capacity or resources as well as the foreclosure of an alternative opportunity to use that scarcity more profitably that the need to value that alternative opportunity then arises.
Fourthly, it is important not to overlook the fact that the Rules do not contemplate that compensation will be payable for every opportunity costs situation. Part of the AEMC’s obligation to publish the Guidelines on compensation, as required by cl 3.14.6(e) of the Rules, is to define the types of opportunity costs which may be claimed. This strongly suggests that not all opportunity costs are compensable.
Turning now to considerations of purpose, mention has already been made of the stated objective in cl 3.14.6(c) of the Rules of paying compensation relevantly so as “to maintain the incentive for: (1) Scheduled Generators … to supply energy; … during price limit events”. But that objective does not exist in a vacuum. It must be viewed in the context of the Rules and the Guidelines as a whole. Their effect is to provide parameters or a framework for determining whether or not compensation will be paid. It would grossly overstate the position to say that the Rules and Guidelines require that compensation must always or generally be paid to a generator such as Delta simply to maintain the incentive for it to supply energy during price limit events. Conformity with the relevant criteria must be established to the AEMC’s reasonable satisfaction.
By broad analogy, in Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47 at [5], Gleeson CJ helpfully emphasised the limits of a purposive construction in some particular instances, albeit by reference to statutory construction (footnotes omitted):

Another general consideration relevant to statutory construction is one to which I referred in Nicholls v R. It was also discussed, in relation to a similar legislative scheme, in Kelly v R. It concerns the matter of purposive construction. In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act is to be preferred to a construction that would not promote that purpose or object. As to federal legislation, that approach is required by s 15AA of the Acts Interpretation Act 1901 (Cth). It is also required by corresponding state legislation, including, so far as presently relevant, s 18 of the Interpretation Act 1984 (WA). That general rule of interpretation, however, may be of little assistance where a statutory provision strikes a balance between competing interests, and the problem of interpretation is that there is uncertainty as to how far the provision goes in seeking to achieve the underlying purpose or object of the Act. Legislation rarely pursues a single purpose at all costs. Where the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem. For a court to construe the legislation as though it pursued the purpose to the fullest possible extent may be contrary to the manifest intention of the legislation and a purported exercise of judicial power for a legislative purpose.

Similarly, although again in a different statutory context, Gageler CJ, Gleeson and Jagot JJ recently stated in Laming v Electoral Commissioner of Australian Electoral Commission [2025] HCA 31; 99 ALJR 1260 at [43] that: “The assumption that the provisions seek to achieve their expressly stated objects at any price is particularly inapt for these provisions” (emphasis added).
I consider that these observations (and those of Gleeson CJ in Carr) apply to the proper construction of both the Rules and the Guidelines.
As to context, as Kirk JA noted in Granville Hotel at [27] with reference to the Ministerial Guideline there (which observations also apply to the Guidelines here):

Yet the Guideline is not delegated legislation. It is a policy document guiding but not binding the exercise of the Authority’s discretion. That is the very nature of a guideline: note Norbis v Norbis (1986) 161 CLR 513 at 520, [1986] HCA 17. It does not set mandatory rules or prescribe binding norms of conduct: note Kassam v Hazzard (2021) 106 NSWLR 520; [2021] NSWCA 299 at [144]. It articulates matters which the Authority must consider when deciding whether to grant an approval under s 40(1), where that does not limit other matters that it may consider. It is clear that the document was not drafted by parliamentary counsel. It was obviously meant to be a practical guide.

As aspects of context, it should be noted that the Guidelines here were drafted by the AEMC, not parliamentary counsel. They also have a very different structure and form to primary or secondary legislation. The Guidelines are drafted in a narrative form which is far more akin to a policy statement or circular than to primary or secondary legislation. This has implications for how the Guidelines are to be construed. As Kirk JA said in Heise v Employer Mutual Limited [2022] NSWCA 283 at [57] (Mitchelmore JA and Griffiths AJA agreeing) with respect to Guidelines published under s 376 of the Workplace Injury Management Act 1998 (NSW) concerning the assessment of an injured worker’s permanent impairment (emphasis added):

Moreover, the appellant’s argument misconstrues the passage quoted from the Guidelines. The appellant described the Guidelines as a form of “delegated legislation”. That may be overstating their significance: cf Ballas v Dept of Education (NSW) (2020) 102 NSWLR 783; [2020] NSWCA 86 at [97]; Kempe v Complete Community Services Pty Ltd [2022] NSWSC 1095 at [30]. Regardless, what is clear from the Guidelines is that they are not drafted in the manner of legislation, nor, it seems, with the care and precision typically associated with legislation. I infer that they are drafted by the Authority itself rather than by Parliamentary Counsel. An introductory page states that the Authority “has developed these Guidelines”.

I would also add that it is difficult to see how many canons of construction which apply to the interpretation of primary or secondary legislation could be applied to the Guidelines here.
For all these reasons, I do not accept that, in identifying the two questions concerning eligibility as set out at [49(b) and (c)] above, the AEMC misunderstood its task or asked itself the wrong question, nor did it misconstrue the Guidelines as claimed by Delta. I reject Ground A1.

(c) Alleged errors concerning technical limitation (Ground 1)

As noted above, Ground 1 has the following three elements:

Asking the wrong question or misunderstanding cl 3.14.6 of the Rules and [5.3.1]–[5.3.3] of the Guidelines in the AEMC’s consideration of the extent of any evidence of attempts by Delta to restore its coal stockpile during and following the APP.

Procedural unfairness in the AEMC’s failure to put Delta on notice (in the DOCM, the draft decision or at all) of its proposal to find that Delta had not established a technical limitation because it provided limited evidence of its attempts to restore its coal stockpile following the APP.

Illogicality, irrationality or unreasonableness in the AEMC’s finding that Delta had not demonstrated a technical limitation was supported by the fact that its coal stockpile grew during and after the APP, as well as a failure to take into account Delta’s submissions on this issue.

I will address these three parts of Ground 1 in turn.

(i) Did the AEMC ask the wrong question or misunderstand the law?

