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  • Unreported Judgment

GPS Power Pty Ltd v CS Energy Ltd

 

[2018] QSC 294

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

GPS Power Pty Ltd & Ors v CS Energy Ltd [2018] QSC 294

PARTIES:

In proceeding SC 13392/17:

GPS POWER PTY LTD ACN 009 103 422
(first applicant)

GPS ENERGY PTY LTD ACN 063 207 456
(second applicant)

SUNSHINE STATE POWER BV ARBN 062 295 425
(third applicant)

SUNSHINE STATE POWER (NO 2) BV
ARBN 063 382 829
(fourth applicant)

SOUTHERN CROSS GPS PTY LTD ACN 063 779 028
(fifth applicant)

RYOWA II GPS PTY LTD ACN 063 780 058
(sixth applicant)

YKK GPS (QUEENSLAND) PTY LTD ACN 062 905 275
(seventh applicant)

v

CS ENERGY LTD ACN 078 848 745
(respondent)

In proceeding SC 761/18:

CS ENERGY LTD ACN 078 848 745
(applicant)

v

GPS POWER PTY LTD ACN 009 103 422
(first respondent)

GPS ENERGY PTY LTD ACN 063 207 456
(second respondent)

SUNSHINE STATE POWER BV ARBN 062 295 425
(third respondent)

SUNSHINE STATE POWER (NO 2) BV
ARBN 063 382 829
(fourth respondent)

SOUTHERN CROSS GPS PTY LTD ACN 063 779 028
(fifth respondent)

RYOWA II GPS PTY LTD ACN 063 780 058
(sixth respondent)

YKK GPS (QUEENSLAND) PTY LTD ACN 062 905 275
(seventh respondent)

FILE NOS:

SC 13392 of 2017

SC 761 of 2018

DIVISION:

Trial Division

PROCEEDING:

Originating Applications

DELIVERED ON:

10 December 2018

DELIVERED AT:

Brisbane

HEARING DATE:

12 and 13 March and 10 April 2018

JUDGE:

Jackson J

ORDER:

Direct that by 24 December 2018 the parties provide written submissions of no more than five pages on the form of the relief to be granted in accordance with these reasons.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where Interconnection and Power Pooling Agreement entered into – where contract provides for forecast of dispatch of electricity – where contract provides for upper and lower estimates in respect of some parts of forecast but not all parts – where obligations in respect of procuring coal and maintaining coal stockpile linked to forecast – whether upper and lower estimates relevant to coal procurement and stockpiling obligations – where contract provides for general standard for performance of obligations called “Good Operating Practice” – whether standard of performance relevant to certain obligations – where contract provides for matters to be taken into account in certain processes – whether and to what extent those or other matters may be taken into account – whether declarations have utility and should be made

Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99, cited

Global Advanced Metals Pty Ltd v Metallurg Inc [2017] WASCA 188, cited

Hume Steel Ltd v Attorney-General for Victoria (1927) 39 CLR 455, cited

Lewis Construction (Engineering) Pty Ltd v Southern Electric Authority of Queensland (1976) 11 ALR 305, cited

PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240, cited

COUNSEL:

S Couper QC, with D Chesterman and A Psaltis, for CS Energy Ltd

P Franco QC, with H Clift, for GPS Power Pty Ltd & Ors

SOLICITORS:

Clayton Utz for CS Energy Ltd

MinterEllison for GPS Power Pty Ltd & Ors

  1. [1]
    JACKSON J: A number of separate questions are set down for hearing upon cross applications for declaratory relief as to the proper construction of a contract between the parties. Some of the questions concern their rights and obligations about the maintenance of a coal stockpile.
  2. [2]
    The relevant contractual provisions are both long and complex, and form only part of a series of relationships governed by a suite of contracts to which the proponents are parties, with others. To understand them, it is necessary to begin with the genesis of and the subject of the transactions that formed the basis of their relationships.

Gladstone Power Station

  1. [3]
    In 1976, Queensland Electricity Commission (“QEC”) commissioned the Gladstone Power Station (“GPS”). GPS is a coal fired power station with a nominal capacity for electrical power generation of 1680 megawatts (“MW”). It comprises six units, each of 280 MW capacity, as well as a turbine that is not relevant to the questions to be decided.
  2. [4]
    GPS is the largest power station in Queensland. In 1982, it became the source of power for the then newly constructed Boyne aluminium smelter (“Smelter”).
  3. [5]
    A smelter extracts the metal aluminium (Al) from aluminium oxide (Al2O3), known as alumina.[1] Electricity is a key input. Electrolysis is used to release oxygen from alumina to produce the pure metal. A smelter is usually located near a large low cost producer of electricity. In this case that was GPS. The Smelter is the State’s largest individual user of electricity.
  4. [6]
    However, the Smelter did not require the whole of GPS’ capacity to generate electrical power. GPS was connected to the State electricity grid. The Smelter took its electrical energy from the grid, supported as to the required energy by GPS’ generation. The excess capacity generated by GPS was available to QEC for electricity supply elsewhere.
  5. [7]
    The location of GPS is in the region of some of the coal mines of the Bowen Basin that were developed in central Queensland from about the mid-1960s onwards. The coal mines were developed in conjunction with the expansion of the rail network of Queensland Rail to carry coal from the newly developed mines to market. GPS was located conveniently to what have become known as the Blackwater Coal Rail System and the Moura Coal Rail System that lead to Gladstone.
  6. [8]
    These circumstances explain a difference between GPS and some other large coal fired power stations in Queensland. In other cases, for example Tarong Power Station, the power station is built adjacent to the intended source of coal, so as to minimise the cost of transport and the need to source coal for the power station from elsewhere.
  7. [9]
    In a coal fired power station, heat energy produced by burning coal in the furnaces indirectly generates electrical energy. As a large power station, GPS is a major consumer of coal and has major facilities adapted to receiving, unloading and storing coal for use in the power station.
  8. [10]
    Coal supplied to GPS is delivered by rail. Historically, the mines that have been the source of coal have been located on the Blackwater Coal Rail System. At GPS there is a dedicated rail loop and unloading facility for unloading coal. A coal train unloads by a largely automated process. The train consists of the locomotives and specialised hopper coal wagons. Each wagon is positioned, successively, over the unloading facility as the train edges around the loop. The hopper doors on the bottom of the wagon open. Coal is dumped below onto a conveyor that carries it to a 700 tonne “weigh bin”. From there it is further distributed by conveyor belt.
  9. [11]
    The distribution is to a place of storage. One place is into one of the 140 tonne coal bunkers within the power station. There are six such bunkers connected to and allocated to each generation unit.  Coal would be stored for a relatively short time in one of the bunkers before it is burned. However, most of the coal delivered to the unloading facility is conveyed to longer term coal storage facilities adjacent to the power station. Those facilities comprise two different systems.
  10. [12]
    One system consists of three longitudinal coal stockpiles. They run parallel to each other along their lengths with two corridors between them. In each corridor a stacker/reclaimer machine is mounted on rails. There are two stacker/reclaimers. Each stacker/reclaimer can access the stockpile on either side of it and is connected to a conveyor system that carries coal to and from the stockpiles. In the stacking process, coal is deposited from the boom onto the stockpile. In the reclaiming process, buckets on a wheel at the end of the boom scoop up coal from the stockpile and carry it by conveyor belts into the power station to one of the bunkers previously mentioned.
  11. [13]
    The second storage system consists of a “V” shaped covered slot bunker, located adjacent to the longitudinal coal stockpile area.  Coal from the train unloading facility is carried by conveyor and deposited either into the top of the slot bunker or onto adjacent areas nearby for future reclaiming underground through slots located towards the bottom of the bunker, by what is described as a ploughing process. The coal deposited onto the adjacent areas is later pushed by bulldozer into the slot bunker for reclaiming. There are two tunnels under the slot bunker. Conveyors carry the reclaimed coal into the power station for burning.
  12. [14]
    The size and configuration of the stockpiles and storage areas permit the operator of the system to store coals from different mines or of different qualities or properties in different locations. The conveyor systems permit the blending of different coals to meet the specification necessary for their use in the units of the power station, so as to optimise the performance of the units and to comply with the power station’s environmental obligations.
  13. [15]
    The configuration of the coal unloading and storage facilities is depicted on the image below.

Judgment-Image

  1. [16]
    Coal from the bunkers associated with each of the six units in the power station is conveyed to a coal pulveriser that reduces the coal into a powder for injection into and combustion in the furnace or furnaces of the unit. There are six coal pulverisers per unit. At maximum load, five of them are in service. At minimum load, only three pulverisers are required to operate the unit. One function of the pulverisers is to adjust the burn rate to meet demand from the unit load setpoint.
  2. [17]
    The system so described has a number of operational limits that affect its capacity. The specification and configuration of the six units of the power station provides a physical maximum generating capacity over any operating period. Other factors that do not need to be mentioned contribute to that. The ability to generate the nominal capacity depends on other processes, including the constraints of the coal handling and storage facilities.
  3. [18]
    Another constraint is the availability, suitability and reliability of supplies of coal. Reference will be made in due course to the existence of long-term contracts for coal supply. Some such contracts are referred to in the contracts to be construed. Two potentially relevant long-term contracts are referred to in the evidence. The evidence also referred to some relevant differences in the physical properties or qualities of some of the coals supplied from time to time.
  4. [19]
    Another potential constraint is that the rail system of deliveries involves the scheduling of trains on the rail network in relation to other users of the network and the process of unloading of trains at the unloading facilities for the power station. The evidence also showed that up to approximately 80,000 tonnes of coal may be burnt at the power station per week. If one assumes a typical coal train delivers approximately 8,000 tonnes of coal, approximately up to 10 trains per week would be required to be scheduled to maintain a consistent stockpile level.
  5. [20]
    However, the evidence did not address in any detail what the implications of these constraints might be for the questions to be resolved. It must be assumed, therefore, that they are not of further importance as surrounding circumstances relevant to the constructional questions to be decided.

Acquisition of GPS by the Participants

  1. [21]
    In 1994, there was an expansion of the Smelter. Entities involved in that transaction also purchased GPS from the QEC, thereby privatising GPS.
  2. [22]
    The buyers, described in this litigation as the Participants, did not need the whole of GPS’ generating capacity to power the Smelter. And they did not purchase the part of the State electricity grid that carried the electrical energy generated by GPS from GPS to the Smelter.
  3. [23]
    On the other hand, the Participants needed a backup supply of electricity for the Smelter for times when GPS was not available. The smelting process takes place 24 hours per day in a line of vessels called “pots” that operate at high temperature (perhaps 950°C). The temperature is maintained by the electrolytic process previously mentioned. If the pots cool, due to an unanticipated interruption in the electricity supply, and the mix in the pots solidifies, the Smelter would suffer potentially catastrophic damage.
  4. [24]
    Against that background, the parties at the time of the purchase by the Participants entered into a suite of contracts. Two are relevant to the present case and one of them, as subsequently amended, is central to it.
  5. [25]
    On 30 March 1994, the central contract in this dispute, styled the “Interconnection and Power Pooling Agreement” (“IPPA”), was made between QEC and the Participants.
  6. [26]
    The second relevant “contract” was a series of contracts in standard form, styled the “Capacity Purchase Agreement” (“CPA”), made between QEC on the one hand and one of the Participants on the other hand. There was a separate CPA for each of the Participants.
  7. [27]
    The IPPA provided for a number of subject matters, including:
  1. (a)
    connection of GPS and the Smelter to the State electricity grid;
  2. (b)
    the obligation of QEC to supply the Smelter;
  3. (c)
    the right of QEC to take the excess capacity of GPS;
  4. (d)
    the rules for dispatch of GPS in relation to the rest of the State system;
  5. (e)
    pricing of interchange energy; and
  6. (f)
    coal procurement.
  1. [28]
    The CPAs provided for other subject matters, including the dedication of capacity of GPS to QEC and the calculation and payment of a charge for that capacity.

2009 Agreements and 2011 amendments and transfer

  1. [29]
    The IPPA has been assigned and amended more than once. There were transfers of QEC’s interests to other government owned corporations: first, to Queensland Transmission and Supply Corporation (“QTSC”); and second, to Stanwell Corporation Limited (“Stanwell”) and Queensland Electricity Transmission Corporation (“QETC”), now known as “Powerlink”.
  2. [30]
    In 2009, after almost 15 years, including the significant changes to the operation of the market for the supply of electricity created by the national electricity market described later in these reasons, the parties made significant amendments to both the IPPA and the CPAs.
  3. [31]
    As amended, the IPPA is Annexure A to a contract styled as the “Master Deed of Amendment and Restatement of IPPA”. As amended, the CPAs are in the form of Annexure A to a contract styled as the “Deed of Amendment and Restatement of Capacity Purchase Agreement”. For convenience, I will call the restated agreements the 2009 IPPA and the 2009 CPAs.
  4. [32]
    By a further deed styled as the “Deed of Amendment – IPPA”, dated 20 June 2011, amendments were agreed to Schedule 16. I will continue to refer to the 2009 IPPA as so amended as the 2009 IPPA. From this point, the references to contract provisions are to the provisions of the 2009 IPPA, unless the contrary is stated.
  5. [33]
    On 1 July 2011, the benefit and obligations under the 2009 IPPA and 2009 CPAs were transferred from Stanwell Corporation Ltd to CS Energy Ltd (“CS Energy”) by the Government Owned Corporations (Generator Restructure) Regulation 2011 (Qld).
  6. [34]
    For the purposes of these reasons, references in the contracts to Stanwell are to be taken as references to CS Energy, and references to the Participants are to be taken as references to the other parties to these proceedings.

Central provisions

  1. [35]
    A number of provisions of the 2009 IPPA are central to the present dispute. Despite their length, it is appropriate to set them out in full.
  2. [36]
    First, clauses 3 to 5A.10 provide:

3.  RIGHT OF CONNECTION AND CHARGES

3.1  Right of connection

The Participants shall be entitled to interconnect GPS with the Power System at no charge of any nature whatsoever to the Participants, subject to this Agreement, and to export electricity from GPS into the Power System pursuant to the obligations of the Participants under this Agreement, the CPAs, the Smelter Power Purchase Agreements and any other arrangements for the possible sale of power in accordance with Clause 21, subject to Stanwell’s rights under this Agreement and to the terms of the GPS Licence. Stanwell shall enter into any necessary arrangements with QETC to give effect to this clause.

