Australia’s largest electricity generator is facing penalties for failing to deliver standby power when it was paid to do so, potentially risking the security of the power grid.

The Australian Energy Regulator said on Friday that AGL had admitted the breaches of the National Electricity Rules and co-operated with its investigation.

It said the parties would be making a joint submission to Federal Court for appropriate relief.

The Australian Energy Market Operator (AEMO) had paid two AGL subsidiaries, AGL Macquarie and AGL Loy Yang Marketing, to be on standby to stabilise the network during power disturbances, the regulator said.

But the subsidiaries didn’t follow instructions or ensure their generating units were able to comply with service offers, it added.

The breaches were committed by AGL’s Bayswater coal-fired power station in Muswellbrook, NSW, between September 2018 and August 2020, and by Loy Yang A station near Traralgon, Victoria, between December 2019 and May 2020.

Australian Energy Regulator board member Justin Oliver said electricity generators needed to do what they said they would if the lights were to be kept on during the transition to variable, renewable energy sources.

“Generators receive payment from AEMO to be on standby … we expect them to ensure that they provide those services when called upon,” he said.

AGL has been approached for comment.

– AAP