Transgrid faces fine of up to $90 million for Broken Hill power failure
Power company Transgrid has been accused of being “in breach of their contract” to supply power to Broken Hill residents — and could cop a multi million-dollar fine for it.
NSW
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Transgrid faces a fine of up to $90 million for failing Broken Hill, it can be revealed.
The city of 17,000 and surrounding towns in the west of the state were plunged into darkness after severe storms knocked out the electricity transmission line on October 17 and Transgrid’s back-up system didn’t do its job.
Broken Hill’s mayor Tom Kennedy told this masthead that during a meeting this week, the Australian Energy Regulator disclosed it had the capacity to litigate to seek a fine of up to 10 per cent of Transgrid’s annual revenue for breaching its legal obligations to the city.
The most recent financial accounts for Transgrid, which cover 2022-23, show annual revenue of $910m.
On Tuesday, the AER confirmed its representative had made the comment during the meeting. It has the power to go to court to seek such a penalty under section 2AB of the National Electricity Law.
Mr Kennedy said he was in no doubt Transgrid had failed to meet its contractual obligations to supply power to Broken Hill.
He said one of the two fossil-fuel generators meant to provide backup had been offline for a lengthy period.
And the sole functioning generator hadn’t been able to do the job.
Mr Kennedy said that by law, Transgrid was supposed to inform an emergency management committee whenever “redundancy” supply was known to be unavailable. But Transgrid didn’t say anything, according to the mayor.
“In my view they are in breach of their contract,” Mr Kennedy said. “They could be potentially fined up to $90m.”
However, any penalty would not be returned to the community, sources confirmed.
Transgrid, whose owners include the Abu Dhabi sovereign wealth fund, said it is “fully cooperating with the investigations led by IPART (the Independent Pricing and Regulatory Tribunal) and the Australian Energy Regulator. These investigations should be allowed to take their course, and it would be inappropriate to comment further at this time.”
Mr Kennedy said there had been constant power since Sunday, when AGL’s battery began supporting the city for several hours at a time.
However, he questioned why the battery hadn’t been available immediately.
According to a document published by AGL last year, the battery’s ability to provide back-up power to Broken Hill was deliberately disabled – under guidance from Transgrid.
AGL declined to comment.
Mr Kennedy said that had the AGL battery been online, rolling blackouts that left thousands of homes without power during the night could have been avoided.
The battery is being charged from sources including excess rooftop solar.
Since the transmission line went down, on sunny days Essential Energy has been asking Broken Hill homeowners to switch off rooftop solar because local panels were producing too much power, which risked tripping the generator and causing it to shut off.
A local mine operator has also been running equipment it wasn’t actually using just to soak up the excess energy from rooftop solar.
The mayor said this was costing the operator hundreds of thousands of dollars a day.
The mine operator was contacted for comment.
The transmission line is expected to be back in operation from November 6.
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