Delta contended that this limb of Ground 1 is concerned with the AEMC’s reasons for denying that there was a technical limitation and, in particular, its finding that Delta provided only limited evidence of attempts to restore the coal stockpile following the APP.
Delta pointed to the fact that in [2.2.2] of the Final Report the AEMC accepted Delta’s claim that “it reduced its average generation during the APP and July 2022 due to its perceived coal limitation”. It contended that the AEMC also acknowledged “but did not resolve” Delta’s submission that it “brought forward coal deliveries due in July and August 2022 to June 2022, to ensure there was sufficient coal available during the APP to meet AEMO’s request for more energy production from Vales Point”, which “resulted in a technical limitation in July 2022” and that the impact of this limitation was the foreclosure of the opportunity to generate more profitably in July 2022. Despite acknowledging Delta’s argument, the AEMC concluded at [2.2.2] that Delta had provided only limited evidence of attempts to restock the stockpile following the APP.
In [48] of its outline of written submissions in this proceeding, Delta challenged the first two of the four reasons given by the AEMC at [2.2.2] of the Final Report (see at [52] above) in finding that Delta did not demonstrate a technical limitation, namely:

the fact that Delta’s stockpile grew during and after the APP; and

the dearth of evidence about its attempts to restore its coal stockpile after the APP.

As to the first of those reasons, Delta contends that it says nothing as to whether Delta had scarce resources as a result of a technical limitation. It also claims that there is no logical connection between that fact and the AEMC’s adverse finding about the non-existence of a technical limitation. Delta contends that, on the contrary, the fact that it brought forward deliveries of coal to June 2022 lent support to its claim, which the AEMC appeared to accept, that it was coal-constrained at that time.
As to the second reason, Delta contends that it also reveals illogicality in the AEMC’s reasoning and exposes a misunderstanding of the applicable law. It contends that there is nothing in cll 3.14.6(b)–(d) of the Rules which requires a claimant for compensation to establish attempts were made to restore any limitation on their scarce resources or capacity which restricted their ability to supply energy during, or after, an APP. Similarly, Delta contends that the Guidelines impose no such requirement and that the only pre-condition to eligibility is that a claimant demonstrate that it had scarce capacity or resources as a result of a technical limitation.
Delta also contends that the AEMC failed to engage at all with the evidence and submissions provided by Delta on this subject. Delta pointed in particular to the material it provided to the AEMC in December 2022 (see at [19] above).
For the following reasons, I do not accept Delta’s contentions concerning Ground 1(a).
First, contrary to Delta’s assertion, the AEMC did not require Delta to establish that attempts were made to restore Delta’s stockpile during and after the APP. Rather, in response to Delta’s assertion that by bringing forward coal deliveries from July 2022 it had a technical limitation in July 2022, the AEMC tested that assertion by considering whether Delta had the ability to restore its stockpile. It did so by reference to the evidence, including whether there was evidence of attempts to restore the stockpile. This did not elevate attempts to restore the stockpile to a “condition” of establishing a technical limitation. Rather, the AEMC considered it to be a factor to be taken into account in reaching the overall conclusion that Delta had not shown the claimed technical limitation. As senior counsel for the AEMC put it in her oral address:

[A]ll that the AEMC is doing here is testing Delta’s argument against the available evidence … That doesn’t involve imposing a condition. That’s testing the argument by reference to the evidence and making a finding of fact. The absence of any evidence of attempts by Delta to restore its stockpile increased the weight that could be given to evidence of Delta’s ability to restore its stockpile. All of that evidence was just relevant to weighing the cogency of Delta’s argument

Secondly, and in any event, the AEMC did not err in considering whether there was evidence of Delta’s attempts to restore its coal stockpile. Paragraph 5.3.3 of the Guidelines permitted the AEMC to consider factors such as “[t]he available resources of the plant under the conditions at the time, including starting resource level, potential rate of resource inflows and minimum resource storage limits” and “[a]vailable alternative resources, which may be determined by the demand-supply balance in the market” in considering whether there was technical limitation. These factors plainly encompass attempts to restore a coal stockpile. Furthermore, the chapeau to this list of factors states, “… the AEMC may consider factors such as …” (emphasis added). The list is non-exhaustive and does not forbid consideration of attempts to restore a stockpile.
Thirdly, Delta has not made good its claim that the AEMC failed to engage with the material it provided to the AEMC, with particular reference to the material provided on 6 December 2022 (see at [17]–[19] above). I consider that the AEMC adequately addressed the evidence and submissions provided by Delta in support of the claimed technical limitation. As noted above, in [2.2.2] of the Final Report, the AEMC summarised Delta’s basic arguments, but concluded that Delta had provided limited evidence of attempts to restore the coal stockpile following the APP, pointing in particular to Delta’s failure to adduce evidence of any attempts by it to restore the stockpile following the APP by either bringing forward additional deliveries or purchasing spot market coal, as well as noting that Delta purchased less coal than was made available to it through a procurement it conducted in late June 2022. Fairly read, the reference to “bringing forward additional deliveries” refers back to Delta’s submission that it had brought forward some coal deliveries due in July and August 2022 to June 2022. The reference to Delta not adducing evidence that it purchased spot market coal in the period following the APP contrasts with Delta’s claim that it had made purchases on the spot market during the First and Second Period. I see no error in the AEMC applying weight to that contrast.
The second matter, concerning the finding that Delta purchased less coal than was made available to it through a procurement it conducted in late June 2022, is a finding of fact. In making this finding, the AEMC implicitly reasoned that Delta could have purchased more coal than it did. Delta does not claim that there was no evidence to support that finding. Nor does the finding or the reasoning which accompanied it evince any misapprehension on the AEMC’s part.

(ii) Was Delta denied procedural fairness?

