As the nation battles to contain the outbreak of COVID-19, ensuring that 'the lights stay on' is of heightened importance. However, energy companies are facing potentially conflicting requirements, as they transition to a mobile or remote workforce in accordance with government directives and medical advice, but remain bound by pre-existing system security regulations that require services to be resourced onsite.

On 20 March, the COAG Energy Council (comprising federal, state and territory energy ministers) agreed to convene an 'Energy Coordination Mechanism' to facilitate regular communications between energy sector business leaders and state and federal governments to combat COVID-19 related issues affecting the energy sector.

The deliberations of that body are not yet publicly known. However, it seems to be the right forum to provide guidance to the sector on how to prioritise potentially conflicting regulatory and safety requirements relating to the operation and manning of energy facilities. 

Competing regulatory priorities

The energy sector faces existing regulatory requirements in relation to the resourcing and staffing of energy assets. Directives that have been implemented under the health, emergency and public safety legislation to curb the spread of COVID-19 may directly conflict with the staffing and communication requirements in the National Electricity Rules.

For example, such obligations in the National Electricity Rules include:

• A 'scheduled generator' (i.e. most dispatchable generation above 30MW) or 'semi-scheduled generator' (i.e. most intermittent generation above 30MW) must ensure that appropriate personnel are available at all times to receive and immediately act upon dispatch instructions issued by the market operator (AEMO) to the relevant generator. Similar requirements apply to generators who are registered to participate in the ancillary service market (the market to provide system security services to the market operator).
• All generators, network service providers and market customers/retailers who are registered under the National Electricity Rules (NEM Participants) must advise AEMO of the name and contract details of the person within their organisation who is responsible for undertaking the operation of their electricity equipment. This is so that AEMO can provide operational communications to the NEM Participant in relation those facilities. Most, if not all, sector participants would have done this, but in the current climate it is worth double-checking to ensure that the contract details provided to AEMO are up to date.
• For each nominated person, NEM Participants must provide two independent telephone communication systems that are fully compatible with AEMO's equipment at the system control centre. Any faults affecting that telephone communication systems must be investigated within four hours of being identified, or as otherwise agreed with AEMO. Any repairs must be undertaken or commissioned promptly.

A breach of these provisions may give rise to a maximum civil penalty for a corporation of up to $100,000 plus $10,000 for each day that the failure continues. Alternatively, the Australian Energy Regulator can issue an infringement notice imposing a fine of $20,000 for an alleged breach of these provisions. Penalties can also be imposed on individuals, but this is only likely to be the case for those who are knowingly (or deliberately) involved in a breach by a NEM Participant.

Adhere to environmental obligations

Energy companies need to continue to adhere to their environmental obligations. COVID-19 measures may impact the supply chain, the workforce, or the availability of expert contractors, making compliance with requirements and timeframes problematic. In this instance, power generators, having done what they can to comply, should consider the avenues available to mitigate the impact, communicate appropriately with the environmental regulator, and ultimately seek to bring themselves into compliance. See COVID-19 and its effect on Environmental Authority holders in Queensland.

Consider site work health and safety, and industrial relations

Site work health and safety, and industrial relations requirements also need to be taken into account. NEM Participants have a duty to ensure the health and safety of workers and other persons while at work, so far as reasonably practicable.

COVID-19 is a workplace hazard and can create a risk – to workers, contractors, customers and members of the public – of contracting the virus arising out of a NEM Participant's usual operations. In addition, the current social and political climate surrounding the response to the pandemic creates a real risk to workers' psychological health.

The primary duty on a person conducting a business or undertaking (PCBU) or employers, is to take all reasonable steps to eliminate, and if not practicable, then minimise risks to health and safety. In circumstances where NEM Participants are significantly restricted as to how their operations are run at the moment (including significant strain on resources), the response to COVID-19 must be directed at risk minimisation strategies. Risk frameworks must be continually updated to take into account changes to the availability and suitability of ways to manage risk in the COVID-19 environment.

A contravention of any WHS obligation can lead to criminal sanctions for both the NEM Participant as a body corporate, as well as individuals within the organisation. However, the Statement of Regulatory Intent published by Safe Work Australia has reassured businesses that any regulatory action 'will be proportionate with a focus on what is reasonably practicable in these exceptional circumstances'.

Complex industrial issues during COVID-19

Complex industrial issues may also arise in relation to employment arrangements during this time, including issues in relation to reductions in salary and options for standing down employees who cannot be usefully engaged. The accessing of personal/carer's leave, long service leave, and annual leave accruals for employees in self isolation or with care of children while schools are not open, also arises. For highly unionised sites, consultation and engagement with the union should be considered in relation to any decisions regarding entitlements. More detail on these issues can be found in COVID-19: Managing the effects on your workplace. Your top five questions answered.

Managing the tension

Unless and until further guidance is provided to the sector via the Energy Coordination Mechanism, it is recommended that sector participants be transparent with regulators, AEMO, and the unions, on the approach and decisions made in circumstances where it is not possible to meet all regulatory, safety and industrial relations considerations at the same time. Organisations that take this approach are going to be best placed to avoid adverse regulatory or union sanctions.

Contact us to find out more about how you can navigate these challenges.