Snowy Hydro ordered to pay $400K in penalties

The Federal Court of Australia has ordered by consent that Snowy Hydro pay total penalties of $400,000 for failing to comply with the Australian Energy Market Operator (AEMO) dispatch instructions in contravention of the National Electricity Rules, in proceedings brought by the Australian Energy Regulator. These are the first court-ordered penalties for a breach of the National Electricity Rules.

The Court declared by consent that Snowy Hydro had breached the National Electricity Rules on nine occasions in 2012 and 2013 by failing to comply with dispatch instructions issued by AEMO. On each occasion, Snowy Hydro generated more power than the dispatch instruction required.

“This is an important outcome for the national electricity market. Failures to follow dispatch instructions will usually affect other market participants and can have serious implications for security of the power system,” said AER Chair Paula Conboy.

“This decision also highlights the AER’s ongoing focus on compliance with dispatch instructions and the AER’s determination to take appropriate enforcement action to deal with non-compliance. The message to market players is clear - the obligation to follow dispatch instructions is a critical provision of the National Electricity Rules and the AER takes non-compliance very seriously,” Conboy said.

The Court also ordered by consent that Snowy Hydro appoint an independent compliance expert to review the accuracy of Snowy Hydro’s internal documents relating to the compliance with dispatch instructions. Snowy Hydro was also ordered by consent to make a contribution to the AER’s costs.

In conjunction with these orders, Snowy Hydro also provided an enforceable undertaking to the AER regarding the operation of generators under certain conditions. The undertaking is the first enforceable undertaking accepted by the AER under the provisions of the National Electricity Law.