3.2 Acceptance of electricity

QETC shall accept all of the electricity generated by GPS and delivered at the Point of Interconnection in accordance with the terms of this Agreement.

3.3 Deleted intentionally

3.4 Disconnection and re-connection of Smelter

The Participants may, by unanimous written notice to Stanwell, request Stanwell to procure of QETC that, within two (2) days of the notice, the Smelter is disconnected from the Power System, thereby ceasing supply to the Smelter. Stanwell shall not be thereby held to be in breach of any of its obligations under this Agreement and the Participants shall fully indemnify, protect and hold harmless Stanwell from any losses, damage, liability, claims or other consequences arising from such requested disconnection. At any time after giving such notice, the Participants may by further unanimous written notice to Stanwell request Stanwell to procure QETC to re-connect the Smelter to the Power System as soon as practicable, having regard to the directions from System Control.

4.  TRANSMISSION CHARGE

4.1 Transmission Charge

  1. (a)
    The Participants shall pay to Stanwell a charge (the “Transmission Charge”) for the transmission of electricity (but not including the cost of Transmission Losses) generated at GPS to the Smelter.
  1. (b)
    The Transmission Charge shall be $250,000 per annum escalated annually at the start of each Contract Year by reference to a factor, the numerator of which is, as of the relevant escalation date, CPIn and the denominator of which is CPIbase, for which purposes CPIbase shall be taken as at June 1993 which is 109.7, using a base year of 1989-90 = 100.

4.2 Exclusive payment

The Parties acknowledge that the Transmission Charge constitutes the exclusive payment for the transmission of electricity generated at GPS to the Smelter and that no further amount shall be payable to Stanwell or any third party in respect thereof for whatever reason.

5.  OPERATIONS AND MANAGEMENT

5.1  General Stanwell and QETC responsibilities

  1. (a)
    Deleted intentionally.
  1. (b)
    Stanwell and QETC shall each perform their respective obligations under this Agreement, where relevant, in accordance with Good Operating Practice. For the avoidance of doubt, this Clause 5.1(b) does not apply to QETC in its capacity as Jurisdictional System Security Coordinator.
  1. (c)
    Deleted intentionally.
  1. (d)
    Deleted intentionally.

5.2 Participants’ duties

  1. (a)
    The Participants shall operate and maintain GPS in accordance with Good Operating Practice and Schedule 1 and in a manner suitable for operation in the Power System, including the securing of adequate fuel supplies (subject to Clause 23) and other materials, and (subject to their obligations under the relevant Transaction Documents) the disposal of by-products and waste.
  1. (b)
    In respect of the operation of GPS as a generating plant comprised within the Power System, the Participants shall, insofar as consistent with the Rules (except to the extent of any inconsistency with the other provisions of this Agreement), follow oral or written directions of Stanwell and where relevant of System Control or QETC and (in the relevant circumstances where appropriate equipment is installed and properly functioning) electronic directions of System Control in relation to GPS Dispatch Instructions and Ancillary Services Dispatch Instructions, including:
  1. (i)
    changes to reactive power generation, automatic voltage regulator and power system stabiliser control modes for maintaining Power System voltage, and for responding appropriately to Power System disturbances; and
  1. (ii)
    the commitment and dispatch of GPS, including directions for mills in service and control modes, under Clauses 6 and 11 of this Agreement; and
  1. (iii)
    Active Power generation for maintaining Power System frequency,

except to the extent that the Participants are otherwise excused under this Agreement from following such directions or it is necessary not to follow such a direction in order to:

  1. (A)
    comply with the Participants’ health and safety obligations under any Law or prevent the risk of death or injury to people;
  2. (B)
    prevent the risk of significant loss or damage to plant and equipment;
  3. (C)
    comply with any requirements of any environmental licence in respect of GPS or the GPS Licence;
  4. (D)
    prevent a breach of the operating limits established pursuant to this Agreement including the Technical Specifications and operating limits;
  5. (E)
    meet the requirements of Good Operating Practice.
  1. (c)
    The Participants shall procure that BSL shall operate the switchgear at the Point of Supply in accordance with the following provisions:
  1. (i)
    BSL shall ensure that, subject to prior consultation between QETC and BSL, the 132kV switchgear at the Smelter is operated such that the Smelter load is taken from the 132kV supply system and from the 275kV supply system to suit the operational requirements of the Power System from time to time; and
  1. (ii)
    if it is necessary upon the request of QETC (or under emergency conditions at the Smelter) to interconnect the 132kV and 275kV supply systems at the Smelter, BSL shall ensure that the tap position on the 275/132kV transformer at the Smelter is set in accordance with reasonable directions or requests from QETC.
  1. (d)
    The Participants shall procure that BSL will, at all times, allow QETC to operate the capacitor banks mentioned in Clause 5.6 and to have operational control of the associated 132kV circuit breakers.

5.3 Operator

  1. (a)
    The Participants hereby confirm that the operator of GPS is the Person specified in this Agreement as the Operator.
  1. (b)
    If the Participants propose to change the Operator they shall at least sixty (60) days prior to effecting such proposed change, submit to Stanwell a reasonable level of written detail in respect of the proposed change and the reasons for the proposed change. 
  1. (c)
    Stanwell may make submissions to the Participants regarding any replacement Operator proposed by the Participants under Clause 5.3(b).
  1. (d)
    Prior to effecting any change in the Operator the Participants shall give due consideration to any submissions regarding the replacement Operator made by Stanwell.
  1. (e)
    The Parties acknowledge that the Operator shall, unless otherwise expressly stipulated, be authorised on behalf of the Participants to co-ordinate the execution of the Performance Obligations of the Participants and to issue invoices and receive payments on behalf of each of the Participants under this Agreement.

5.4 QETC’s duties to operate and maintain

  1. (a)
    Power System

QETC shall operate and maintain its parts of the State System in accordance with the Electricity Act, Good Operating Practice and the other requirements of this Agreement.

  1. (b)
    Point of Interconnection

Subject to Clause 5.4(c), QETC shall operate and maintain the electrical interconnection between GPS and the Power System at the Point of Interconnection, including the GPS Switchyard, in accordance with Good Operating Practice.

  1. (c)
    Contract maintenance

If so requested by the Participants, QETC shall maintain the high voltage overhead lines owned by the Participants at or near the Point of Interconnection in accordance with a contract maintenance agreement to be concluded between QETC and the Participants and QETC shall be entitled to charge the Participants a reasonable fee for such maintenance. If contract terms for such maintenance are not agreed between the Parties, the resulting dispute may be referred to the dispute resolution procedure in Clause 34.

5.5 Quality of electricity supply

The Participants and QETC shall ensure that the electricity supplied or taken at the Point of Interconnection or at the Point of Supply is produced or otherwise dealt with in accordance with Schedule 5.

5.6 Reactive Power

  1. (a)
    Stanwell acknowledges (on behalf of it and QETC) that the Participants have installed or caused to be installed, after the Date of Transfer an additional ninety (90) MVAR of capacitors on the BSL electrical busbar.
  1. (b)
    Subject to Clause 5.6(d), Stanwell acknowledges (on behalf of it and QETC) that the installation of the capacitors mentioned in Clause 5.6(a), together with the capacitors existing at the Smelter at the Date of Transfer (having a nominal capacity of sixty (60) MVAR) and the reactive capacity of GPS at the Date of Transfer constitute the full extent of any requirement for the Participants to provide reactive capacity or to pay for Reactive Power.
  1. (c)
    The Participants shall procure that BSL maintains the capacitors existing at the Smelter at the Date of Transfer and the capacitors mentioned in Clause 5.6(a) installed since then in good working order and in accordance with Good Operating Practice.
  1. (d)
    If, due to replacement, refurbishment or otherwise, the reactive capability of a Unit is reduced below the reactive capability of the Unit at the Date of Transfer, the Parties shall agree upon the most effective way and time to replace this reactive capability at the cost of the Participants. 

5.7 GPS Switchyard

  1. (a)
    Access to GPS Switchyard

QETC shall allow suitably qualified agents or employees of the Participants access to the GPS Switchyard at all times when such access is required. In exercising such access the Participants shall comply with procedures established by QETC and notified by QETC to the Participants governing:

  1. (i)
    such access;
  1. (ii)
    notification by the Participants to QETC of their access requirements, other than immediate access requirements;
  1. (iii)
    operating methods to be followed by the Participants in the course of exercising their access rights; and
  1. (iv)
    applicable safety standards.
  1. (b)
    Control of GPS Switchyard
  1. (i)
    Deleted intentionally.
  1. (ii)
    QETC shall allow the Participants to operate the GPS Switchyard (to be carried out remotely from the control room within GPS) for the purposes of synchronising Units to, or isolating Units from, the Power System. In performing such operations, the Participants shall comply with procedures governing such operations established by QETC and notified to the Participants from time to time.

5A STATION ANNUAL FORECAST AND DISPATCH ESTIMATE

5A.1 Operations Committee

  1. (a)
    The Parties shall form a committee called the Operations Committee.
  1. (b)
    The functions of the Operations Committee shall be:
  1. (i)
    to receive and review (as necessary) the Station Annual Forecast and information concerning the Station Annual Forecast, and Monthly Coal Procurement Plan;
  1. (ii)
    make a determination pursuant to Clause 23.4B(c);
  1. (iii)
    to review commitment and dispatch of GPS in the previous Months, and discuss any departures from the Station Annual Forecast for those Months;
  1. (iv)
    to receive information, consider Allowed Adjustments and whether to recommend the payment of compensation as a result of an Allowed Adjustment and (subject to any decision of the Co-ordination Committee in respect of the payments of such compensation) to make decisions about Allowed Adjustments;
  1. (v)
    to develop, revise, and agree amendments to any Operations Manual pursuant to Clause 5A.2; and
  1. (vi)
    to perform such other functions as may be conferred upon it by this Agreement or the Co-ordination Committee.
  1. (c)
    Until such time as the Operations Manual provides otherwise:
  1. (i)
    the Operations Committee shall comprise two (2) members nominated by Stanwell and two (2) members nominated by the Participants (one (1) of whom shall be the nominee of the Operator);
  1. (ii)
    the Operations Committee shall meet following a request by a Party or member of the Operations Committee on five (5) Working Days’ notice;
  1. (iii)
    a quorum shall be two (2) members, being one (1) member appointed by each Party; and
  1. (iv)
    decisions of the Operations Committee shall be unanimous and shall be binding upon the Parties.

5A.2  Operations Manual

  1. (a)
    The Operations Committee may develop the Operations Manual.
  1. (b)
    The Operations Manual may contain the agreed timing, procedures and communications protocols for and associated with the following activities:
  1. (i)
    communication of, and assessment of, the impact of changes, or potential changes, to Unit Availability and temporary restrictions on Unit performance;
  1. (ii)
    communication or, and assessment of, the impact of changes, to coal delivery schedules and coal stockpile levels;
  1. (iii)
    proceedings of the Operations Committee;
  1. (iv)
    such other matters as may be provided for in this Agreement; and
  1. (v)
    such other matters as the Operations Committee may determine.
  1. (c)
    If the Operations Manual varies the time for provision of information under this Agreement, that variation shall only be valid if all other times which are connected with or relate to that information whether directly, or indirectly, are also varied in a manner that is consistent with that variation.
  1. (d)
    Subject to Clause 5A.2(c), the matters agreed from time to time by the Operations Committee within the authority given pursuant to Clause 5A.2(b), as set out in the Operations Manual, shall be binding as between the Parties. To the extent of any express or implied inconsistency between the provisions of the Operations Manual and the provisions of this Agreement which are not expressly provided for in the Operations Manual, this Agreement shall prevail and the effect of the Operations Manual shall be read down accordingly.

5A.3 Station Annual Forecast

  1. (a)
    No later than 6 July in each Contract Year, Stanwell shall prepare and provide to the Participants a draft of the Station Annual Forecast together with such supporting material as Stanwell, in its discretion, considers appropriate.
  1. (b)
    Stanwell shall ensure that the Station Annual Forecast includes:
  1. (i)
    the anticipated level of dispatch of GPS on a sent-out basis for the next year on a Monthly basis and such levels on an indicative yearly basis for the remaining four (4) Contract Years;
  1. (ii)
    (in order to assist in coal procurement and planning) the upper and lower estimates of dispatch of GPS on an annual basis for the next five (5) Contract Years (or such further period as the Parties may agree);
  1. (iii)
    the anticipated level of Non-market Ancillary Services for the next year on a Monthly basis and such levels on an indicative yearly basis for the remaining four (4) Contract Years;
  1. (iv)
    the indicative number of Units to be committed on a Monthly basis for the next Contract Year; and
  1. (v)
    an indicative profile showing the level of dispatch on a sent-out basis in each Trading Interval of a Trading Day, which is representative of the average daily dispatch for each Month of the next Contract Year.

Unless the Parties otherwise agree, Stanwell shall ensure that information provided pursuant to this Clause 5A.3 is in the form provided in Schedule 8, Part 1.

  1. (c)
    Stanwell shall prepare the Station Annual Forecast in good faith taking into account:
  1. (i)
    the GPS Forecast Data provided to Stanwell under Clause 23.3, in particular the Planned Outage Schedule and Major Refurbishment Outage Schedule; and
  1. (ii)
    the impact of generation levels and dispatch profile on long-term Unit performance.

5A.4 Commitment and Dispatch Estimate

  1. (a)
    By Wednesday of each week in a Contract Year, Stanwell shall prepare and provide to the Participants the Commitment and Dispatch Estimate. The Commitment and Dispatch Estimate shall provide information, on a daily basis for the first week of the following eight (8) weeks, and on a weekly basis for the remaining seven (7) weeks.
  1. (b)
    The Commitment and Dispatch Estimate shall include:
  1. (i)
    the anticipated level of dispatch of GPS and the Combustion Turbine on a sent-out basis;
  1. (ii)
    the anticipated level of Non-market Ancillary Services;
  1. (iii)
    the anticipated number of Units to be committed; and
  1. (iv)
    an indicative profile showing the level of dispatch on a sent-out basis for each Trading Interval of each Trading Day of the first week and an indicative profile showing the level of dispatch on a sent-out basis for each Trading Interval of a Trading Day which is representative of the average daily dispatch for each week of the remaining seven (7) weeks.