Delta properly acknowledged that an administrative decision-maker is generally not required to disclose all of its thinking processes and provide a running commentary on what it thinks of a claimant’s application so that there is a forewarning of all possible reasons for failure. It also properly acknowledged that a decision-maker may, however, be obliged to disclose the critical issues on which its decision is likely to turn and any adverse conclusion drawn which is not obviously open on the known material (citing Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591–2; [1994] FCA 1074).
Delta also relied upon the evidence of Mr Joel Aulbury, Compliance and Regulation Manager at Delta, regarding meetings which he attended with representatives of the AEMC, with particular reference to whether he was put on notice that the AEMC was interested in what Delta had done with its stockpile after the APP had ended. Reference was made to Mr Aulbury’s evidence concerning a meeting on 10 May 2023, which was attended by representatives of both Delta and the AEMC, where he said that the focus was on Delta’s actions concerning its stockpile prior to the APP and why Delta did not buy more coal at that time as opposed to a later point in time.
Delta also placed particular emphasis on the contents of the draft decision which was provided to it under cover of a letter dated 13 December 2023 and invited it to provide any feedback. Reference was made to the following passage at page 11 of the draft decision (footnotes omitted):

However, Delta has not demonstrated that it was actually technically limited because it was able to bring forward coal deliveries and it was able to restore its coal stockpile during and following the APP, noting the following reasons:
^● Whilst some contracted coal deliveries were missed immediately prior to and during the APP, the stockpile returned to Delta’s forecast levels by 25 June and no deliveries were missed thereafter. The stockpile level grew from approximately 14 June to the end of June 2022.
^● From the evidence provided by Delta, it is clear that some sources of coal procurement were under delivering, but Delta was able to bring coal deliveries forward and all potential sources of coal supply were not exhausted.
^● The weather conditions that delayed some coal deliveries did not prevail throughout the entire APP and therefore Delta had physical access available for coal deliveries at multiple points throughout and following the APP.

The EUU supports the Commission’s reservations in the DOCM, noting “Delta provided insufficient evidence that a technical or commercial limitation was occurring during the market intervention”.

Delta submitted that this material indicated that the AEMC was not concerned with Delta’s actions regarding restoring the stockpile after the APP, which it contrasted with the finding in the Final Report that Delta had made “limited attempts to restore its coal stockpile during and following the APP”. There was a further statement that Delta had provided “limited evidence of attempts to restore the stockpile following the APP”. Delta contends that this constituted a change of position on the part of the AEMC, which was not notified to it.
For the following reasons, I reject Delta’s claim that it was denied procedural fairness.
First, I consider that the relevance of Delta’s ability to restore the stockpile was evident from a normal reading of the Guidelines. The following aspects of [5.3.3] of the Guidelines are pertinent (the terms of this provision are set out at [43] above):

The first indented numbered paragraph concerning “Technical limitations” states that this may relate to “physical limitations on an eligible participant’s available capacity or resources, that restricts its ability to supply energy …” and “[t]he replenishment of inputs, such as water or gas, may limit output over a particular period of time” (emphasis added). In circumstances where Delta was asserting that its coal supply was limited in June-July 2022 due to bringing forward deliveries, the question of whether it could have replenished that supply in July was an obvious and relevant one.

Likewise, the reference in “factor 2” in [5.3.3] (which applies to both technical and commercial limitations) to “[t]he available resources of the plant under the conditions at the time, including starting resource level, potential rate of resource inflows and minimum storage limits” (emphasis added), points to the obvious relevance of Delta’s ability to restore its stockpile during and after the APP.

Secondly, the AEMC did consult with Delta pursuant to cl 3.14.6(r) of the Rules on the matters in cl 3.14.6(q) by providing Delta with a draft decision on 13 December 2023. Critically, pages 10 and 11 of that draft decision squarely put Delta on notice of the relevant issue. Page 11 expressly informed Delta that the AEMC was proposing to find that “it was able to restore its coal stockpile during and following the APP” (emphasis added). It also expressly informed Delta that “all potential sources of coal supply were not exhausted” (second bullet). If Delta had wanted to challenge this proposed finding, evidence of failed attempts to restore its stockpile would have been an obvious source to put before the AEMC.
Thirdly, although I was initially attracted to Delta’s submission that the conclusion in the AEMC’s Final Report that “Delta provided limited evidence of attempts to restore the stockpile following the APP” was the “opposite” to what had previously been stated in the draft decision, I am not satisfied that Delta has made good this claim. In the draft decision, the AEMC had written that Delta had not “demonstrated it was actually technically limited because it was able to bring forward coal deliveries and it was able to restore its coal stockpile during and following the APP” (emphasis added). An “opposite” conclusion would have been to conclude that Delta was not able to restore its stockpile after the APP, but this is not what the AEMC did. In fact, the conclusion reached in the Final Report was broadly consistent with the draft, albeit less emphatic. The second bullet point after the statement about limited evidence stated: “Delta purchased less coal than was made available to it through a procurement it conducted in late June 2022”, suggesting an ability to restore the stockpile.
Fourthly, although I consider that the documentary material referred to above provides a sufficient answer to Delta’s procedural unfairness claim, I also accept the evidence of Mr Drew Butterworth, a director in the Networks and Technical Policy Team of the AEMC, that Delta was put on notice at several meetings and by an information request that the AEMC was interested in reviewing any evidence regarding Delta’s attempts to restore the stockpile after the APP concluded and during the claim period, which extended into July. In brief, his evidence was as follows:

In his affidavit at [52(g)], Mr Butterworth gave evidence in response to [33(d)] of Mr Aulbury’s first affidavit, where Mr Aulbury deposed that he understood from the questions asked by the AEMC at the 10 May 2023 meeting that it wanted to know why Delta had not purchased more coal prior to the APC event (i.e., as opposed to after that event). Paragraph 52(g) of Mr Butterworth’s affidavit said:

I refer to paragraph 33(d) of the Aulbury Affidavit, where Mr Aulbury states that the AEMC asked why Delta had not purchased more coal "prior to the APC event". I do not recall any questions limited to this particular period during the 10 May 2023 meeting. While the project team was interested in learning more about Delta's coal procurement endeavours at this meeting, our interest was not solely directed to the period leading up to the APP. Based on this, I believe that we did not narrow our questions to the period prior to the APC event, given that at this time the project team was considering Delta's coal procurement endeavours more generally and we had not narrowed our focus to particular timeframes (before receiving more evidence around Delta's contracting activities).

Mr Butterworth prepared a note in advance of that meeting which he described as “a guide” to the points he wanted to relay at the meeting. In cross-examination, Mr Butterworth agreed that his note did not say anything about Delta’s conduct in relation to its stockpile after the APP. Earlier in his cross-examination, Mr Butterworth was asked several questions regarding [52(g)] of his affidavit. It was put to him that Delta was asked by the AEMC’s representatives at the meeting why it didn’t purchase more coal prior to the APC event and what was the situation at that time (i.e., as opposed to a later period), Mr Butterworth answered: “Not to my recollection, no”. When pressed as to whether he had asked why Delta had not purchased more coal prior to the APC event, Mr Butterworth said that “I don’t recall specially asking that”. The following exchange then occurred:

Q. Well, isn’t the import of your evidence, at subparagraph G, that the question was asked, but you don’t remember a time restriction being placed on it?
A. I recall a conversation about Delta’s coal procurement efforts, yes, but, yeah, I don’t recall putting a - as you say, putting a specific period around that.
Q. All right, but you don’t know one way or the other?
A. I don’t recall, yeah.

