By Derek Rose in Sydney

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.

AGL said on Friday the breach was inadvertent, and it had self-reported the matter to the Australian Energy Regulator following a query from the Australian Energy Market Operator (AEMO).

The Australian Energy Regulator said AGL had co-operated with its investigation but it took the matter seriously.

“Generators receive payment from AEMO to be on standby … we expect them to ensure that they provide those services when called upon,” said Australian Energy Regulator board member Justin Oliver.

The parties will make a joint submission to the Federal Court to decide upon an appropriate penalty.

An AGL spokesperson said an incorrect setting on the “frequency influence switch” meant that during times the power stations had been enabled to provide contingency power, they couldn’t.

“This was inadvertent,” the spokesperson said.

“No profit was derived from this, and the funds initially received for the provision of the services were returned to AEMO following discovery of the issue.”

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.