Unless the Parties otherwise agree, Stanwell shall ensure that information provided pursuant to this Clause 5A.4 is in the form provided in Schedule 8, Part 2.

  1. (c)
    Stanwell shall prepare the Commitment and Dispatch Estimate in good faith taking into account:
  1. (i)
    any changes to the Availability and performance of the Units and Combustion Turbine and any temporary restrictions on Unit performance that the Participants have notified to Stanwell;
  1. (ii)
    the GPS Forecast Data provided to Stanwell under Clause 23.3, in particular the Planned Outage Schedule and Major Refurbishment Outage Schedule;
  1. (iii)
    the impact of generation levels and dispatch profile on long-term Unit performance;
  1. (iv)
    the Monthly Coal Procurement Plan and the Revised Monthly Coal Stockpile Forecast;
  1. (v)
    the Station Annual Forecast:
  1. (vi)
    the material impact on GPS operating costs namely, fuel costs, Unit shut down and start up costs and Heat Rate; and
  1. (vii)
    other relevant factors.
  1. (d)
    Stanwell may revise (on one or more occasions) any estimate made under this Clause 5A.4(d) to the extent that it is reasonably necessary to do so as a result of changes to the matters upon which it was originally based or any other further or better relevant information available to Stanwell, having regard to Good Operating Practice at GPS. In the case of Unit Commitment, Stanwell shall notify the Operator of the revisions as soon as possible (either in writing or orally, in which case Stanwell shall subsequently confirm such revision in writing). Stanwell shall use reasonable endeavours to provide notification of such revisions as soon as possible.

5A.5 Review of Station Annual Forecast

  1. (a)
    No later than ten (10) Working Days after the Participants have received the draft Station Annual Forecast under Clause 5A.3(a) (or such later date as the Parties may agree), the Participants (acting reasonably) may request that Stanwell provide information relevant to the physical basis of the Station Annual Forecast (being those physical factors which Stanwell considers material in the development of the Station Annual Forecast, for example, seasonal factors, new generation, load growth and transmission constraints) to assist the Participants’ review of the Station Annual Forecast. Stanwell shall use reasonable endeavours to provide such of the relevant additional supporting information as is within its possession or control in sufficient time to enable the Participants to consider that information at a meeting convened under Clause 5A.5(b).
  1. (b)
    No later than fifteen (15) Working Days after the Participants have received the draft Station Annual Forecast under Clause 5A.3(a), the Participants shall review the draft Station Annual Forecast and either notify Stanwell that:
  1. (i)
    it has no comments on the draft Station Annual Forecast, in which case the draft Station Annual Forecast made under Clause 5A.3(a) shall be the final Station Annual Forecast and for the purposes of Clause 5A.6 shall be taken as confirmed by Stanwell as the Station Annual Forecast; or
  1. (ii)
    it has comments on the draft Station Annual Forecast, in which case the Parties shall convene a meeting of the Operations Committee to review the draft Station Annual Forecast.
  1. (c)
    An Operations Committee meeting convened pursuant to Clause 5A.5(b)(ii) shall:
  1. (i)
    review the draft Station Annual Forecast for the next Contract Year;
  1. (ii)
    receive for consideration any additional information that either Party may wish to provide about the draft Station Annual Forecast; or
  1. (iii)
    receive for consideration any additional information that Stanwell has been requested to provide in accordance with Clause 5A.5(a).
  1. (d)
    As a result of any meeting held pursuant to Clause 5A.5(c), or otherwise at any time prior to 1 September in the relevant year, Stanwell may (but is not obliged to) amend the draft Station Annual Forecast, and where amended by Stanwell it shall provide to the Participants the amended Station Annual Forecast. If the Operations Committee does not agree on the draft Station Annual Forecast, any failure to so agree shall not be susceptible to dispute resolution pursuant to Clause 34 or any other method of dispute resolution including litigation.

5A.6 Confirmation of Station Annual Forecast

  1. (a)
    Prior to 15 September in the relevant year (and thereafter no later than ten (10) Working Days after the approval of an Allowed Adjustment) Stanwell shall prepare and provide to the Participants and the Operations Committee the consolidated Station Annual Forecast relevant to the Contract Year, or, (in relation to the draft Station Annual Forecast) shall confirm that the draft Station Annual Forecast is to be the Station Annual Forecast for the next Contract Year.
  1. (b)
    The Station Annual Forecast provided or confirmed by Stanwell pursuant to Clause 5A.6(a) shall be the Station Annual Forecast until such time as it is amended pursuant to Clause 5A.9.

5A.7 Change in value of Station Annual Forecast

At any time after the Station Annual Forecast for a Contract Year is established under Clause 5A.6, a Party by written notice to the other Party may request adjustments to the Station Annual Forecast for the relevant Contract Year to reflect any material Changes that affect the Station Annual Forecast for that Contract Year, (an “Allowed Adjustment”). The Party who makes such request shall include in the request supporting documentation sufficient to permit the other Party to review and comment upon the proposed Allowed Adjustment.

5A.8 Time for request for adjustment

Any notice given under Clause 5A.7 shall be given as soon as practicable after the need to make an Allowed Adjustment reasonably becomes known to the Party giving the notice but in any event no later than the day which is six (6) weeks after the end of the Month to which the Allowed Adjustment first applies.

5A.9 Adoption of Allowed Adjustments

  1. (a)
    The Operations Committee shall consider a requested Allowed Adjustment at the next meeting following receipt by a Party of a notice under Clause 5A.7. The Operations Committee may decide if the requested Allowed Adjustment is necessary or appropriate. In reviewing the requested Allowed Adjustment, the Operations Committee must reasonably consider the material impact of the following:
  1. (i)
    the GPS Forecast Data provided to Stanwell under Clause 23.3(a), in particular the Planned Outage Schedule and Major Refurbishment Outage Schedule;
  1. (ii)
    the effect of generation levels and dispatch profile on long-term Unit performance;
  1. (iii)
    the Committed Coal, the availability of additional coal and coal stockpile levels;
  1. (iv)
    Stanwell’s GPS revenue and obligations as Market Customer for the Smelter; and
  1. (v)
    the changes in Heat Rate on the cost of Smelter Energy, recognising the availability of payments pursuant to Clause 6.11.
  1. (b)
    If the Operations Committee of Co-ordination Committee decides that a requested Allowed Adjustment is not necessary or not appropriate, the requested Allowed Adjustment shall not be made.
  1. (c)
    If the Operations Committee decides that a requested Allowed Adjustment is necessary or appropriate, but that it would be appropriate for compensation to be payable, the Operations Committee may make a non-binding recommendation to the Co-ordination Committee as to whether compensation or payments under Clauses 17.5, 17.10 or 23.4B (as the case may be) would be appropriate in the circumstances.
  1. (d)
    If the Operations Committee approves the requested Allowed Adjustment and neither Party seeks the payment of compensation then the requested Allowed Adjustment shall be made by Stanwell.
  1. (e)
    If a Party is of the view that it is entitled to compensation in respect of a requested Allowed Adjustment, then that Party may refer the requested Allowed Adjustment and the associated compensation (if any) in the first instance directly to the Co-ordination Committee for resolution as to whether the requested Allowed Adjustment should be made and as to whether compensation or payments under Clauses 17.5, 17.10 or 23.4B (as the case may be) would be appropriate in the circumstances.
  1. (f)
    If the Co-ordination Committee approves the requested Allowed Adjustment then the requested Allowed Adjustment shall be made by Stanwell.
  1. (g)
    If the Operations Committee or Co-ordination Committee is unable to resolve whether a requested Allowed Adjustment should be made within twenty (20) Working Days of the referral of the matter to it, then the request for the Allowed Adjustment shall be resolved in accordance with the dispute resolution procedure in Clause 34, provided that if the matter is referred to an Expert in accordance with Clause 34.3, the Expert shall have regard to the matters set out in Clauses 5A.9(a)(i) to 5A.9(a)(v) inclusive in determining whether the Allowed Adjustment should be made and, if compensation or a payment is to be determined, the Expert shall also have regard to the matters set out in Clauses 17.5, 17.10 and 23.4B as the case may be.

5A.10 Impact of Allowed Adjustments

  1. (a)
    In the event that an Allowed Adjustment is made under Clause 5A.9 above, then to reflect any necessary changes arising as a result of the Allowed Adjustment the affected Party shall be entitled to:
  1. (i)
    provide a POS Request Notice under Clause 17.5;
  1. (ii)
    provide a MROS Request Notice under Clause 17.10;
  1. (iii)
    provide a notice in respect of the purchase of additional coal under Clauses 23.5(a) or 23.5(b); and
  1. (iv)
    issue a Revised Monthly Coal Stockpile Forecast on the basis of the Allowed Adjustment; and
  1. (v)
    if, under the Revised Monthly Coal Stockpile Forecast, and anticipated end of Month GPS coal stockpile forecast is outside the Acceptable Coal Stockpile Range, then the Operations Committee shall meet to determine the appropriate action to be taken by the Parties to ensure so far as practicable the coal stockpile is maintained within the Acceptable Coal Stockpile Range and that in any event the Revised Monthly Coal Stockpile Forecast is brought within the Acceptable Coal Stockpile Range by no later than the third (3rd) Month after the Month in which the Revised Monthly Coal Stockpile Forecast is given, having regard:
  1. (A)
    if the Revised Monthly Coal Stockpile Forecast is less than 300,000 tonnes, to the options, circumstances, consequences and accountabilities set out in Clause 23.4B(a);
  1. (B)
    if the Revised Monthly Coal Stockpile Forecast is greater than 800,000 tonnes, to the options, circumstances, consequences and accountabilities set out in Clause 23.4B(b);
  1. (C)
    if a combination of the circumstances in Clauses 23.4(c)(i) and (ii) apply, having regard to the mechanisms listed in Clauses 23.4B(a) and (b),

but in each case also having regard to the circumstances which gave rise to the request for an Allowed Adjustment pursuant to Clause 5A.7.

  1. (b)
    If an Allowed Adjustment is made under Clause 5A.9 above and the circumstances giving rise to the Allowed Adjustment were contributed to by Stanwell, then the Participants shall be entitled to make any adjustments to the Planned Outage Schedule or Major Refurbishment Outage Schedule to the extent that it is reasonably necessary to change or add a Planned Outage or Major Refurbishment Outage as a direct result of the Allowed Adjustment (determined on the basis of Good Operating Practice).
  1. [37]
    Second, clauses 6.1 to 6.4 provide:

6. SCHEDULING AND DISPATCH

6.1 Availability declarations

For the purposes of this Agreement, declarations of Availability of GPS by the Participants shall be in accordance with Schedule 3.

6.2 GPS Commitment

  1. (a)
    Rules for commitment and decommitment
  1. (i)
    As Stanwell is the Nominated Generator for GPS, Stanwell shall be responsible for the commitment and decommitment of the Units and the Combustion Turbine.
  1. (ii)
    The Participants may withdraw a Unit or the Combustion Turbine from service or otherwise reduce the Available Capacity of GPS, in co-operation with Stanwell, as otherwise permitted under this Agreement or to the extent necessary:
  1. (A)
    to comply with the Participants’ health and safety obligations under any Law or prevent the risk of death or injury to people;
  2. (B)
    to prevent the risk of significant loss or damage to plant and equipment;
  3. (C)
    to comply with any requirements of any environmental licence in respect of GPS or the GPS Licence;
  4. (D)
    to meet the requirement of Good Operating Practice; or
  5. (E)
    to prevent a breach of the operating limits established pursuant to this Agreement including the Technical Specifications.
  1. (iii)
    The Participants shall use reasonable endeavours to provide all information and carry out all plant testing requested by Stanwell which is necessary to permit Stanwell to meet its obligations as Nominated Generator for GPS under the Rules.
  1. (b)
    Notification of Smelter Demand

No later than fifteen (15) Working Days prior to the first (1st) day of each Contract Year, the Participants shall notify Stanwell of the demand for electricity at the Point of Supply of the Smelter (the “Notified Smelter Demand”). The Participants shall procure the Operator (or BSL if Stanwell so notifies) to advise Stanwell of changed in demand of the Smelter at the times set out in paragraph 3.1 of Part 1 of Schedule 3 and as soon as the Operator becomes aware of any changes from the Notified Smelter Demand, expected:

  1. (i)
    to last for longer than twelve (12) hours; and
  1. (ii)
    to be more than five (5) MW.
  1. (c)
    Commitment in accordance with Estimate

Stanwell shall use reasonable endeavour to commit Units, or the Combustion Turbine (if relevant), in accordance with the Commitment and Dispatch Estimate.

  1. (d)
    Withdrawal of Committed Units

The Participants shall not, except as directed by System Control or if the Participants exercise a right under Clause 6.2(a), withdraw committed Units from service or otherwise reduce the Available Capacity of GPS.

  1. (e)
    Declaration of Unavailability

Co-operation between the Participants (or the Operator on their behalf) and Stanwell under Clause 6.2(a) or 6.6, shall not be taken to vary the operation of the provisions for the declaration of Unavailability under this Agreement unless expressly agreed otherwise between the Participants (or the Operator on their behalf) and Stanwell.