I accept Mr Butterworth’s evidence that although Delta’s coal procurement efforts were discussed at the meeting he had no recollection of the specific periods of time to which that discussion related. His evidence does not, however, support Mr Aulbury’s evidence to the effect that the AEMC’s interest in Delta’s coal procurement efforts was focused only on the period prior to the APC event. Nor is Mr Aulbury’s evidence on this matter corroborated by any direct documentary material (as to the significance of this, see at [118] below). The absence of any reference in Mr Butterworth’s pre-meeting file note to Delta’s efforts after the APC event provides insufficient corroboration to Mr Aulbury’s claim. Moreover, even if it did, there is other evidence which establishes that Delta was on sufficient notice prior to the Final Report that the AEMC viewed as relevant its coal procurement efforts beyond the APC and into July (being the 28 day period forming part of the claim period).

In an email Mr Butterworth sent to Mr Aulbury on 11 July 2023, reference was made to Delta’s coal procurements and tenders for coal in January, May and June 2022 and Mr Aulbury was asked whether this represented the entirety of endeavours to source coal in the six months “lead up to and during the current claim period” (emphasis added).

(ii) Complaint about Delta’s failure to substantiate covenants

Delta’s claim was that it would conserve generation if its coal stockpile decreased below a set minimum target based on covenants with its financier. However, the AEMC found that it did not substantiate the covenants with evidence, nor was the minimum target outlined in an internal policy. Ground 2(c) alleges the requirement for substantiation was unreasonable or reflected a failure to consider relevant material. Delta’s written submissions also add a new contention that the AEMC misunderstood its argument, namely that if its coal stockpile decreased below a set minimum target, it would operate as resource-constrained and conserve generation.
This new contention is rejected for the following reasons.
First, the AEMC did not misunderstand Delta’s argument. Delta’s original submission dated 6 December 2022, in the context of explaining its asserted constraints, stated that: “The minimum stockpile target is set based on Delta’s covenants with its financier, and Delta seeks to maintain the coal stockpile above this level”. The AEMC was accordingly correct to focus on the covenants.
Secondly, if Delta’s point is simply that it had a stockpile limit, or that it had a more profitable opportunity to use the coal after the APP, this would not be sufficient to establish a commercial limitation under the Guidelines. The AEMC was entitled to view the scarcity element as distinct from the foreclosure element (see Ground A1 above). The reference in [5.3.3] of the Guidelines to “commercial incentives or disincentives on using capacity or resources” requires more than simply a more profitable alternative opportunity. It requires something in the nature of “penalties”, as the Guidelines suggest.
As to Ground 2(c), Delta contends that because it made submissions which asserted that its minimum stockpile target was set based on financier covenants, the conclusion that this claim was not substantiated must mean the AEMC disregarded this material. This is misconceived. Delta’s assertions were not evidence. This was made clear in page 20 of the DOCM. For instance, Delta could have provided copies of its loan agreements containing relevant covenants to support its claims, but it did not. There was no error in the AEMC requiring substantiation, particularly when [5.3.3] of the Guidelines states: “The claimant will need to provide sufficient evidence justifying its claim in relation to the factors above”. Moreover, the Guidelines stated earlier on, in the section headed “How to apply for compensation”, that “to enable a claim for compensation to be assessed, the claimant must provide information to support its claim” and that the “responsibility for substantiating a claim for compensation, including the costs incurred, analysis and/or models, rests with the claimant”. It was not unreasonable for the AEMC to require substantiation even where the rules of evidence plainly did not apply.
Further, the attachments to Delta’s submissions and contemporaneous internal documents to which Delta refers did not provide evidence of the covenants or that the minimum stockpile limit was set by reference to such covenants.

(e) Challenge to the AEMC’s analysis of the second question (Ground 3)

Ground 3, which is expressed as being in the alternative to Ground A1, alleges jurisdictional error or error of law on the face of the record in relation to the AEMC’s conclusion that Delta had not shown foreclosure of an alternative profitable opportunity due to the APC.
The AEMC gave the following two broad reasons for this conclusion:

Delta had made inconsistent submissions on the topic such that the AEMC was unable to conclude on the basis of the available evidence that the APC caused the foreclosure of an alternative, more profitable, opportunity during or after the APP for Delta; and

while Delta may have had scarce coal supplied during the APC and assuming that this constituted a relevant commercial limitation, the APC did not affect Delta’s ability to generate more energy following the APP, which was the period in which Delta claimed a foregone opportunity.

It is desirable to elaborate upon the AEMC’s reasons in relation to these matters before addressing Delta’s judicial review claims.

(i) Delta’s inconsistent submissions

In [2.2.4] of the Final Report, the AEMC noted that Delta had initially argued in December 2022 that it would have preferred to generate at a lower level during the APP to conserve its scarce coal so that it could generate and receive higher uncapped prices later.
The AEMC contrasted this claim with Delta’s subsequent response to the DOCM where it said that Delta argued that:

the prices at which it dispatched during the APP were considered by Delta to be sufficiently high for it to bid its units in at normal generation levels; and

the only reason why Delta would conserve its generation during the APP was because of scarce coal.

