February 27, 2025
The long-running fallout from the explosion at Callide C in May 2021 has continued this month, with the Federal Court ordering a fine of $ 9 million for breaches of the National Electricity Rules.
The Australian Energy Regulator brought the proceedings against Callide Power Trading Pty Ltd, an entity that is owned in equal shares by Intergen and the Queensland Government’s CS Energy. The company admitted in court that it had failed to ensure the Callide C4 generating unit met performance standards, and had failed to plan, design, and operate facilities in compliance with performance standards, in breach of the National Electricity Rules.
The fine of $9 million, just shy of the maximum $10 million penalty, is the highest ever imposed for a breach of performance standards under the Rules. While Callide Power Trading worked cooperatively with the Regulator to resolve the matter and agree to the fines, the judgement by Justice Derrington was emphatic:
‘[The contraventions] arose as a result of a substantive failure of major infrastructure to operate with the Callide C4 unit. The consequences included the destruction of valuable equipment, the potential loss of life, loss of power to the grid, and significant, long-term and wide-ranging impacts on the National Electricity Market (NEM).’
The explosion put the C4 unit out of action for more than three years, only recently restarting in September 2024.
MEU members had been raising the alarm about poor maintenance and neglect at Callide for years, concerned that the company was not investing in the safe operation of the plant ahead of its impending closure in 2028. These concerns were vindicated by long-delayed reports that finally lifted the lid on the situation at the site.
Last year’s Brady Report highlighted that the ‘key organisational factor’ causing the incident was the lack of implementation of effective process safety practices – the report said the company failed to value process safety practices, placing them in tension with cost-cutting.
Queensland District President Mitch Hughes welcomed news of the fine, saying: “It is deeply disappointing that a lack of maintenance and oversight led to this preventable disaster which risked the lives of workers. We hope that today’s judgement sends a strong message to all companies in the industry. ”
It is important for the Regulator to continue holding companies to account as the energy environment becomes increasingly challenging. There is no place for cost-cutting or skimping on maintenance in environments where the consequences can be catastrophic and place lives at risk.