The power trader at the Callide coal-fired power station has been fined $9 million over the “catastrophic failure” of protection systems in 2021, which led to power outages for half a million Queenslanders and destabilised the state’s power grid.
Callide Power Trading (CPT), the registered market participant for the Callide C Power Station under the National Electricity Rules (NER), admitted contravening the rules at the Mount Murchison station on 25 May that year, when a sequence of events related to battery replacement led to the destruction of the station’s generating unit.
In the Federal Court judgment published on Tuesday, Justice Derrington also made orders that CPT take remedial and preventative actions, as sought by the Australian Energy Regulator (AER).
“Though the contraventions appear, at first blush, to be minor technical breaches, they were, in fact, very serious,” they said.
“In broad terms, they arose as a result of a substantive failure of major infrastructure to operate within the Callide C4 unit.
“The consequences included the destruction of valuable equipment, the potential for loss of life, loss of power to the grid, and significant, long-term and wide-ranging impacts on the National Electricity Market (the NEM).”
The incident led to the station being out of service for about two years.
An investigation report stated that two minutes after staff were evacuated due to a fire, a two-tonne piece of rotor shaft was thrown five metres across the floor of the turbine hall, and a 300kg piece of equipment was thrown 20 metres in the air, through the roof of the hall.
About 488,501 customers were disconnected, and a Lack of Reserve Power declaration was made, allowing the NEM operator to contract for emergency reserves. The spot price for electricity multiplied by 35.
Justice Derrington said the contraventions should be considered “very serious” for several reasons, including first, that the performance standards “are directed to matters which may impact fundamentally on the stability and security of the power system”.
“Secondly, there is the potential for catastrophic consequences arising from contraventions of the relevant provisions. Indeed, the explosions and fire which occurred in the Callide C turbine hall caused extensive damage and could have resulted in significant personal injuries,” they said.
The seriousness of the contraventions was heightened by the fact there should have been awareness of the risks associated with the battery changeover, and the significant impact of the event not only on the operation of the station but on the NEM, they said.
A fine toward the upper end of the range was appropriate, they said.
“The regulations were intended to ensure the safety and operational continuity of power plants which are essential for societal and economic operations, and the importance of adherence to the requirements of the regulations is undoubtedly reflected in the severity of the penalty provided for their contravention,” Justice Derrington said.
“Such matters ought to be kept at the forefront when approaching the imposition of penalty with the aim of deterring any further contravention by CPT or another participant in the industry.
“The contraventions were caused by a failure to have proper regard to the Callide Standards though, it can be accepted to some degree, they were not deliberate or engaged in for the purposes of achieving some commercial advantage.
“However, that is not to say that the contraventions were not avoidable. They certainly were. That also is important to keep in mind when considering the deterrent effect of the penalty.”
Justice Derrington said the joint venture owners, or their supporters, “have enormous amounts of capital such that even the maximum (fine) will not be sufficient to have a major impact”.
“Still, the amount suggested by the parties is neither trivial nor inconsequential,” they said.
“It should be understood by others in the industry as reflecting the seriousness with which the court regards the two contraventions admitted by CPT.”
CPT was also ordered to pay the AER’s court costs of $150,000.
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