The AEMC found that Delta’s response to the draft decision adopted another, different position. It described Delta’s submission as claiming that, under normal circumstances, a spot price of $300/MWh would be sufficient for Delta to bid its generation at normal level but that, due to the price capping during the APP, when Delta said it was coal-constrained, it elected to lower its generation levels. Having regard to what the AEMC said were inconsistent submissions, the AEMC concluded that “it is not clear that Delta’s generation behaviour would have been different had the price cap not been applied”, with the consequence that it was unable to find on the basis of the available evidence “that the price cap caused the foreclosure of an alternative, more profitable, opportunity during or after the APP for Delta”.
Delta submits that the AEMC’s finding of inconsistency stems from a misunderstanding by the AEMC and a failure to consider Delta’s submissions responding to the DOCM. Delta provided two responses to the DOCM. The first was the draft submissions dated 17 October 2023. It emphasised that it was made clear there that those submissions were to be read in conjunction with Delta’s earlier material dated 6 December 2022. At page 12 of its 17 October 2023 submission, Delta summarised its position as follows (emphasis in original):

In summary, it was a combination of technical limitations on coal supply from Delta’s own mine and third party mines, commercial limitations on enforcing contract delivery, commercial disincentives to buy more coal at the prices offered, and uncertain events affecting supply (mine issues, extreme weather, transport delays, etc.) that resulted in Delta being resource constrained through the APP and the subsequent price opportunities in the next few weeks. This meant that Delta’s response to AEMO requests to generate above Delta’s preferred level during the APP (including the market suspension period) left Delta unable to conserve its critically scarce coal at times of relatively low prices, which increased the risk that Delta may not be able to defend its contract position or fully capitalise on subsequent price opportunities that followed, which led to Delta incurring an opportunity cost.

Delta’s second response to the DOCM is a letter dated 19 October 2023, which was a shortened version of the draft response. Again, Delta asked the AEMC to read this submission in conjunction with the 6 December 2022 material. It further submitted that the Vales Point coal stockpile was at critically low levels and generation was scaled back in June 2022 to manage both the scarcity of coal and “material risk of exposure to financial penalties from an inability to cover contract position after the APC was lifted”.
Delta now complains that the AEMC’s finding as to inconsistency appears to rely upon the first sentence of the following paragraph in the 19 October 2023 submission and fails to take into the remainder of the paragraph:

During the APC period, an average dispatched weight price of $280 MWh would have still been a very profitable price for Delta but instead Delta chose to reduce generation to manage very scarce coal. As explained in Delta’s submission made in December 2022, Delta was trying to conserve scarce coal in order to minimise the chance of running out of coal and the risk of not being able to cover its contract position after the APC was lifted, as it was expected that prices would return to higher levels where Delta would potentially face large commercial loses due to an inability to cover its contract position. As it was, Delta did incur some losses against its contract position, as set out on p8 of this document.

Thus, Delta submits that it made clear in these submissions that it reduced its generation during the APP not just because of scarce coal but also because it expected prices to increase after the APP when capped prices would no longer apply.
Delta also complains that the AEMC was itself inconsistent on this point. It draws attention to the fact that in [10] of the executive summary to the Final Report the AEMC accepted Delta’s argument that “it may have reduced its average daily generation during and following the APP because of its concerns about coal levels”. It says that this was inconsistent with the AEMC’s subsequent reference in that paragraph to Delta having provided “inconsistent explanations of the reasons for which it chose to lower its generation during and following the APP”.
It is desirable to set out the relevant parts of [10] of the executive summary to the Final Report which explains the AEMC’s approach to the second question (namely whether Delta had suffered the foreclosure of an alternative opportunity to use scarce capacity or resources more profitably either at the same time or at a later point in time arising from the APP):

…
• The Commission accepts that, as Delta has argued, it may have reduced its average daily generation during and following the APP because of its concerns about its coal levels.
• In addition, we accept that Delta may have chosen to conserve resources during the APP due to the imposition of the price cap. It may make sense for a participant to conserve resources when prices are relatively low so that those resources can be deployed more profitably at a later time when prices are higher.
• However, Delta has provided inconsistent explanations of the reasons for which it chose to lower its generation during and following the APP. Given the evidence provided by Delta, the Commission is unable to conclude that Delta suffered the foreclosure of an alternative opportunity to use its scarce capacity or resource more profitably at the same point in time or at a later point in time, as a result of the imposition of the price cap, and the answer to the second question is therefore ‘no’.

Delta then points to its response to the draft decision which it claims was substantially the same as those it provided in December 2022 and October 2023. It relies in particular on the following extracts from its response to the draft decision:

For the avoidance of doubt, if Delta was not coal limited it would have been at or close to maximum production during and after the APP (at the very least covering its contract position), as these prices were relatively high compared with periods outside of the volatile period in 2022. However, this was not the case. Delta was coal limited and had to make a decision when to consume its fuel, either:
• during the APP where it knew prices would not exceed $300 MWh, or
• after the APP when prices were expected to exceed $300 MWh.

Delta’s preference was to remain at minimum generation during the APP to minimise the risk of running out of coal and being able to defend its position after the APP when it would have a much higher commercial exposure.
At AEMO’s request Delta consumed significantly more fuel than it otherwise would have and in doing so lost the better alternative opportunity to consume that fuel after the APP. Delta was incurring this loss or ‘penalty’ because it was coal limited and the APC was in place. While the APC provided some protection against price spikes the additional fuel consumption limited generation at higher prices which were reasonably expected after the APC was lifted.

Relying on those extracts, as well as other parts of that response, Delta submits that it was made clear to the AEMC that Delta reduced its generation during the APP not merely because of the scarce coal, but also because of the imposition of the APC.
Having regard to all this material Delta provided to the AEMC, Delta complains that the AEMC failed to appreciate the material in [2.2.4] of the Final Report. Even if the AEMC’s relevant findings were findings of fact, Delta submits that this was not fatal to Ground 3 because such factual findings “were made as a consequence of a failure to consider Delta’s submissions or a misunderstanding of those submissions…”.