6.3 Dispatch Offers for GPS

  1. (a)
    Subject to Clause 6.3(d), Stanwell may make GPS Dispatch Offers and GPS Rebids in respect of the Available Capacity of GPS into the Spot Market and, subject to Clause 21, Stanwell is entitled to receive all monies in relation to the Availability of GPS and dispatch of Available Capacity of GPS including:
  1. (i)
    Trading Amounts;
  1. (ii)
    monies payable by System Control for provision of Ancillary Services; and
  1. (iii)
    all other compensation, revenue and amounts in respect thereof payable by System Control or third parties under the Rules or otherwise.
  1. (b)
    Stanwell shall be entitled to submit to System Control a Dispatch Offer for the dispatch in each Trading Day of the Available Capacity of GPS (a “GPS Dispatch Offer”) and one or more Rebids for the dispatch of Available Capacity of GPS (“GPS Rebids”) in respect of each Trading Interval within that Trading Day to maximise its overall revenue and profit position on a power station by power station or portfolio basis as Stanwell may in its sole discretion determine:
  1. (i)
    provided that for the purpose of this Clause 6.3(b) the Available Capacity shall be taken to be that determined by the Notified Availability for that Trading Day; and
  1. (ii)
    subject to Stanwell’s compliance with the restrictions in Clause 6.3(d) and taking into account its obligations under Clause 7 and the provisions of Clause 23.4B.
  1. (c)
    Stanwell shall use reasonable endeavours to submit GPS Dispatch Offers, GPS Rebids and Non-market Ancillary Services Offers that:
  1. (i)
    are based upon the relevant Notified Availability for the Trading Day;
  1. (ii)
    are consistent with the operating limits established pursuant to this Agreement, including the Technical Specifications;
  1. (iii)
    have regard to the Commitment and Dispatch Estimate for the Trading Day; and
  1. (iv)
    have reasonable regard to opportunities to optimise the supply of Economy Purchase Energy to the Participants.
  1. (d)
    Stanwell shall not submit GPS Dispatch Offers or GPS Rebids under this Clause 6.3 which are likely to cause a Unit or the Combustion Turbine (if relevant) to be dispatched where the Participants have exercising reasonable judgement, advised Stanwell (or in the case of item (v) of this subclause where Stanwell ought reasonably to be aware) that such dispatch may result in:
  1. (i)
    a failure to comply with the Participants’ health and safety obligations under any Law or a risk of death or injury to people;
  1. (ii)
    a risk of significant loss or damage to plant and equipment;
  1. (iii)
    a failure to comply with any requirements of any environmental licence in respect of GPS or the GPS Licence;
  1. (iv)
    a failure by the Participants to meet the requirements of Good Operating Practice; or
  1. (v)
    a breach of the operating limits established pursuant to this Agreement, including the Technical Specifications.
  1. (e)
    If Stanwell submits GPS Dispatch Offers or GPS Rebids in breach of Clause 6.3(d), the Participants shall have the right to withdraw a Unit or the Combustion Turbine or otherwise reduce the Available Capacity of GPS to the extent that the offers or rebids are in breach of Clause 6.3(d).

6.4 Dispatch notifications

  1. (a)
    Stanwell shall provide, or procure the provision to the Participants or the Operator on their behalf, the latest pre-dispatch schedule for GPS published or re-published by System Control to Stanwell, by electronic means (a “GPS Pre Dispatch Schedule”).
  1. (b)
    Unless the Operations Manual otherwise provides, before 5pm on each Trading Day, Stanwell shall provide to the Participants or the Operator on their behalf, the required Unit Commitment for the next Trading Day.
  1. (c)
    Stanwell shall give to the Operator (on behalf of the Participants) GPS Dispatch Instructions issued by System Control in relation to each Unit and (if relevant) the Combustion Turbine, and Stanwell shall give to the Operator corresponding Mill Start-Up and Mill Shutdown instructions, provided that the obligations of Stanwell under this Clause 6.4(c) shall be discharged in relation to GPS Dispatch Instructions to the extent that those instructions are given directly by System Control.
  1. (d)
    The Participants shall comply, and shall procure the Operator to comply, with the GPS Dispatch Instructions, except to the extent that:
  1. (i)
    the Participants have correctly advised Stanwell of the occurrence of one or more of the matters set out in Clause 6.3(d)(i) to and including (v) or in the case of a matter set out in Clause 6.3(d)(v) Stanwell ought reasonably be aware of the occurrence of that event (a “Withdrawal Event”);
  1. (ii)
    a Withdrawal Event had occurred and where practicable been advised to Stanwell since the GPS Dispatch Offer or last GPS Rebid;
  1. (iii)
    the Participants or the Operator acting reasonably in accordance with Good Operating Practice, have determined that the relevant Unit or (if relevant) the Combustion Turbine is not physically able to generate in accordance with those GPS Dispatch Instructions due to a temporary performance restriction including an unexpected change in Unit Availability; or
  1. (iv)
    Stanwell is otherwise excused under the Rules from complying with the GPS Dispatch Instructions.
  1. (e)
    In the event that any of Clauses 6.4(d)(i) to and including (iii) apply, the Participants shall notify Stanwell:
  1. (i)
    of the event or circumstances as soon as reasonably practicable;
  1. (ii)
    of the expected duration of the relevant event or circumstance; and
  1. (iii)
    when the event or circumstance had ceased,

and either at or as soon as practicable following notification provide Stanwell with reasonably appropriate information (and any further appropriate information reasonably requested by Stanwell to meet its obligations under the Rules) as to the reason for the failure to comply with the GPS Dispatch Instruction.

  1. (f)
    If Stanwell is otherwise excused under the Rules from complying with the GPS Dispatch Instructions, then Stanwell shall inform the Operator as soon as the matter comes to its attention and the Parties shall determine whether in the circumstances it is appropriate:
  1. (i)
    not to comply with the GPS Dispatch Instruction in accordance with the Participants’ rights under Clause 6.4(d)(iv) and Stanwell’s rights under the Rules; or
  1. (ii)
    to comply with the GPS Dispatch Instruction.
  1. (g)
    Where, despite the Participants meeting their obligations under paragraph 4 of Schedule 3, Part 1, the Participants have not been able to meet GPS Dispatch Instructions of a Unit(s) or Combustion Turbine, Stanwell may submit GPS Rebids for that Unit(s) or Combustion Turbine for the purpose of complying with the Rules relating to Dispatch Instructions and in these circumstances:
  1. (i)
    Stanwell shall notify the Participants where such a GPS Rebid has been made and the Participants shall have regard to such notice for the purpose of complying with their obligations under paragraph 4 of Schedule 3, Part 1; and
  1. (ii)
    the fact that a GPS Rebid has been made shall not affect the Availability of a Unit for the purposes of paragraph 4.4 of Schedule 3, Part 1.
  1. (h)
    If the Participants (or the Operator on their behalf) notify Stanwell of any change in the Notified Availability of a Unit or the Combustion Turbine (if relevant), Stanwell may promptly make a GPS Rebid for the relevant Unit or the Combustion Turbine.
  1. (i)
    If the Participants fail to comply with a Dispatch Instruction in accordance with Clause 6.4(d) then they must take immediate steps to cure the cause of the failure as soon as possible, but in any event no later than ten (10) days following the initial failure.
  1. (j)
    The Participants shall indemnify and keep Stanwell indemnified against all penalties, fines, loss or charges imposed on Stanwell under the Electricity Laws directly resulting from the Participant’s failure to comply with a GPS Dispatch Instruction in accordance with its obligations under Clause 6.4(d) and all costs and expenses (including legal costs) directly suffered or incurred by Stanwell in relation to processes or proceedings with respect to same except to the extent that any such penalty, fine, loss, charge, cost or expense has arisen directly due to a negligent act or omission, breach of contract or breach of statutory duty (other than a breach of statutory duty caused by the negligence, default or breach of legal or contractual duties by the Participants) on the part of Stanwell, its employees, agents, contractors or other persons for whom it is responsible.
  1. [38]
    Third, clauses 7.1 to 7.3 provide:

7.  SMELTER POWER SUPPLY

7.1 Right of connection

Stanwell shall ensure that BSL may interconnect the Smelter with the Power System at the Point of Supply, at no charge whatsoever, subject to the terms of this Agreement, and more particularly that it will be entitled to take, and QETC shall transmit electricity in accordance with the provisions set out in this Clause 7.

7.2 Generation of power by the Participants

  1. (a)
    Subject to the other conditions in this Agreement and consequent upon the Participants bearing the primary responsibility for the provision of generating capacity for supply of electricity to the Smelter, the Participants shall, throughout the term of this Agreement, maintain, repair, fuel and operate GPS as required by Good Operating Practice, the other provisions of this Agreement and any requirements of law, with a view to making GPS available at an EAF of not less than eighty-one (81) and to generate electricity to the extent required by Stanwell for dispatch including requirements of a Black Start, restarting, reconnection or rapid loading of generating plant, in accordance with the terms of this Agreement, so that Stanwell and QETC may carry out their obligations pursuant to Clause 7.3 of this Agreement.
  1. (b)
    Nothing in this Clause 7.2 shall require the Participants to act other than in accordance with Good Operating Practice or to operate GPS outside the operating limits and procedures contained in the Technical Specifications.
  1. (c)
    Without in any way affecting the obligations of the Participants with respect to the payment of Availability Liquidated Damages pursuant to the provisions of the CPAs and the payment of Capacity Support Charges pursuant to Clause 9, the Participants shall not be liable to Stanwell of QETC for any losses of whatsoever kind resulting from a breach of this Clause 7.2 except for a Wilful Default on the part of the Participants of their obligations under this Clause 7.2.

7.3 Delivery of power

  1. (a)
    Subject to Clause 3.4 and the other provisions of this Clause 7 QETC shall transmit power:
  1. (i)
    generated at GPS from the BSL Allocated Capacity; and
  1. (ii)
    generated within the Power System pursuant to Capacity Support and Economy Interchanges as described in Clauses 9 and 10,

continuously to the Smelter to meet its actual load up to the Final SDL.

  1. (b)
    Subject to Clause 7.3(c) if at any time QETC proposed to dispose of any of the assets comprising the Connecting Transmission Equipment, then QETC shall offer those assets for purchase by the Participants. If such offer is accepted by the Participants and the Participants acquire those assets, then the Point of Supply for all purposes of the Agreement shall be deemed to be the point or points at which the Connecting Transmission Equipment is connected to the Power System.
  1. (c)
    The purchase rights of the Participants under Clause 7.3(b) do not apply to equipment that is the subject of the Boyne Island Smelter Transmission Line Lease.
  1. [39]
    Fourth, clause 10.1 provides:

10.1 Types and calculation of energy

  1. (a)
    Types of energy
  1. (i)
    Active Energy delivered by the Participants at the Point of Interconnection shall be one or more of:
  1. (A)
    Smelter Energy; or
  2. (B)
    Total Contract Energy; or
  3. (C)
    Excess Sale Energy.
  1. (ii)
    Where relevant, the Participants shall purchase from Stanwell one or more of the following types of Active Energy:
  1. (A)
    Economy Purchase Energy; or
  2. (B)
    Capacity Support Energy.
  1. (b)
    Calculation of energy

The amounts of Active Energy Falling within the categories set out in Clause 10.1(a) above shall be calculated in accordance with Schedule 16, and payments in respect of such Active Energy shall be determined in accordance with Schedule 16, provided that payments for Total Contract Energy shall be made pursuant to the CPAs.

  1. [40]
    Fifth, clause 23 provides:

23 FUEL ARRANGEMENTS

23.1 Purpose

The purpose of this Clause 23 is to establish procedures for the procurement of coal for GPS and the management of the associated coal risks with a view to:

  1. (a)
    deleted intentionally;
  1. (b)
    minimising the long term costs of electricity generation to meet the requirements of the Smelter and Stanwell;
  1. (c)
    ensuring that there are adequate supplies of coal to meet the Station Annual Forecast and the actual generation requirements of GPS;
  1. (d)
    minimising BSL’s and Stanwell’s exposure to coal price fluctuations; and
  1. (e)
    providing the Participants with the flexibility to acquire low cost coal under contract.

Reference may be made to this Clause 23.1 in order to assist the resolution of any dispute or difference between the Parties concerning the terms or application of this Clause 23.

23.2 Initial coal supply arrangements

  1. (a)
    The Parties acknowledge that the following coal supply and transport arrangements in respect of GPS were put in place as at the Date of Transfer:
  1. (i)
    the Callide On-Sale Contract;
  1. (ii)
    the Curragh On-Sale Contract; and
  1. (iii)
    the Rail Haulage Agreement,

and that the coal forming the subject matter of the above contracts, and which was subject to take or pay obligations under the above contracts, was agreed to be Committed Coal for the relevant purposes.

  1. (b)
    The Parties acknowledge that the Callide On-Sale Contract was terminated by the parties to it and the Curragh On-Sale Contract and Rail Haulage Agreement have expired and that various other contracts have been entered into by the Participants pursuant to Clause 23.5(e) for the supply of coal to GPS and that under Clause 23.5(d) the minimum coal deliveries under those contracts are regarded as Committed Coal for the relevant purposes.

23.3 Forecasting procedures

  1. (a)
    By 15 March of each year or such other date as the Parties may agree, the Participants shall provide to Stanwell the GPS Forecast Data.
  1. (b)
    In addition, by 15 March of each year or such other date as the Parties may agree, the Participants shall if requested by Stanwell upon not less than sixty (60) days’ written notice, and may in any event, provide to Stanwell for each of the next five (5) succeeding Contract Years, the anticipated cost of additional delivered coal for the purpose of longer range dispatch forecasting based on a range of annual coal consumption estimates notified to the Participants by Stanwell.
  1. (c)
    No later than 15 June in each year the Participants shall confirm or revise the GPS Forecast Data for the next Contract Year provided to Stanwell under Clause 23.3(a) by giving notice of the confirmation or revisions to Stanwell, together with such information supporting the GPS Forecast Data as Stanwell may reasonably require.
  1. (d)
    Following receipt of, and having regard to, the GPS Forecast Data, Stanwell shall provide the Station Annual Forecast to the Participants in accordance with Clause 5A to assist in coal procurement and planning, for each of the succeeding five (5) Contract Years or such longer period as the Parties may agree.
  1. (e)
    Deleted intentionally.
  1. (f)
    Deleted intentionally.

