The Australian Energy Regulator (AER) on Thursday commenced Federal Court proceedings against the fossil fuel giant, alleging it failed to keep records of material renominations at day-ahead auctions on 4701 occasions between March 2019 and June 2021.
Day-ahead auctions were implemented in March 2019 and require companies to nominate the amount of gas they expect to move from one location to another the next day.
The auctions are designed to improve competition in the market by freeing up access to unused capacity on gas pipelines.
Abiding by record-keeping obligations is critical for maintaining transparency in the gas market, AER board member Justin Oliver said.
“The Day-Ahead Auction is vital to moving gas between markets on the east coast and relies on market participants providing accurate information to (electricity market operator) AEMO to operate efficiently,” Oliver said.
“This includes maintaining contemporaneous records to enhance the AER’s ability to monitor, investigate and ensure compliance with the National Gas Rules in the wholesale gas market.”
The AER is seeking pecuniary penalties, declarations, an order requiring the implementation of a compliance program, and costs.
The Adelaide-based company, a perennial number 1 on InDaily’s South Australian Business Index, said it was “disappointed” the proceedings had been brought against it and maintained the alleged breaches had no impact on supply or price in the east coast domestic gas market.
“Santos always acted and will continue to act in good faith in respect of nomination and renomination behaviour in the domestic gas market, and there are no allegations otherwise,” the company said in a statement.
Santos said the process to update systems to comply with the record-keeping obligations was complex.
“Despite recognising this complexity, the AER instituted a policy of strict compliance from day one,” Santos said.
“This is contrary to the approach taken for other gas market regulations.”
The AER is seeking fines, declarations, the implementation of a compliance program and costs from Santos.
The proceedings follow separate action the AER has taken against EnergyAustralia, Incitec Pivot and Jemena for alleged breaches of the National Gas Rules.