Consideration

Ground 3(a) alleges that the AEMC’s conclusion that it was unable to conclude that the APC caused the foreclosure of a profitable opportunity (based on “inconsistent” Delta submissions) failed to consider or misunderstood certain Delta material.
As to the allegation that the AEMC misunderstood Delta’s submissions, this is no more than a disagreement with the merits. The fact that it may have been open to conclude that Delta’s submissions were consistent does not gainsay that the opposite was equally open. Delta claimed in its 13 December 2022 submission that it would have preferred to generate at a lower level during the APP to conserve its coal for generating at future higher prices. By contrast, as noted above, its later submissions suggested that prices during the APP were sufficient to bid at normal generation levels. This raised at least a potential inconsistency, because the later submissions suggested that the price during the APP was sufficient to warrant Delta generating at the level it did, which left open the inference that it in fact produced at its preferred level. Faced with such a position, there was no error in the AEMC concluding that it could not be satisfied the APC caused foreclosure.
Delta points to further parts of its DOCM response and suggests that this demonstrates it provided evidence that, by having brought forward coal deliveries from July 2022 to June 2022, it lost the opportunity to generate more energy than it did in July 2022 when prices were higher. However, to prove that it forwent a valuable opportunity to use scarce resources after the APP, Delta would need to have shown that it produced more (i.e., used more of its coal) during the APP than it had wanted to. Delta’s draft response to the DOCM, which was emailed to Mr Butterworth on 10 October 2023 contained a table (Table 1) which records that Delta’s generation during the APP (when it asserts its resources were scarce) was around 81% to 87% of its generation in the two weeks before and after when the price was also higher. A second table (Table 2) records that Delta’s generation in July 2022 when its stockpile was below 100 kt (i.e., similarly low) was around 88% to 91% of its generation when the stockpile was above 100 kt. Rather than demonstrating that Delta generated more than it had wanted to during the APC, this data points in the opposite direction, namely that Delta produced what it wanted to or less. Thus, there is no illogicality in the AEMC concluding that it could not be satisfied based on Delta’s submissions that its generation behaviour would have been any different. In any event, Delta’s arguments appear to go to the merits of the AEMC’s analysis, which is beyond the scope of a legitimate judicial review.

(ii) The AEMC’s finding that even if there was a scarcity of coal supplies during the APC Delta increased its coal stockpile during and after the APP

The second reason why the AEMC found in the Final Report that Delta had not foregone value from an alternative opportunity arising from the APC related to the AEMC’s analysis that, while there were periods that Delta and its contracted coal suppliers experienced challenges in delivering coal to Vales Point, these challenges did not prevent Delta from increasing its coal stockpile during and following the APP. The AEMC then added that, while Delta may have had scarce coal supplied during the APC, and even if this constituted a relevant limitation, the APC did not impact its ability to generate more energy following the APP, that being the period in which Delta claimed its forgone opportunity.
Delta describes this reasoning as irrational because “there’s no logical connection between the evidence before the commission and that finding, that the finding overlooks the fact that Delta used coal during the APP which it could have used after that period when prices were expected to be higher”. Delta submits that the AEMC simply overlooked Delta’s submissions on this issue. It also points to the fact that the AEMC’s staff had noted in an internal document dated 22 February 2024 that “it could be argued that Delta expected still higher prices once the APC was lifted”.
It is desirable to set out the entirety of that internal AEMC document:

Delta could still argue that it expected prices to be higher after the APP
While prices for Delta’s generation may have been relatively high, it could be argued that Delta expected still higher prices once the APC was lifted.
This means that the Commission could accept Delta’s arguments and find that the imposition of the price cap did indeed cause foreclosure of a better alternative opportunity.
We are not proposing that this position be adopted, rather we are highlighting that it could be argued.

Consideration

Delta contends that the AEMC’s finding that an increase in Delta’s stockpile during and after the APP meant it did not forgo a valuable opportunity is both irrational or illogical and a misunderstanding of “opportunity costs” in the Rules and the Guidelines.
This contention is rejected. First, the fact that Delta’s stockpile grew supplied an intelligible justification for the AEMC’s finding that its ability to generate more energy after the APP was unaffected by the APC event (which if so meant there was no foregone opportunity). This path of reasoning was not irrational or illogical in circumstances where the AEMC had found that there was only limited evidence of Delta’s attempts to restore the stockpile during and following the APC.
Secondly, there was no misunderstanding by the AEMC of the definition of opportunity costs. At [2.2.4] of the Final Report, the AEMC correctly recorded the definition of opportunity costs in both [5.3.1] of the Guidelines and cl 3.14.6(a) of the Rules. It is also clear from the fact that the AEMC turned its mind to whether the APC event affected Delta’s ability to generate more energy following the APC event. That was the very period in which Delta asserted it forfeited its opportunity to use scarce resources.
Thirdly, as senior counsel for the AEMC correctly pointed out, it is described at [2.2.4] of the Final Report as a “further” point. Thus, even if there was an error in part of AEMC’s analysis, it would not be material. The AEMC’s primary conclusion, based on “inconsistent” Delta submissions, was sufficient to reject the suggestion that the APC foreclosed a more profitable opportunity.

(f) Recovery of costs incurred by the AEMC

After publishing its Final Report, the AEMC recovered $104,796.62 in costs from Delta pursuant to cl 3.14.6(v) of the Rules. This reflected part of the AEMC’s costs of retaining external consultants in assessing Delta’s claim. Delta contends that this sum should be repaid if the AEMC made reviewable errors, because this would mean the AEMC had not carried out its functions under cl 3.14.6 in respect of Delta’s claim.
Strictly speaking, this issue does not arise because no reviewable error has been established. In any event, in circumstances where it is made clear in cl 3.14.6(v) of the Rules that the AEMC can recover its costs “prior to the claim being considered or determined” it is difficult to see why the AEMC would not be entitled to recover at least some of its costs leading up to the point of its final decision even if that final decision was found to be vitiated by jurisdictional error.

Has the AEMC breached the Hardiman principle?

In its reply submissions filed on 20 August 2025, Delta raised (for the first time) a claim that the AEMC had failed to comply with the Hardiman principle. The issue was then addressed by the parties in both supplementary written submissions and in oral address. For the following reasons, I am not persuaded that the principle has been breached in the particular circumstances here.
The principle can be traced back at least to R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; [1980] HCA 13, where the respondent Tribunal adopted what the High Court described as “an unusual course of contesting the prosecutors’ case for relief … by presenting a substantive argument”. In particular, after senior counsel for the Tribunal had conducted a searching examination of one of the prosecutor’s witnesses, the High Court said at 35–6:

… In cases of this kind the usual course is for a tribunal to submit to such order as the court may make. The course which was adopted by the Tribunal in this Court is not one which we would wish to encourage. If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted. The presentation of a case in this Court by a tribunal should be regarded as exceptional and, where it occurs should, in general, be limited to submissions going to the powers and procedures of the Tribunal.