23.4  Deleted intentionally

23.4A GPS coal procurement plans

  1. (a)
    By 15 October of each year or such other date as the Parties may agree, the Participants shall prepare and provide to Stanwell their annual coal procurement plan for the next Contract Year (“Annual Coal Procurement Plan”).
  1. (b)
    The Participants shall prepare the Annual Coal Procurement Plan in good faith, taking into account the final Station Annual Forecast pursuant to Clause 5A.6.
  1. (c)
    It is the responsibility of the Participants to manage, at their discretion, the overall supply of coal using Good Operating Practice so that the Station Annual Forecast can be met.
  1. (d)
    Each Annual Coal Procurement Plan shall include the following:
  1. (i)
    changes to coal information provided in the GPS Forecast Data relevant to details of maximum and minimum contracted volumes, anticipated delivery schedule and price for all contracts for the supply of coal for the next Contract Year;
  1. (ii)
    changes to coal information provided in the GPS Forecast Data relevant to anticipated delivery schedules (in tonnes per month) for deliveries of coal to GPS in the next Contract Year; and
  1. (iii)
    the Participants’ anticipated end of month coal stockpile forecasts for the next Contract Year, on a month by month basis, (“Projected Monthly Coal Stockpile Forecast”).
  1. (e)
    By the last Working Day of each Month (or such earlier date as the Operations Committee may agree), the Participants shall prepare and provide to Stanwell a revised coal procurement plan for each of the next two (2) Months, (“Monthly Coal Procurement Plan”).
  1. (f)
    Each Monthly Coal Procurement Plan shall include an anticipated end of Month GPS coal stockpile forecast for each of the next two (2) Months, (“Revised Monthly Coal Stockpile Forecast”), taking into account the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate.
  1. (g)
    It is the Participants’ and Stanwell’s intention to maintain the coal stockpile at GPS within a range between 300,000 tonnes and 800,000 tonnes, (“Acceptable Coal Stockpile Range”).

23.4B Rules for Coal Stockpile Management

  1. (a)
    Subject to Clause 23.4B(c) if the Revised Monthly Coal Stockpile Forecast for any given Month is less than 300,000 tonnes and:
  1. (i)
    the stockpile level forecast is attributable to the actual level of dispatch at GPS being in excess of the anticipated levels of dispatch as disclosed in the Station Annual Forecast (taking into account the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate), Stanwell shall:
  1. (A)
    procure, in accordance with either Clause 23.4C or Clause 23.5, sufficient deliveries of additional coal to GPS; or
  2. (B)
    manage the dispatch of power from GPS,

in order to ensure that so far as practicable the coal stockpile is maintained within the Acceptable Coal Stockpile Range and that in any event, the Revised Monthly Coal Stockpile Forecast is brought within the Acceptable Coal Stockpile Range by no later than the third (3rd) Month after the Month in which the relevant Revised Monthly Coal Stockpile Forecast is given; or

  1. (ii)
    the stockpile level forecast is attributable to the deliveries of coal arranged by the Participants being less than the deliveries necessary to ensure that GPS is able to meet the level of dispatch identified in the Station Annual Forecast, the Participants shall unless the Parties otherwise agree:
  1. (A)
    procure sufficient deliveries of additional coal to GPS to meet the anticipated levels of dispatch as disclosed in the Station Annual Forecast; or
  2. (B)
    request Stanwell to reduce the dispatch of power from GPS (which request Stanwell may, in its sole discretion accept, decline or advise the Participants of the increased costs it will incur in meeting this request and in doing so provide the Participants the opportunity to accept and reimburse Stanwell for those costs),

to ensure that so far as practicable the coal stockpile is maintained within the Acceptable Coal Stockpile Range and that in any event, the Revised Monthly Coal Stockpile Forecast is brought within the Acceptable Coal Stockpile Range by no later than the third (3rd) Month after the Month in which the relevant Revised Monthly Coal Stockpile Forecast is given.

  1. (b)
    Subject to Clause 23.4B(c), if the Revised Monthly Coal Stockpile Forecast for any given Month is greater than 800,000 tonnes and:
  1. (i)
    the stockpile level forecast is attributable to the actual levels of power dispatched at GPS being less that the anticipated levels of dispatch as disclosed in the Station Annual Forecast (taking into account the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate), then Stanwell shall either:
  1. (A)
    request the Participants to reduce deliveries of coal to GPS (which request the Participants may, in their sole discretion accept, decline or advise Stanwell of the increased costs the Participants will incur in meeting this request and in doing so provide Stanwell with the opportunity to accept and reimburse the Participants for those costs); or
  2. (B)
    increase the dispatch of power from GPS,

in order to ensure that so far as practicable the coal stockpile is maintained or is brought within the Acceptable Coal Stockpile Range and in any event does not at any time exceed 900,000 tonnes and is brought within the Acceptable Coal Stockpile Range by no later than the third (3rd) Month after the Month in which the relevant Revised Monthly Coal Stockpile Forecast is given; or

  1. (ii)
    the stockpile level forecast is attributable to either the deliveries of coal arranged by the Participants being greater than the deliveries necessary to ensure that GPS is able to meet the level of dispatch identified in the Station Annual Forecast, or to a reduction in the Availability of GPS below the GPS availability forecast contained in the GPS Forecast Data, the Participants shall either:
  1. (A)
    reduce deliveries of coal to GPS; or
  2. (B)
    request Stanwell to increase the dispatch of power from GPS (which request Stanwell may, in its sole discretion, accept, decline or advise the Participants of the increased costs it reasonably believes it will incur in meeting this request and in doing so provide the Participants the opportunity to accept and reimburse Stanwell for those costs),

in order to ensure that so far as practicable the coal stockpile is maintained or is brought within the Acceptable Coal Stockpile Range and in any event does not at any time exceed 900,000 tonnes and is brought and maintained within the Acceptable Coal Stockpile Range by no later than the third (3rd) Month after the Month in which the relevant Revised Monthly Coal Stockpile Forecast is given.

  1. (c)
    If the Revised Monthly Coal Stockpile Forecast for any Month is not within the Acceptable Coal Stockpile Range and either Party acting reasonably believes that this is attributable to a combination of:
  1. (i)
    the levels of dispatch of power at GPS (taking into account the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate); and
  1. (ii)
    either:
  1. (A)
    the deliveries of coal arranged by the Participants; or
  2. (B)
    a reduction in the Availability of GPS below the forecast availability,

then either Party may refer the matter to the Operations Committee for a determination as to what steps should be taken by the Parties to being the coal stockpile within the Acceptable Coal Stockpile Range having regard to the mechanisms listed in Clauses 23.4B(a) and 23.4B(b) and giving due weight to the circumstances that gave rise to the anticipated coal stockpile at GPS being outside the Acceptable Coal Stockpile Range.

  1. (d)
    If a Party is required to procure additional coal to satisfy the requirements of Clause 23.4B(a), then unless the other Party otherwise directs, for the purposes of calculating amounts payable by Stanwell under this Agreement:
  1. (i)
    in the event that coal is procured pursuant to Clause 23.4B(a)(i):
  1. (A)
    that additional coal will be deemed to constitute Dedicated Coal for the purposes of Clause 9.2 of Schedule 16;
  1. (B)
    subject to paragraph (C) below, that additional coal will be deemed consumed before all other Dedicated Coal for the purposes of calculating Average Cost Delivered Fuel; and
  1. (C)
    if in any Month, that additional coal is the only Dedicated Coal for the purposes of calculating the Total Contract Energy Charge pursuant to Clause 9.2 of Schedule 16, then the balance of that additional coal will be deemed consumed in the following Month;
  1. (ii)
    in the event that coal is procured pursuant to Clause 23.4B(a)(ii), that coal will be deemed not to constitute Dedicated Coal for the purposes of Clause 9.2 of Schedule 16 and shall be treated as BSL Specific Coal.
  1. (e)
    Subject to Clause 23.4B(f), any Stockpile Incentive Payment payable will be:
  1. (i)
    calculated in accordance with the formula set out in paragraph 10.11 of Schedule 16; and
  1. (ii)
    payable in accordance with Clauses 14 and 23.4B(f).
  1. (f)
    For the avoidance of doubt, Stanwell shall not be liable to pay Stockpile Incentive Payment to the Participants to the extent that Clause 23.4B(b)(ii) applies.

23.4C Supply of coal by Stanwell

  1. (a)
    Stanwell may, by notice in writing, advise the Participants that it wishes to supply coal in addition to Committed Coal to GPS (“Stanwell Short Term Coal”). Unless otherwise agreed by the Participants, Stanwell Short Term Coal shall be supplied for the purposes of meeting all or part of the Total Contract Energy portion of the Station Annual Forecast.
  1. (b)
    If Stanwell delivers a notice pursuant to Clause 23.4C(a), it shall provide the Participants with particulars of the expected quantity, delivery schedule and contract specification of the Stanwell Short Term Coal.
  1. (c)
    Upon receipt of a notice pursuant to Clause 23.4C(a) and the information to be provided under Clause 23.4C(b), the Participants shall consider whether in their reasonable opinion:
  1. (i)
    the coal stockpile will not, having regard to the proposed schedule for delivery of Stanwell Short Term Coal, and other scheduled deliveries of coal to GPS, exceed 450,000 tonnes (unless the Participants otherwise approve, which approval shall not unreasonably be withheld in circumstances requiring an emergency train diversion having regard to the parameters in Scenario 1 of Schedule 14);
  1. (ii)
    the Stanwell Short Term Coal:
  1. (A)
    satisfies the technical and environmental requirements of GPS (as assessed by the Participants), both on a stand alone and blended basis;
  2. (B)
    will, if supplied, comply with any relevant Authorisation held by or for the Participants in respect of GPS both on a stand alone and blended basis; and
  3. (C)
    will not, if supplied, in the reasonable opinion of the Participants, have any adverse technical, environmental or commercial consequences for GPS (including its coal stockpile) or BSL or compromise the operation of GPS.
  1. (d)
    In addition to the matters set out in Clause 23.4C(c), if it is necessary to conduct trial burns or other tests to obtain any Authorisation in respect of the use of the Stanwell Short Term Coal at GPS, Stanwell shall cooperate in those trial burns or tests, and shall promptly upon demand reimburse the Participants for any costs of and incidental to those trial burns or test.
  1. (e)
    If the Participants are satisfied of the matters set out in Clause 23.4C(c), they shall promptly advise Stanwell of that matter, and Stanwell may proceed to arrange delivery of the Stanwell Short Term Coal, subject to the matters set out in Clauses 23.4C(g) to and including (i).
  1. (f)
    If Stanwell elects to supply coal under this Clause 23.4C:
  1. (i)
    Stanwell shall pay for that coal and pay for the costs associated with transporting the coal to GPS, unless the Participants otherwise agree. If BSL elects to participate in the purchase of that coal, or the Participants otherwise agree, the cost of coal supplied by Stanwell will be taken into account in calculating ACDF; and
  1. (ii)
    Stanwell shall ensure that its contracted delivery arrangements are compatible with delivery schedules under any Annual Coal Procurement Plan or Monthly Coal Procurement Plan.
  1. (g)
    Title to and risk in coal supply by Stanwell under this Clause 23.4C shall transfer to the Participants when it is unloaded at GPS.
  1. (h)
    If any Stanwell Short Term Coal does not meet the requirements of Clause 23.4C(c), the Participants may:
  1. (i)
    reject that delivery, in which case Stanwell must arrange to remove it from the stockpile and in that event Stanwell shall indemnify, defend and hold harmless the Participants against all loss, damage or expense of whatever nature incurred by Stanwell or the Participants on Stanwell’s behalf due to any shortfall in being able to meet the Station Annual Forecast relevant to that quantity of coal that is rejected; and
  1. (ii)
    by notice to Stanwell, suspend Stanwell’s entitlement to supply coal to GPS until Stanwell can demonstrate to the Participants that further coal to be supplied by Stanwell conforms to the required specifications.
  1. (i)
    Stanwell shall provide notice to the Participants of proposed deliveries of coal supplied under this Clause 23.4C in accordance with Schedule 14.
  1. (j)
    If three-way blending capability is necessary to manage the coal supplied by Stanwell, Stanwell shall reimburse to the Participants those capital costs of plant reasonably incurred to enable the blending to occur. The Participants shall notify Stanwell in writing of any proposed capital costs of plant that are intended to be incurred in accordance with this Clause 23.4C(j) and shall only incur those capital costs of plant following approval by Stanwell.

(k) The supply of Stanwell Short Term Coal under the Clause 23.4C will not affect the Participants’ rights to Dispatch Compensation for Excess Generation.

