AER takes Santos to court for alleged breaches of gas rules

Santos plant in Cooper Basin at sunset (AER)
Santos gas plant in the Cooper Basin

The Australian Energy Regulator (AER) has instituted proceedings in the Federal Court against Santos Direct (Santos) for alleged breaches of important record keeping obligations in the National Gas Rules relating to the Day Ahead Auction for gas pipeline capacity.

The Day Ahead Auction commenced in 2019 and was designed to improve competition in the gas market by providing access to contracted but unused capacity on gas pipelines.

Related article: CS Energy fined over alleged electricity law breach

The AER alleges that on 4,701 occasions between March 2019 and June 2021, Santos failed to keep the required records of its material renominations for the Day Ahead Auction across six different auction facilities, contravening Rule 666(1) of the National Gas Rules.

AER Board Member Justin Oliver noted that these record keeping obligations are critical for transparency and reinforced calls for gas market participants to have the necessary checks and balances in place to maintain the Day Ahead Auction.

“The Day Ahead Auction is vital to moving gas between markets on the east coast and relies on market participants providing accurate information to AEMO to operate efficiently.

“This includes maintaining contemporaneous records to enhance the AER’s ability to monitor, investigate and ensure compliance with the National Gas Rules in the wholesale gas market,” Oliver said.

Santos responded in a statement saying, “Santos always acted and will continue to act in good faith in respect of nomination and renomination behaviour in the domestic gas market, and there are no allegations otherwise.

“The National Gas Rules were introduced on 1 March 2019. The process to update compliance systems is complex and in recognition of this the AER issued a discussion paper on guidance for record-keeping under the rules in April 2023. Despite recognising this complexity, the AER instituted a policy of strict compliance from day one (1 March 2019). This is contrary to the approach taken for other gas market regulations.

Related article: Santos says Legendre methane leaks impossible to fix

“Santos is disappointed proceedings have been instituted. The conduct alleged arises from record keeping of nominations and renominations over a period of around 27 months.
The number of occasions alleged by the AER is of limited relevance to the outcome of these proceedings. Factors which will be relevant include the fact that there has been no impact on pricing or supply and the steps Santos has taken to put in place robust and best practice compliance systems that have been operating effectively since June 2021.

“Santos continuously reviews and improves our business systems and processes to comply with the National Gas Rules and other regulations that apply to our domestic gas activities, and we are confident we have a robust and effective compliance management program in place.”

Previous articleAware Super to invest $2 billion in renewables
Next articleMassive synchronous condensers arrive for EnergyConnect