Callide Power Trading, the trading arm of Callide Power Station, has been ordered by the Federal Court to pay a penalty of $9 million for breaches of the National Electricity Rules (NER).
In proceedings brought by the Australian Energy Regulator (AER), Callide Power Trading admitted that on 25 May 2021 it failed to ensure the Callide C4 generating unit met or exceeded its performance standards in breach of rule 4.15(a)(1) of the NER. It also admitted that it failed to plan and design its facilities and ensure they were operated to comply with its performance standards, in breach of clause 5.2.5(a)(1) of the NER.
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This event caused the catastrophic failure and destruction of the Callide C4 generating unit, and was followed by significant, long-term and wide-ranging impacts on the National Energy Market and on energy consumers in Queensland and northern New South Wales. The plant damage resulted in Callide C4 being out of service for nearly two years. It remained offline until 30 August 2024 due to unrelated incidents.
With a maximum penalty of $10 million, the $9 million fine is the highest ever imposed for a failure to comply with performance standards under the NER.
In his judgment, Justice Derrington said, “Though the contraventions appear, at first blush, to be minor technical breaches, they were, in fact, serious. In broad terms, they arose as a result of a substantive failure of major infrastructure to operate with the Callide C4 unit. The consequences included the destruction of valuable equipment, the potential loss of life, loss of power to the grid, and significant, long-term and wide-ranging impacts on the National Electricity Market (NEM).”
AER chair Clare Savage said the Court’s decision reflected the seriousness of the breach by Callide Power Trading.
“In the immediate aftermath of the event, the energy supply for almost half a million customers was disrupted and the spot price for electricity in Queensland and New South Wales significantly increased. The generator itself was offline for nearly two years.
“This significant penalty reinforces the importance of generators and Registered Participants, who are responsible for generators, complying with performance standards to ensure the security and safety of the power system.
“Those responsible for generators must have appropriate systems, processes and protocols in place to ensure they and their operators can comply with their regulatory obligations,” Savage said.
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Justice Derrington said: “… The penalty of $9,000,000… should be understood by others in the industry as reflecting the seriousness with which the Court regards the two contraventions admitted by CPT.”
In addition to ordering Callide Power Trading to pay the penalty, the Court ordered it to pay $150,000 towards the AER’s legal costs.