23.5 Purchase of additional coal for GPS

  1. (a)
    Stanwell may request that the Parties meet to identify and evaluate prospective coal supply options that may be available to the Participants:
  1. (i)
    to meet a projected shortfall in the amount of coal under contract to meet Station Annual Forecast;
  1. (ii)
    to meet an Allowed Adjustment under Clause 5A.9;
  1. (iii)
    in a manner that best meets the objectives mentioned in Clauses 23.1(b) and 23.1(d); or
  1. (iv)
    to meet the requirements of Clause 23.4B.
  1. (b)
    If the Participants first notify Stanwell, the Participants may decide to seek bids for coal for GPS:
  1. (i)
    to meet a projected shortfall in the amount of coal under contract to meet the Station Annual Forecast;
  1. (ii)
    to meet an Allowed Adjustment under Clause 5A.9 (via 5A.10(a)(iii)) or in a manner that best meets the objectives mentioned in Clauses 23.1(b) and 23.1(d); or
  1. (iii)
    to meet the requirements of Clause 23.4B.
  1. (c)
    Coal bids
  1. (i)
    Upon receipt of a request pursuant to Clause 23.5(a) or notice under Clause 23.5(b), the Parties shall meet and discuss the impact that the purchase of additional coal may have on stockpile levels to determine whether such additional coal is required. Unless otherwise agreed, additional coal shall not be purchased that would result in the Actual Coal Stockpile level exceeding 450,000 tonnes if GPS was dispatched in accordance with the Station Annual Forecast (including any approved Allowed Adjustment).
  1. (ii)
    Subject to Clause 23.5(c)(i), if requested by Stanwell in accordance with Clause 23.5(a)(i), or if the Participants so decide in accordance with Clause 23.5(b)(i), the Participants shall seek “arms-length” bids for the supply of the amount of coal agreed with Stanwell (provided that the quality of coal is suitable to be burned at GPS) and, if appropriate, seek bids for transport of such coal. Unless otherwise agreed, the bids for the supply of coal shall be based on contract terms such that the supply is for a period in the range of five (5) to twelve (12) years and with a flexibility in the annual rate of delivery of at least ten percent (10%) less than or greater than the average annual rate of delivery.
  1. (iii)
    If requested by Stanwell in accordance with Clause 23.5(a)(iv) or Clause 23.5(a)(ii) or if the Participants so decide in accordance with Clause 23.5(b)(ii) or Clause 23.5(b)(iii), the Participants shall seek “arms-length” bids for the supply of the amount of coal agreed with Stanwell (“Adjustment Coal”) (provided that the quality of coal is suitable to be burned at GPS) and, if appropriate, seek bids for the transport of such coal. Unless otherwise agreed, the bids for the supply of coal shall be based on the duration of the Allowed Adjustment or the period for which additional coal is necessary under Clause 23.4B.
  1. (iv)
    In the event that Stanwell wishes to participate in the coal bid process (as a bidder), Stanwell must nominate its intention to do so prior to the Participants approaching the market for “arms-length” bids in accordance with paragraph (ii) and (iii) above. If it does not so nominate, Stanwell shall not be entitled to participate in the coal bid process (as a bidder).
  1. (v)
    The Participants shall notify Stanwell of the bids received and which of those bids that the Participants reasonably consider are appropriate (“Acceptable Bids”). If Stanwell disputes the selection by the Participants as to which bids are Acceptable Bids then the matter shall be referred to an Expert appointed pursuant to Clause 34.3. Any bids determined by the Expert to be appropriate in accordance with this Clause 23.5(b) shall become Acceptable Bids.
  1. (vi)
    If an Acceptable Bid is in respect of Adjustment Coal, the Participants shall, within ten (10) Working Days of a bid becoming an Acceptable Bid, advise whether BSL has elected to include the Acceptable Bid as Dedicated Coal for the purposes of this Agreement.
  1. (vii)
    the Participants shall not be required to accept any Acceptable Bid where such acceptance would require the Participants to make any payment by way of direct and identified contribution to capital costs to a coal supplier or coal haulier in contracting for the supply or delivery of coal as contemplated by this Clause 23.5, until the Parties have agreed the manner in which such contributions shall be recouped and taken into account in determining the payments for Dedicated Coal and the Dedicated Coal Price, as defined in and for the purposes of Schedule 16.
  1. (d)
    If the purchase of additional coal is initiated by Stanwell pursuant to Clause 23.5(a), Stanwell shall evaluate the Acceptable Bids received pursuant to Clause 23.5(c) with a view to establishing whether such Acceptable Bids are consistent with the objectives of this Clause 23. Upon such evaluation being completed, Stanwell shall notify the Participants as to which, if any, of the Acceptable Bids it wishes the Participants to accept and the Participants shall, unless to do so would be prohibited by any laws regulating trade practices (and any other applicable legislation), enter into a binding contract with respect thereto. In any other case, the Participants shall determine which of the Acceptable Bids they propose to accept.
  1. (e)
    Where an Acceptable Bid is accepted in accordance with Clause 23.5(d) then:
  1. (i)
    if BSL has elected to include the Acceptable Bid as Committed Coal (pursuant to Clause 23.5(c)(vi)), any minimum coal deliveries that must in consequence be accepted by the Participants under the terms of that Acceptable Bid shall be regarded as Committed Coal and the coal supplied pursuant to the Acceptable Bid shall be regarded as Dedicated Coal for the purposes of Schedule 16;
  1. (ii)
    in any other case, the coal supplied pursuant to the Acceptable Bid shall be treated as supplying Stanwell’s Total Contract Energy for the term of the relevant coal contract and the coal shall be treated as supplying part of the Total Contract Capacity for the purposes of Schedule 16.
  1. (f)
    Notwithstanding the foregoing procedures, if the quantity of coal (both firm and incremental) available under contract for use at GPS is less than eighty percent (80%) of that required to meet the Final SDL, the Participants may, after consultation with Stanwell, contract to purchase additional coal (unless otherwise agreed on contract terms such that the supply is for a period in the range of five (5) to twelve (12) years and with a flexibility in the annual rate of delivery of at least ten percent (10%) less than or greater than the average annual rate of delivery) necessary to re-establish the level as aforesaid. Such coal shall be regarded as Committed Coal.
  1. (g)
    If the Participants exercise their right to purchase coal for the Smelter pursuant to Clause 23.5(f), Stanwell may elect as to whether such coal is to be included in the coal price averaging of energy produced from GPS and supplied to Stanwell as Total Contract Energy for the term of the relevant coal contract. In the event that Stanwell chooses not to so include such coal, the coal shall be treated solely as supplying the Smelter’s energy for pricing purposes under Schedule 16 and that coal shall be treated as BSL Specific Coal.
  1. (h)
    For the purposes of power billing, BSL Specific Coal and Stanwell Specific Coal shall be deemed to be consumed in the Month in which the relevant coal was delivered to GPS.
  1. (i)
    The annual reconciliation arrangements in Schedule 16, shall exclude any BSL Specific Coal or Stanwell Specific Coal which is deemed to be consumed.

23.6 Deleted intentionally

23.7 Deleted intentionally

Coal procurement

  1. [41]
    When the 2009 IPPA was agreed the Participants had (to Stanwell’s knowledge) two contracts for the supply of coal to GPS:
    1. (a)
      a contract with Glencore Coal Queensland Pty Ltd dated 26 August 2005, for the supply of coal from the Rolleston Mine to GPS; and
    2. (b)
      a contract with Callide Coalfields (Sales) Pty Ltd dated 2008, for the supply of coal to GPS from the Boundary Hill and Southern mines.
  2. [42]
    The cost of coal used in the operation of GPS is borne principally by the Participants, subject to the operation of clause 23, as discussed later, and any reimbursement through payment for charges for Active Energy under clauses 10.1(b), 14 and Schedule 16, as discussed later. As will appear, such charges only become payable on the burning of coal, generally speaking.

Capacity of GPS

  1. [43]
    GPS’s generation capacity for electrical power is identified in the 2009 IPPA as the Net Maximum Capacity, a term that is defined to mean the maximum continuous output capacity of any Generating Unit to be determined in accordance with clause 18.1, and which is abbreviated to “NMC”. The NMC is 1613 MW.[2] NMC may be adjusted to “Contracted Net Maximum Capacity” (“CNMC”) under clause 8.3(e), under which CNMC is in turn used to derive “Total Contract Capacity” (“TCC”).
  2. [44]
    From the NMC of 1613 MW, 1104 MW represents the “BSL [Boyne Smelter Limited] Allocated Capacity”, as defined, a term abbreviated to “BAC”. Clause 7.3 obliges QETC to transmit electricity to meet the load of the Smelter from both the “BAC” and by way of further “Capacity Support” under clauses 9 and 10.
  3. [45]
    As well, CS Energy is obliged to purchase electricity in an amount equivalent to the actual load of the Smelter in a “Trading Interval”[3] up to the “Final SDL” (810 MW unless adjusted under clause 8.3(e)) plus any “Make-up Energy”[4] for delivery to the Participants for the Smelter.[5]
  4. [46]
    Accordingly, approximately 509 MW of GPS’ generation capacity is available as Total Contract Capacity, determined in accordance with clause 8.3, and having regard to the meaning of “Contract Capacity”[6] as set out in the CPA between each Participant and Stanwell. “Contract Energy” is defined to mean energy generated at GPS from the Total Contract Capacity and delivered to Stanwell pursuant to the 2009 IPPA.[7] In effect, that is the energy that CS Energy is able to trade for profit on its own account.

National Electricity Market and the 2009 IPPA

  1. [47]
    The national electricity market (“NEM”) was established from 1 December 1998. The Electricity—National Scheme (Queensland) Act 1997 (Qld), applies the National Electricity Law in Queensland as the National Electricity (Queensland) Law[8] and the National Electricity Rules[9] to the NEM in Queensland.
  2. [48]
    The National Electricity Rules provide (now) for Australian Energy Market Operator (“AEMO”) to operate and administer a spot market for the sale and purchase of electricity.[10] They also provide in detail for the registration of participants, including generators of different classes.[11]
  3. [49]
    The NEM (and its interim predecessor) brought about a fundamental change in the 1994 arrangements for the State system. Power stations, as or through a nominated generator, supply energy into the NEM and are dispatched in accordance with dispatch offers made by the relevant generator through a competitive bidding process.
  4. [50]
    The NEM provides a “wholesale” market for the supply of electrical energy by generators to retailers and end-users across the east coast of Australia (and South Australia). The market operates through a pooling system conducted (now) by AEMO. Generators’ supply is aggregated and scheduled to meet demand from retailers and end-users on a real-time basis. That the market operates as a spot market, where demand and supply are matched, is dictated by the inability to store electrical energy from most forms of generation.
  5. [51]
    The “AEMO Dispatch Engine” (now) determines the required generation levels of power station units, including GPS, based on the dispatch offers made by participant generators, and provides dispatch signals through an automated control system.
  6. [52]
    A generator offers energy for dispatch for five minute periods during a half-hour Trading Interval. Actual demand determines the generation that is dispatched for any five minute period on the basis of lowest priced generation first. The dispatch offers[12] are scheduled to be dispatched based on a price “stack”, from lowest to highest accepted price. The last generator’s dispatch offer that is dispatched, ie the highest priced accepted offer that is dispatched for the five minute period in question, is an input amount to the spot price for the relevant half-hour’s Trading Interval, which is the average of such input amounts.
  7. [53]
    The demand curve of this market varies according to a number of factors. Typically, there is a lower load or demand overnight, growing in the early morning to an initial peak for the day at about 8 am. Depending on the air conditioning load, demand falls off slightly through the middle of the day, then grows again to a second daily peak at about 6 pm or 7 pm, and then falls again to the overnight load.
  8. [54]
    These varying loads during a day may be broken down, for analysis, into a base load, an intermediate load and a peak load. A large low cost coal-fired power station and generator may supply parts of each of those loads although different generators do take on the role of supply of one part of the load profile rather than another.
  9. [55]
    The bidding process is complex. A generator may offer the capacity of a single generating unit in multiple (up to 10) bands of capacity and price. That will potentially affect when the unit is dispatched, in what capacity and at what price. But when dispatch occurs for a 5 minute period, the highest band dispatch offer that is dispatched for the period contributes to the spot price that will be received by each generator for the Trading Interval.
  10. [56]
    The 1994 IPPA provided for dispatch of GPS in relation to the rest of the State system and the supply and pricing of interchange energy based on the costs of other generation in the State system, as well as coal procurement and other matters. Under clause 6.3 of the 1994 IPPA, generating plant connected to the State system, including GPS, was then committed in accordance with the cost based “Economic Dispatch”, as defined, and was dispatched in accordance with a cost based “Merit Order”, as defined.
  11. [57]
    Clause 25.16 of the 1994 IPPA envisaged the possible changes that might be brought about by a national grid and that amendment of the IPPA might be required. The 2009 IPPA is the end result.
  12. [58]
    Under Recital I and clause 6.2(a)(i), CS Energy is the nominated generator for GPS for the purposes of the NEM. It dispatches the whole of GPS’ output into the NEM in accordance with the 2009 IPPA.
  13. [59]
    The changes made in the 2009 IPPA included a new:
    1. (a)
      clause 5A (Station Annual Forecast and Dispatch Estimate);
    2. (b)
      clause 6.3 (Dispatch Offers for GPS);
    3. (c)
      clause 23.4A (GPS coal procurement plans);
    4. (d)
      clause 23.4B (Rules for Coal Stockpile Management); and
    5. (e)
      clause 23.4C (Supply of coal by Stanwell).
  14. [60]
    The 2009 IPPA contains a number of provisions that relate to the dispatch by CS Energy of GPS into the NEM. They include provisions for forecasting that dispatch, including those relating to the Station Annual Forecast set out in clause 5A and referred to in clause 23 set out above. The procurement of coal for the station in accordance with clause 23 is related to dispatch because the availability of coal is a constraint on the available generation capacity, as previously mentioned.
  15. [61]
    Generally speaking, clause 23 contains rules for managing the procurement and stockpiling of coal (meaning all the stockpiles and storage previously described) for the purpose of ensuring the availability of coal to generate the forecast electrical energy (but not overstocking coal for that purpose), in part, by maintaining a coal stockpile in the range from a minimum of 300,000 tonnes and a maximum of 800,000 tonnes.
  16. [62]
    The parties are in dispute about the operation of clauses 5A and 23. In particular, CS Energy contends that the Participants have failed to procure coal and maintain the stockpile in accordance with clause 23.4A(c) and 23.4B and that has compromised the “flexibility” of dispatch of GPS, apparently meaning that CS Energy has not been able to dispatch the Contract Capacity as Contract Energy at times when it would have been advantageous to CS Energy to do so. However, the scope of the dispute was not better defined for the purpose of this hearing, except for an assertion that because CS Energy was unable to avail itself of trading opportunities in the electricity market it has suffered revenue losses in the order of tens of millions of dollars.

Charges under the 2009 CPAs and the 2009 IPPA

  1. [63]
    The 2009 CPAs are contemporaneous with and inter-related to the 2009 IPPA in such a way that they should be considered together.
  2. [64]
    A central provision of the 2009 CPAs is clause 5 which provides, in part:

5. Capacity Charge

5.1 Calculation of Capacity Charge

  1. (a)
    Subject to the provisions of Clause 5.1(b) below, Stanwell shall pay to the Participant, in respect of each Month in each year until the expiry or termination of this Agreement, a monthly charge (the ‘Capacity Charge’) in consideration for the provision to Stanwell of Contract Capacity determined in accordance with the calculation set out below:-

 Capacity Charge = (Contract Capacity * Capacity Rate * 1000) – IAm

where:-

 Contract Capacity is the Participant’s Share of the Total Contract Capacity in the relevant Month (expressed in MW);

 Capacity Rate is the value set out in Schedule 1 for the relevant Contract Year, Escalated at CPI;

 IAm means the interest adjustment for the relevant Month ‘m’ (IAm) (expressed in dollars) and is calculated in accordance with the following formula:-

 IAm = PAm *(FIIRm FLIRm)

 where:-

 PAm is the outstanding Principal Amount as at the start of the relevant Month ‘m’ as determined in respect of that Month from Schedule 6;

 FIIRm is the Fixed Interest Rate for the relevant Month ‘m’;

 FLIRm is the Floating Interest Rate at the start of the relevant Month ‘m’.”