It is notable that those statements of principle were made in the context of judicial review of the Tribunal’s conduct of an adjudicative process involving contradicting parties presenting submissions to the Tribunal. The basis for the principle relates to concerns regarding impartiality, particularly where there is a prospect of remitter if a judicial review challenge is successful. A body such as the Tribunal generally needs to play an appropriate role as a disinterested adjudicator.
The Hardiman principle is not, however, unqualified. I respectfully agree with the following observations by Colvin J in MetLife Insurance Ltd v Australian Financial Complaints Authority (No 3) [2022] FCA 849; 411 ALR 163 at [12]:

Of course, the statement of general principle submits to the particular circumstances. There may be an aspect of the statutory provisions that requires the tribunal to take up the role of contradictor in the event that administrative review is sought of its decision: TXU Electricity Ltd v Officer of the Regulator General [2001] VSC 4; (2001) 3 VR 93 at [39] (Astley J). Further, as explained by Greenwood J in Ogawa v Australian Information Commissioner [2014] FCA 229 at [23], ‘the application of the Hardiman principle requires some adapted flexibility to the particular circumstances which present themselves to the Court for consideration‘. One such circumstance is where the natural contradictor enters a submitting appearance: Fagan v Crimes Compensation Tribunal (1982) 150 CLR 666; Freedom Pharmaceutical Pty Ltd v Minister for Health (No 2) [2021] FCA 1250 at [6] (Burley J); and Ogawa at [24]. Another is where the proceedings before the tribunal were not inter partes: Ogawa at [25]. A substantial factor counting the other way is where there is a prospect of remitter. Where there is no proper contradictor and a prospect of remitter then it may appropriate for the attorney-general to seek to intervene to respond to substantive claims. Alternatively, the court may seek the assistance of amicus curiae. As to these matters see Dilatte v MacTiernan [2002] WASCA 100 at [3] (Malcolm CJ), TXU Electricity at [19], [42], [45] (Astley J); and Police Integrity Commission v Shaw [2006] NSWCA 165; (2006) 66 NSWLR 446 at [40] –[43] (Basten JA), but see [36] (Hodgson and Giles JJA agreeing).

The reference to Fagan v Crimes Compensation Tribunal (1982) 150 CLR 666; [1982] HCA 49 is significant, as that case well illustrates the flexible character of the principle. In that case, Brennan J said at 681–2 (citations omitted):

In this case the Tribunal appeared by counsel as respondent to contest the appellant's case. Where curial proceedings arise out of a matter which is contested between parties appearing before a tribunal, it is not ordinarily appropriate for the tribunal to appear to contest the curial proceedings brought by one of the parties before it … But where the proceedings before the tribunal are not inter partes, and where the Attorney-General cannot or does not intervene to represent the public interest … and neither a law officer nor a public official is heard by the court … , it may be desirable that the tribunal should appear by counsel to make such submissions as it thinks calculated to assist the court and, in an appropriate case, to argue against the applicant's case. That is what was done in this case. Here, the Tribunal's function was to determine whether and to what extent a claimant was entitled under statute to a payment out of public moneys. Though the Tribunal was bound to act impartially, it was in a sense the guardian of the moneys appropriated by Parliament to answer the proper claims for compensation under the Act. In proceedings to review its decision, the Tribunal properly represents the public purse, and it was right that the Tribunal should appear by counsel as a party to respond substantially to the application …

In addition, it is well settled that the principle does not prevent a body from explaining to a judicial review court the basis for its impugned decision as well as addressing matters of power and procedure (see Hardiman at 36 and Bankstown City Radio Co-Operative Ltd v Australian Communications and Media Authority [2007] FCA 2053 at [5]–[6] per Sackville J).
It is also settled that where it is demonstrated that a decision-maker has not observed the Hardiman principle, that conduct does not of itself vitiate the impugned decision, but may affect any costs order which is ultimately made. The point is well illustrated by Schmidt AJ’s recent decision in Darley v City of Parramatta Council [2025] NSWSC 990. There, the Council engaged an external person to investigate and report on a complaint that a Councillor had breached the Council’s Code of Conduct. The Council acted upon a final report provided by the reviewer in which he recommended that the Councillor be censured. The Court upheld the Councillor’s judicial review challenge finding that the reviewer’s report was invalid. Moreover, apprehended bias on the part of the reviewer was established and it was held that other reviewable errors had been made by the Council’s General Manager and its Complaints Co-Ordinator. It was also held that the Councillor had been denied procedural fairness.
The Council actively defended not only the actions of the reviewer (who was separately represented), but also the actions of its Complaints Co-Ordinator and General Manager, as well as conducting an active defence of its own censure decision.
In concluding that the Council had departed from the Hardiman principle, notwithstanding that the Council was not dealing with an inter partes dispute, Schmidt AJ held that the Council should not have adopted such a defensive role, especially where the impugned decision concerned complaints made by Councillors against another Councillor (at [51]). Her Honour said that the Council had not confined itself only to arguments of law and the course it adopted “risked endangering the impartiality which the Act expects Councils to maintain when considering such a complaint in accordance with its code of conduct” (at [52]).
Acting Justice Schmidt distinguished McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504; [2008] NSWCA 209, where another Council’s active role in defence of its Councillors and officers was found not to breach the Hardiman principle having regard to the allegations of improper conduct made in that case (see at [226] per Basten JA, Campbell JA agreeing).
Delta’s complaint that the AEMC had not observed the Hardiman principle in the present proceeding focused on two particular aspects of its conduct. First, its conduct preceding the trial hearing when it successfully sought to set aside Notices to Produce issued by Delta and, secondly, the cross-examination of Delta’s only witness, Mr Aulbury.
As to the first of those matters, in her reasons for decision in Sunset Power International Pty Ltd v Australian Energy Market Commission (Supreme Court (NSW), Registrar Hedge, 5 June 2025, unrep), Registrar Hedge noted at [25] that, in a judicial review challenge, the usual course is to place before the Court material which was before the decision-maker. She noted that the AEMC had produced to Delta the documents that were considered by the two Commissioners responsible for the Final Report regarding Delta’s claim for compensation (with redactions for privilege and irrelevant content). Delta’s demand that it be provided with documents between the AEMC and Synergies Economic Consulting was regarded as being too broad and were in effect an attempt to obtain discovery for which leave had neither been sought nor granted. Registrar Hedge held that Delta was not entitled to be provided with other Synergies’ documents provided to AEMC staff but which were not included in the material before the two Commissioners. Accordingly, the AEMC succeeded in having three Notices to Produce issued by Delta set aside and was awarded costs of its amended notice of motion.
The AEMC’s conduct does not offend the Hardiman principle. In the absence of an active contradictor, the impartiality expected of a body such as the AEMC is generally not tainted by taking active steps to limit the production of documents to those which are properly admissible in a judicial review proceeding.
As to the second matter, I consider that the AEMC’s cross-examination of Mr Aulbury was appropriate in the particular circumstances. His evidence was relied upon by Delta in support of its complaint of procedural unfairness. In its very terms, that complaint relates to the AEMC’s procedures and its duty to ensure that Delta was informed of the primary issues affecting its assessment of the compensation claim.
An important part of Delta’s procedural unfairness case was based on Mr Aulbury’s evidence as to what he was told at several meetings with AEMC representatives and, in particular, whether he was told that the AEMC was interested in Delta’s attempts to restore its coal stockpiles post the APP itself and extending into July. Having regard to Delta’s claims of procedural unfairness and the controversy relating to their factual underpinning, it was appropriate for the AEMC to provide a different version of events in the form of the affidavit affirmed by Mr Butterworth and to cross-examine Mr Aulbury in order to test the strength of his evidence as to what was said at the various meetings. It is also notable that Mr Butterworth’s affidavit was provided following the making of orders by consent which contemplated the provision of such evidence by the AEMC.
I consider that the following additional matters indicate that the AEMC performed a measured and appropriate role as contradictor:

