Penalty for CS Energy over inability to supply FCAS

FCAS, Kogan Creek Power Station
CS Energy's Kogan Creek Power Station

CS Energy has paid $200,000 in penalties for allegedly failing to ensure it could provide frequency control ancillary services (FCAS) it had offered to the market.

FCAS helps manage the stability of the power system and therefore prevent disruption of electricity supply to customers, in this case, Queensland customers.

CS Energy has also repaid $1.13 million to the Australian Energy Market Operator (AEMO) it received as payment to provide the services. The Australian Energy Regulator (AER) requested CS Energy to make this repayment because it was not capable of complying with the FCAS offers it submitted to AEMO.

AER Chair Clare Savage said it was a basic principle that businesses should not keep payment for services they are unable to deliver in line with their offers.

“Inaccurate information about FCAS offers undermines AEMO’s ability to manage frequency deviations that is critical to supporting the integrity of the power grid,” Ms Savage said.

“CS Energy and other FCAS providers must have robust systems and processes in place to ensure it is at all times able to comply with its FCAS offers and that customers pay only for services that are provided.

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“The AER will continue to monitor FCAS providers and take action against businesses who do not comply with these crucial obligations.”

CS Energy allegedly failed to ensure it was at all times able to comply with its contingency FCAS offers at certain units at Callide B power station on August 25, 2018 and Gladstone power station in November 2019 and January 2020. 

CS Energy was not capable of complying with its offers due to settings at certain units at the power station, says the AER.

CS Energy has made changes to its processes and systems so that it does not make offers for contingency FCAS at Callide B and Gladstone power stations when these settings are in place.

CS Energy says it self-reported the matter to the regulator, and has been working cooperatively to improve its compliance.

“CS Energy self-reported to the AER instances where it had offered contingency FCAS to the market that were not fully delivered in accordance with the market operator’s technical specifications,” the company said in a statement.

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“The self-reporting related to instances on August 25, 2018 (from Callide Power Station Unit B2) and on several occasions between November 2019 and January 2020 (from Gladstone Power Station Unit 1).

CS Energy CEO Andrew Bills said CS Energy worked hard to be a responsible and compliant market participant, and was extremely disappointed that the incidents relating to the Callide and Gladstone power stations had occurred.

“Consistent with our values, CS Energy self-reported these matters to the AER and has co-operated with the AER in a transparent manner throughout its investigations,” Mr Bills said.

“We believe that market regulation is working as it is designed and that CS Energy has acted safely and with integrity for the benefit of the power system as a whole.”

Mr Bills said the FCAS non-compliances occurred due to a combination of systems and human error, and did not impact system stability.

“CS Energy has since improved its systems, processes and training in response to these events and has implemented remedial actions to minimise the risk of these or other issues arising again.”