Santos slapped with $2.75M fine by energy regulator

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

The Federal Court has ordered Santos to pay a penalty of $2,750,000 for breaches of important record keeping obligations in the National Gas Rules relating to the Day Ahead Auction for gas pipeline capacity.

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In proceedings brought by the Australian Energy Regulator (AER), Santos admitted that between March 2019 and June 2021, it contravened rule 666(1) of the National Gas Rules on 4,701 occasions by failing to keep the required records of its material renominations for the Day Ahead Auction across six different gas auction facilities.

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

In her judgment, Justice Neskovcin said, “[T]he failure to comply with r 666(1), which has a substantive role in protecting the proper functioning of the capacity auction, heightens the need for deterrence in respect of this conduct.”

Separately, Her Honour stated that the penalty imposed “should operate as a deterrent against such conduct being engaged in by Santos or other participants in the gas markets in the future.”

AER chair Clare Savage said the Court’s decision reinforced the importance of accurate record-keeping for gas market participants.

“The Day Ahead Auction is vital to moving gas between markets on the east coast and relies on companies both keeping accurate records and providing pipeline operators, and ultimately AEMO with the information it needs to operate the Auction.

“It is crucial that trust and confidence in the Day Ahead Auction is maintained for it to continue to deliver benefits to consumers.”

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In addition to the penalty, the Court ordered the appointment of an independent reviewer to review Santos’ processes to ensure compliance with rule 666(1) and provide a report containing recommendations for any action to be taken by Santos.

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