This is not an inter partes dispute.

Delta’s claim for opportunity costs compensation would be recovered from, and paid by, other market participants in the NEM. It was desirable, therefore, that the Court have the assistance of a contradictor to optimise the prospect of a just outcome.

There was no other obvious or proper contradictor and the AEMC was the only party joined by Delta as a defendant in the proceedings.

The dispute essentially concerns a private claim by Delta for payment of market compensation and does not appear to have a sufficient element of public interest to warrant intervention by the Attorney-General.

I do not consider that the AEMC has engaged in inappropriate “curial tactics” of the kind referred to in Macedon Ranges Shire Council v Romsey Hotel Pty Ltd (2008) 19 VR 422; [2008] VSCA 45 at [33]. I have already explained why the AEMC’s challenge to the three Notices to Produce was not inappropriate. I also accept that it adopted a reasonable approach when responding to Delta’s notice to admit facts dated 1 August 2025.

Finally, I accept the AEMC’s submissions that it is relevant to take into account the belated timing of Delta’s Hardiman objection. The objection was not raised until Delta filed its submissions in reply dated 19 August 2025 and against the background of it having consented to the AEMC filing affidavit evidence.

Conclusion

For all these reasons, the amended summons will be dismissed, with costs.

**********

Decision last updated: 23 September 2025

Medium Neutral Citation:	Delta Power & Energy (Vales Point) Pty Ltd ACN 162 696 335 v Australian Energy Market Commission [2025] NSWSC 1087
Hearing dates:	02 to 03 September 2025
Date of orders:	23 September 2025
Decision date:	23 September 2025
Jurisdiction:	Common Law
Before:	Griffiths AJ
Decision:	(1) The amended summons filed 19 August 2024 is dismissed. (2) The plaintiff to pay the defendant’s costs.
Catchwords:	ADMINISTRATIVE LAW — review of decision of Australian Energy Market Commission — status of Compensation Guidelines — whether Commission failed properly to apply Compensation Guidelines — whether plaintiff denied procedural fairness — whether Commission acted in irrational, illogical or unreasonable manner — whether Commission contravened principle in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; [1980] HCA 13
Legislation Cited:	Interpretation Act 1987 (NSW), s 3 National Electricity (New South Wales) Act 1997 (NSW), ss 6, 8 National Electricity (NSW) Law (NSW), ss 2, 3, 70, 90, Sch 2, cll 1, 10, 41, 42 National Electricity Rules, cl 3.14.6 National Electricity (South Australia) Act 1996 (SA), s 6 Workplace Injury Management Act 1998 (NSW), s 376
Cases Cited:	Allianz Australia Insurance Ltd v Cervantes [2012] NSWCA 244; 61 MVR 443 Australian Energy Regulator v Snowy Hydro Ltd (No 2) [2015] FCA 58 Bankstown City Radio Co-Operative Ltd v Australian Communications and Media Authority [2007] FCA 2053 Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576; [1994] FCA 1074 Darley v City of Parramatta Council [2025] NSWSC 990 Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 197 ALR 389 Fagan v Crimes Compensation Tribunal (1982) 150 CLR 666; [1982] HCA 49 Granville Hotel Operations Pty Ltd v Independent Liquor and Gaming Authority [2023] NSWCA 248; 413 ALR 499 Heise v Employer Mutual Limited [2022] NSWCA 283 Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12 Laming v Electoral Commissioner of Australian Electoral Commission [2025] HCA 31; 99 ALJR 1260 Macedon Ranges Shire Council v Romsey Hotel Pty Ltd (2008) 19 VR 422; [2008] VSCA 45 McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504; [2008] NSWCA 209 MetLife Insurance Ltd v Australian Financial Complaints Authority (No 3) [2022] FCA 849; 411 ALR 163 Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16 R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; [1980] HCA 13 Re minister for Immigration and Multicultural Affairs; Ex Parte Miah (2001) 206 CLR 57; [2001] HCA 22 Sunset Power International Pty Ltd v Australian Energy Market Commission (Supreme Court (NSW), Registrar Hedge, 5 June 2025, unrep)
Texts Cited:	Australian Energy Market Commission, Compensation Guidelines, Final Guidelines, 21 October 2022 M Aronson, M Groves and G Weeks, Judicial Review of Administrative Action and Government Liability (7th ed, 2022, Thomson Reuters) P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters)
Category:	Principal judgment
Parties:	Delta Power & Energy (Vales Point) Pty Ltd ACN 162 696 335 (Plaintiff) Australian Energy Market Commission (Defendant)
Representation:	Counsel: NL Sharp SC and BD Kaplan (Plaintiff) RCA Higgins SC and PJ Strickland (Defendant) Solicitors: Bartier Perry Lawyers (Plaintiff) Johnson Winter & Slattery (Defendant)
File Number(s):	2024/00302863
Publication restriction:	Nil