  1. [65]
    Accordingly, it is fundamental to the contractual arrangements that CS Energy pays for Contract Capacity, that is, the capacity of GPS to generate energy in excess of the Smelter’s amounts for CS Energy to trade for profit, not just the Contract Energy that is actually generated.
  2. [66]
    The annual amounts of Capacity Charges paid by CS Energy to the Participants for the 2015 to 2017 contract years were as follows:

 

Year

Capacity Charge ($)

2015

36,863,697

2016

37,450,342

2017

38,080,122

  1. [67]
    In addition, the 2009 CPAs provide for payment by CS Energy to the Participants for Contract Energy under clause 6 that provides as follows:

6. Contract Energy

6.1 Calculation of Contract Energy

 In respect of each Month during the Term, the Contract Energy for the purposes of this Agreement shall be the number of kWh calculated as the Participant’s Share of the Total Contract Energy for that Month.

6.2 Calculation of Energy Charge

 Stanwell shall, in respect of each Month during the Term, pay the Energy Charge to the Participant for Contract Energy in that Month calculated as the Participant’s Share of the Total Contract Energy Charge for that Month determined in accordance with Schedule 16 of the IPPA.”

  1. [68]
    Accordingly, the obligation to make payments for Contract Energy turns on the operation of Schedule 16 to the 2009 IPPA, in particular clause 9.2. The complexity of the algebraic language deployed in the relevant clauses means that it is not useful to set all of them out in full in these reasons. A summary must suffice. Even the parts to be set out are not easily understood.

Total Contract Energy Charge

  1. [69]
    Clause 10.1 of the 2009 IPPA provides that Active Energy delivered by the Participants to the “Point of Interconnection”[13] shall be one or more of “Smelter Energy”,[14] “Total Contract Energy”[15] (or “TCE”), or “Excess Sale Energy”[16] (or “ESE”). The clause further provides that Active Energy delivered by the Participants shall be allocated amongst those categories and that charges in respect of those categories shall be determined under Schedule 16 (although payments for TCE are made under the separate Capacity Purchase Agreements).
  2. [70]
    The series of complex calculations set out in Schedule 16 include clause 9.2(a) (as amended in 2011) that provides for a “Total Contract Energy Charge” to be made by the Participants to CS Energy for the provision of TCE and ESE in a month, as follows:

$TCEm = (SSCTEm × PSSCm)

+ [max[(TCTEm + ESTEm – SSCCOm – SSCTEm) , 0] × ACDFm]

(“TCE Charge Calculation”).

  1. [71]
    Each of the components of that calculation is the subject of further definition or calculation in Schedule 16 or elsewhere.
  2. [72]
    The TCE Charge Calculation comprises the addition of two terms, each of which represents a charge (in $) for a quantity of thermal energy (in GJ) multiplied by a dollar rate per quantity of thermal energy (in $/GJ).

The first term of the TCE Charge Calculation – separate treatment for Stanwell Specific Coal

  1. [73]
    The first term produces a charge for “Stanwell Specific Coal”[17] (or “SSC”) delivered to the station in the relevant month.
  2. [74]
    The charge is calculated by multiplying the thermal energy content of SSC delivered (or “SSCTE”) by the “Price for Stanwell Specific Coal”[18] (or “PSSC”), a rate in $/GJ reflecting all amounts payable by the Participants for delivery of SSC, in the period.
  3. [75]
    SSC is defined as coal that is delivered to the station that is not (and is not deemed to be) “Dedicated Coal”[19] or “BSL Specific Coal’[20]. This includes Stanwell Short Term Coal that CS Energy elects to provide,[21] and for which it pays unless the Participants otherwise agree.[22] It also includes coal acquired after a request by CS Energy to identify prospective coal supply options to ensure sufficient coal supply for any of the reasons in clause 23.5(a), unless BSL has elected to include the coal as Dedicated Coal.
  4. [76]
    As such, the first term of the TCE Charge Calculation, broadly speaking, has the effect of passing through any cost incurred by the Participants for SSC to CS Energy, when the coal is burnt or deemed to be burnt.

The second term of the TCE Charge Calculation

  1. [77]
    The second term produces a charge for the non-SSC components of the Total Contract Energy Charge in the relevant month.
  2. [78]
    The second term is calculated by multiplying a calculated quantity of thermal energy by the “Average Cost Delivered Fuel”[23] ( or “ACDF”), which is defined as the average cost of Dedicated Coal delivered to GPS during the month, expressed under item 1.2 as a dollar rate per quantity of thermal energy (in $/GJ).
  3. [79]
    The first factor of the second term is a quantity of thermal energy, which is restricted to non-negative values,[24] and essentially comprises “Total Contract Thermal Energy”[25] (or “TCTE”) and “Excess Sale Thermal Energy”[26] (or “ESTE”), subject to two adjustments to account for SSC’s separate treatment.[27]
  4. [80]
    TCTE and ESTE are quantities of thermal energy (in GJ) calculated in items 4.3(b) and 5.2(b) of Schedule 16 by multiplying a calculated quantity of electrical energy (TCE and ESE respectively, in MWh) by a heat rate (an average ratio or incremental ratio respectively, in GJ/MWh, from thermal energy of fuel to electrical energy for a particular level of power output).[28]
  5. [81]
    The real complexity in the second term is in the calculation of TCE and ESE.

TCE is calculated in clause 4.3(a) as follows:

Judgment-Image

  1. [82]
    Simplified and interpreted, energy output[29] in excess of half the maximum smelter demand[30] is allocated to TCE until the value of TCE is capped when TCE reaches half of the available proportion of the station’s capacity allocated to CS Energy (“TCE cap”).
  2. [83]
    After that cap is reached, further energy output can only be accounted for in the second term by allocation to the ESE category, calculated in item 5.2(a) as follows:

Judgment-Image

  1. [84]
    Simplified and interpreted, energy output in excess of the TCE cap (assuming a certain condition holds[31]) is allocated to ESE.
  2. [85]
    The effect of allocating energy output to either of TCE or ESE is that different heat rates are applied to the two terms to produce TCTE and ESTE respectively, which are then variables in the TCE Charge Calculation.

The effect of the TCE Charge Calculation

  1. [86]
    Various points of potential relevance emerge from the above consideration of the TCE Charge Calculation.
  2. [87]
    First, SSC, which coal is supplied on the election or request of CS Energy, is the subject of a direct pass through of the Participants’ coal costs to CS Energy.
  3. [88]
    Second, although there are domains of energy output over which no allocation is made to TCE or ESE (that is, energy output up to half the maximum smelter demand which is not in TCE, and energy output in the possible gap between the TCE cap and ESE if the available smelter capacity condition does not hold), outside those domains increases in energy output lead to increased TCE or ESE, thus TCTE or ESTE, thus to the Total Contract Energy Charge. In other words, the Total Contract Energy Charge is generally higher for higher levels, and lower for lower levels, of energy output.
  4. [89]
    Third, due to the use of different forms of heat rates for calculating TCTE and ESTE from TCE and ESE respectively, the additional charge for each additional unit of electrical energy output allocated to one or the other may differ. I infer that this may reflect different physical realities in terms of the conversion of thermal energy to electrical energy in the units of the power station for the different components of power generated represented by TCE and ESE.
  5. [90]
    Fourth, the complexity of the calculations, definitions and other provisions affecting pricing for the charges make it difficult to assess, in the abstract, the precise effects on the Total Contract Energy Charge of the operation of the particular terms that are disputed in this case.

Scheduling and Dispatch

  1. [91]
    Clause 6.2 provides for Stanwell as the nominated generator for GPS to commit or de-commit units and the combustion turbine in accordance with the “Rules”[32]. By clause 6.2(c), CS Energy is to use reasonable endeavours to commit units in accordance with the Commitment and Dispatch Estimate made under clause 5A. Commitment is the commencement of the process of starting up and synchronising a generating unit to the Power System under the NEM.[33]
  2. [92]
    Under clause 6.3, CS Energy may make “GPS Dispatch Offers” (and “GPS Rebids”) in respect of the Available Capacity of GPS into the “Spot Market”[34] and is entitled to receive all monies in relation to the “Availability”[35] of GPS and dispatch of “Available Capacity”[36] of GPS.
  3. [93]
    Subject to two provisos, clause 6.3(b) provides that CS Energy shall be entitled to submit to System Control a Dispatch Offer for the dispatch in each Trading Day of the Available Capacity of GPS (a “GPS Dispatch Offer”) (and one or more rebids for the dispatch of Available Capacity of GPS (“GPS Rebids”)) in respect of each Trading Interval within that Trading Day to maximise its overall revenue and profit position on a power station by power station or portfolio basis as CS Energy may in its sole discretion determine.
  4. [94]
    The apparent purpose of this clause is two-fold. First, it is to provide for CS Energy’s entitlement to submit relevant dispatch offers (and rebids) into the NEM. Second, it is to provide that CS Energy is free to do so, so as to maximise its own revenue and profit position, taking into account that it is the nominated generator for other power stations as well as GPS.
  5. [95]
    CS Energy’s entitlement to submit GPS Dispatch Offers and GPS Rebids is qualified under clause 6.3(c) by the obligation to use reasonable endeavours to submit such offers and rebids that have regard, inter alia, to the Commitment and Dispatch Estimate for the Trading Day and have reasonable regard to opportunities to optimise the supply of Economy Purchase Energy to the Participants.
  6. [96]
    Under clause 6.4, CS Energy must provide or procure the provision to the Participants, or the Operator on their behalf, of the latest pre-dispatch schedule for GPS published or republished by System Control by electronic means. Further, CS Energy must provide to the Participants or the operator on their behalf, the required Unit Commitment for the next trading day and shall give to the operator the “GPS Dispatch Instructions”[37] issued by System Control in relation to each unit, and corresponding “Mill Start-Up”[38] and “Mill Shutdown”[39] instructions. Correspondingly, the Participants must comply with and procure the operator to comply with the GPS Dispatch Instructions, subject to certain exceptions.

Smelter power supply

  1. [97]
    The Power System is the system provided for under the Rules. Under clause 7.1, CS Energy must ensure that BSL may interconnect the Smelter with the Power System. The connection is to take place at the “Point of Supply”[40] at no charge whatsoever subject to the terms of the agreement. CS Energy also promises that QETC shall transmit electricity in accordance with the provisions of clause 7. Further, by clause 7.3, QETC promises to transmit power continuously to the Smelter to meets its actual load up to the Final SDL. These provisions are supported by clause 7.4, under which CS Energy and QETC promise only to interrupt the supply of power to the Smelter in certain specified circumstances.
  2. [98]
    Offsetting CS Energy’s entitlement to dispatch the whole of GPS’ capacity into the NEM, clause 8.1 provides that CS Energy shall purchase electricity at the Point of Supply in an amount equivalent to the actual load of the Smelter up to the Final SDL plus any Make-Up Energy for delivery to the Participants. That is, CS Energy as a participant in the NEM is the purchaser of electricity for supply to the Smelter.

Capacity support

  1. [99]
    By clause 9, the Participants promise to maintain and preserve the “Smelter Reserve Margin”[41] and make it available for dispatch. CS Energy promises to arrange for the provision of “Capacity Support”[42] and to provide “Capacity Support Energy”[43] to the Participants in respect of the power supply obligations of the Participants to the Smelter. Those obligations are contained in a separate contract, styled the Smelter Power Purchase Agreement.
  2. [100]
    Capacity Support and Capacity Support Energy are charged for by CS Energy and paid for by the Participants in accordance with separate charges described as the “Capacity Support Charge”[44] and the “Capacity Support Energy Charge”[45]. The Capacity Support Charge is to be determined in accordance with Schedule 7 where applicable. The Capacity Support Energy is the amount of Active Energy by which the Smelter Demand (accounting for Transmission Capacity Losses) exceeds the Available BSL Allocated Capacity at any time and is calculated in accordance with Schedule 16, paragraph 5.3.

Clause 23.4B and Acceptable Coal Stockpile Range

  1. [101]
    A convenient starting point for a number of the issues joined by the parties is clause 23.4B. It provides for coal stockpile management. On any view, it represents an allocation of responsibility for maintaining the coal stockpile within an identified range of tonnes of coal. There was no corresponding provision in the 1994 IPPA.
  2. [102]
    The term “Acceptable Coal Stockpile Range”[46] is defined to have the meaning set out in clause 23.4A(g). That paragraph provides that it is the Participants’ and Stanwell’s intention to maintain the coal stockpile at GPS within the range between 300,000 tonnes and 800,000 tonnes.
  3. [103]
    The term is then used in clauses 23.4B(a)(i), 23.4B(a)(ii), 23.4B(b)(i), 23.4B(b)(ii) and 23.4C (in relation to the rules for managing the stockpile), as well as in clause 5A.10(a)(iv) (in relation to the impact of Allowed Adjustments).
  4. [104]
    The aim to maintain the stockpile within the Acceptable Coal Stockpile Range is supported by the operation of the provisions relating to the “Stockpile Incentive Payment”,[47] a term defined to have the meaning set out in paragraph 10.11 of Schedule 16. Clause 14.1 provides for the monthly payment statement to be prepared by the Participants to include any sums due from one party to another party in respect of the Stockpile Incentive Payment.
  5. [105]
    Paragraph 10.11 of Schedule 16 is expressed in algebraic form. In broad terms, it provides for a payment to be made by either CS Energy or the Participants, depending on the “Stockpile Level”[48] for the relevant month, an expression defined to mean the end of month stockpile level based on a bi-monthly physical measurement on a tonnes basis as reported in the Operator’s Monthly Report.
  6. [106]
    The payments to be made under paragraph 10.11 of Schedule 16 may be summarised as follows:
    1. (a)
      if the stockpile level is between 300,000 tonnes and 450,000 tonnes, a payment from the Participants to CS Energy;
    2. (b)
      if the stockpile level is between 450,000 tonnes and 600,000 tonnes, no payment by either party;
    3. (c)
      if the stockpile level is between 600,000 tonnes and 750,000 tonnes, payment from CS Energy to the Participants; and
    4. (d)
      if the stockpile level is between 750,000 tonnes and 900,000 tonnes, a higher payment from CS Energy to the Participants.
  7. [107]
    Under clause 23.4B(a), if the stockpile level forecast for any given month is less than 300,000 tonnes, additional coal deliveries are to be obtained to bring it within range or CS Energy is to decrease the energy to be dispatched. Under clause 23.4B(b), if the stockpile level forecast is greater than 800,000 tonnes, CS Energy is to increase the energy to be dispatched or the Participants are to decrease coal deliveries to bring it back within range.
  8. [108]
    Clause 23.4B thus specifically provides for the parties’ respective responsibilities if the stockpile level forecast will fall outside the Acceptable Coal Stockpile Range within the next two months. In some circumstances, the responsibility to remedy the situation falls on CS Energy. In others, it falls upon the Participants.
  9. [109]
    For present purposes, the significance is not in the detail of those respective rights or obligations but that the clause sets out a detailed code for the parties’ respective responsibilities and does so without there being any breach of contract. Similarly, the incentives provided for by the Stockpile Incentive Payment do not turn on any breach of contract.
  10. [110]
    The parties dispute the contractual operation of the rules provided for by clause 23.4B. CS Energy submits that operation is affected by a number of questions as to the proper construction of the contract, namely whether:
    1. (a)
      the comparisons to be made, under clauses 23.4B(a)(i) and clause 23.4B(b)(i), between “the actual level of dispatch” and “the anticipated levels of dispatch as disclosed in the Station Annual Forecast (taking into account the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate)” must be made having regard to the Upper Estimate and Lower Estimate shown in the relevant Station Annual Forecast;
    2. (b)
      the comparisons to be made, under clauses 23.4B(a)(ii) and 23.4B(b)(ii), between “the deliveries of coal arranged” and the “deliveries necessary to… meet the level of dispatch identified in the Station Annual Forecast” must be made having regard to the Upper Estimate and Lower Estimate shown in the relevant Station Annual Forecast; and
    3. (c)
      whether “the stockpile level forecast”, under clauses 23.4B(a)(i) and clause 23.4B(b)(i) is to be calculated having regard to factors that decrease its usable quantity, such as coal being contaminated with dirt from underneath the stockpile to an extent that decreases the usable coal by 10 percent.
  11. [111]
    Another question is whether the surveying technique deployed by the Participants over-measures the coal in the stockpile that is usable coal.
  12. [112]
    To understand these issues, it is first necessary to explain the provisions for forecasting the dispatch of GPS and for planning the procurement of coal for the station under the 2009 IPPA.

Forecasting the dispatch of GPS and planning coal procurement

  1. [113]
    As appears from clauses 23.3, 5A and 6(c), the dispatch of GPS is to be made taking into account the results of a process of detailed forecasts of dispatch provided by CS Energy to the Participants and plans for coal procurement provided by the Participants to CS Energy.
  2. [114]
    Summarising, the first stage of the contractual forecasting process begins in March of the year preceding a relevant “Contract Year” and ends by October of that preceding year with an annual forecast of dispatch and a plan for coal procurement for GPS, each of which is broken down into monthly periods for the following year. The second stage is that during the Contract Year itself (Contract Year 1):
  1. (a)
    the annual forecast of dispatch for each month is followed up by rolling weekly forecasts of anticipated daily dispatch for the ensuing 7 days and anticipated weekly dispatch for the 7 weeks after that; and
  2. (b)
    the annual coal procurement forecast for each month is followed up at the end of each month by a monthly coal procurement plan that includes a forecast of the stockpile level as at the end of each of the ensuing two months.

Station Annual Forecast

  1. [115]
    By 15 March of the year preceding the Contract Year, the Participants agree to provide information described as the “GPS Forecast Data”[49] to CS Energy.  GPS Forecast Data is defined to mean the information prescribed in accordance with Schedule 13 for each of the succeeding 5 Contract Years. That information comprises forecasts of maximum demand of and total energy sales to the Smelter, the NMC for each Unit at GPS, the minimum operational load for each Unit, the heat rate for each Unit on a sent out basis and other information as to availability and costs, as well as information as may be reasonably required and requested by CS Energy to facilitate the preparation of the Station Annual Forecast and Commitment and Dispatch Estimates.
  2. [116]
    In addition to the GPS Forecast Data, CS Energy may request the Participants to provide the anticipated costs of additional delivered coal for the purpose of longer range dispatch forecasting based on a range of annual coal consumption estimates notified by CS Energy for the next 5 succeeding Contract Years.[50] Further, by not later than 15 June, the Participants are to confirm or revise the GPS Forecast Data.
  3. [117]
    Following receipt of and having regard to the GPS Forecast Data, CS Energy is to provide the “Station Annual Forecast”[51] to the Participants in accordance with clause 5A to assist in coal procurement and planning for each of the succeeding 5 Contract Years, or such longer period as the parties may agree.[52]
  4. [118]
    By no later than 6 July, CS Energy must prepare and provide to the Participants a draft of the Station Annual Forecast together with such supporting material as it considers appropriate.[53] The draft Station Annual Forecast must include the anticipated level of dispatch of GPS on a sent out basis for the next calendar year on a monthly basis and such levels on an indicative yearly basis for the remaining 4 Contract Years.[54] Second, it must include (in order to assist in coal procurement and planning) the upper and lower estimates of dispatch of GPS on an annual basis for the next 5 Contract Years (or such further period as the parties may agree).[55]
  5. [119]
    Relevantly, as well, CS Energy must ensure that the Station Annual Forecast information provided pursuant to clause 5A.3 is in the form provided in Schedule 8 Part 1, unless the parties otherwise agree.[56]
  6. [120]
    The form provided in Schedule 8 Part 1 is as follows:

Contract Year 1:

Period

Generated Energy

(Sent Out Basis) –

GPS Units (GWh)

Details of Non-Market Ancillary Services

Generated Energy

(Sent Out Basis) –

Combustion Turbine

Number of Committed Units

(1 to 6)

 

Sent Out Basis

(GWh)

Upper Estimate Sent Out Basis

(GWh)

Lower Estimate Sent Out Basis

(GWh)

 

Sent Out Basis

(MWh)

Blocks of Units during Periods 1-n

January

GWh

N/A

N/A

Required

MWh

Required

February

GWh

N/A

N/A

Required

MWh

Required

March

GWh

N/A

N/A

Required

MWh

Required

April

GWh

N/A

N/A

Required

MWh

Required

May

GWh

N/A

N/A

Required

MWh

Required

June

GWh

N/A

N/A

Required

MWh

Required

July

GWh

N/A

N/A

Required

MWh

Required

August

GWh

N/A

N/A

Required

MWh

Required

September

GWh

N/A

N/A

Required

MWh

Required

October

GWh

N/A

N/A

Required

MWh

Required

November

GWh

N/A

N/A

Required

MWh

Required

December

GWh

N/A

N/A

Required

MWh

Required

Annual Total

GWh

GWh

GWh

N/A

MWh

N/A

Contract Year 2 to 5 inclusive:

 

Annual Generated Energy

(Sent Out Basis) –

GPS Units

(GWh)

Details of Non-Market Ancillary Services

Generated Energy

(Sent Out Basis) –

Combustion

 

Sent Out Basis

(GWh)

Upper Estimate Sent Out Basis

(GWh)

Lower Estimate Sent Out Basis

(GWh)

 

(MWh)

Contract Year 2

GWh

GWh

GWh

Required

MWh

Contract Year 3

GWh

GWh

GWh

Required

MWh

Contract Year 4

GWh

GWh

GWh

Required

MWh

Contract Year 5

GWh

GWh

GWh

Required

MWh

  1. [121]
    Finally, CS Energy agrees to prepare the Station Annual Forecast in good faith taking into account the GPS Forecast Data and the impact of generation levels and dispatch profile on long term Unit performance.[57]
  2. [122]
    Clauses 5A.5 and 5A.6 provide for the review and confirmation of the draft Station Annual Forecast, including through a meeting of the Operations Committee.
  3. [123]
    Before 15 September, CS Energy must provide or confirm what becomes the final Station Annual Forecast, subject to any amendment made under clause 5A.9 by way of an “Allowed Adjustment”.[58]

Annual Coal Procurement Plan

  1. [124]
    By 15 October, the Participants are to prepare and provide to CS Energy their coal procurement plan for the next Contract Year, defined as the “Annual Coal Procurement Plan”.[59] They must do so in good faith taking into account the final Station Annual Forecast. It is the responsibility of the Participants to manage, at their discretion, the overall supply of coal using Good Operating Practice so that the Station Annual Forecast can be met.
  2. [125]
    Each Annual Coal Procurement Plan must include any changes to coal information provided in the GPS Forecast Data relevant to details of maximum and minimum contracted volumes, anticipated delivery schedules and price for contracts for the supply of coal for the next Contract Year, as well as the Participants’ anticipated end of month coal stockpile forecast for the next Contract Year, on a month by month basis, defined as the “Projected Monthly Coal Stockpile Forecast”.

Commitment and Dispatch Estimates

  1. [126]
    From the commencement of the Contract Year, CS Energy is required to prepare weekly Commitment and Dispatch Estimates each Wednesday.[60] For the following week, it provides daily information, then weekly for the subsequent seven weeks. It includes anticipated levels of dispatch, indicative profiles for dispatch for each Trading Interval for each Trading Day of the following week, and a representative average daily dispatch profile for each of the subsequent seven weeks, in the form of Schedule 8 Part 2.

Monthly Coal Procurement Plan

  1. [127]
    Also from the commencement of the Contract Year, by the last Working Day of each Month the Participants shall prepare and provide a revised coal procurement plan for each of the next two months, the “Monthly Coal Procurement Plan”.[61]
  2. [128]
    By clause 23.4A(f), the Monthly Coal Procurement Plan is to be prepared taking into account the anticipated levels of dispatch as shown in the most recent Commitment and Dispatch Estimate (not the Station Annual Forecast). The intention is that the Monthly Coal Procurement Plan is to be adjusted having regard to the most recent Commitment and Dispatch Estimate.

Station Annual Forecast dispute

  1. [129]
    One area of clear dispute between the parties is as to the use of the Station Annual Forecast. The content of the Station Annual Forecast is as previously described. One purpose of it is to assist in coal procurement and planning for each of the succeeding 5 Contract Years.[62] The focus in the present case is on Contract Year 1 of a relevant Station Annual Forecast.
  2. [130]
    During Contract Year 1, the Station Annual Forecast has an express role to play in a number of relevant clauses under the 2009 IPPA. They fall into three groups: first, provisions for the Participants to prepare and provide Monthly Coal Procurement Plans;[63] second, provisions for rules for coal stockpile management;[64] and third, provisions for the purchase of additional coal for GPS.[65]

Station Annual Forecast and the Upper Estimate and Lower Estimate

  1. [131]
    Paragraphs 1, 2, 4 and 5 of the Participants’ application are for:

Clause 23.4B of the IPPA – coal stockpile management

  1.  A declaration that, upon the proper construction of clause 23.4B(a)(i) of the IPPA:
  1. (a)
    the reference to ‘stockpile level forecast’ is a reference to a monthly forecast below 300,000 tonnes that is contained in the Revised Monthly Coal Stockpile Forecast; and
  1. (b)
    unless clause 23.4B(c) of the IPPA applies, [CS Energy] is obliged to take the steps in clause 23.4B(a)(i)(A) or (B) if the existence of a stockpile level forecast below 300,000 tonnes is attributable to:
  1. (i)
    the actual levels of dispatch in the calendar year to the date of the Revised Monthly Coal Stockpile Forecast (to the extent this data was reasonably available to the Participants when the Revised Monthly Coal Stockpile Forecast was prepared);

plus

  1. (ii)
    the anticipated levels of dispatch in the then-current Commitment and Dispatch Estimate (for the balance of that calendar month plus the following two calendar months and on the assumption that the anticipated levels of dispatch in the last week of the Commitment and Dispatch Estimate would continue to the end of the month);

 exceeding

  1. (iii)
    the aggregate of the primary dispatch forecasts for the same periods.
  1.  A declaration that, upon the proper construction of clause 23.4B(b)(i) of the IPPA:
  1. (a)
    the reference to ‘stockpile level forecast’ is a reference to a monthly forecast above 800,000 tonnes that is contained in the Revised Monthly Coal Stockpile Forecast;
  1. (b)
    unless clause 23.4B(c) of the IPPA applies, [CS Energy] is obliged to take the steps in clause 23.4B(b)(i)(A) or (B) if the existence of a stockpile level forecast above 800,000 tonnes is attributable to:
  1. (i)
    the actual levels of dispatch in the calendar year to the date of the Revised Monthly Coal Stockpile Forecast (to the extent this data was reasonably available to the Participants when the Revised Monthly Coal Stockpile Forecast was prepared);

 plus

  1. (ii)
    the anticipated levels of dispatch in the then-current Commitment and Dispatch Estimate (for the balance of that calendar month plus the following two calendar months and on the assumption that the anticipated levels of dispatch in the last week of the Commitment and Dispatch Estimate would continue to the end of the month);

 falling below

  1. (iii)
    the aggregate of the primary dispatch forecasts for the same periods.

Clauses 23.4A and 23.4B of the IPPA – Coal procurement obligations

  1. A declaration that, upon the proper construction of the IPPA, each of the following is a reference to meeting the primary dispatch forecasts:
  1. (a)
    the reference in cl. 23.4A(c) to ‘so that the Station Annual Forecast can be met’;
  1. (b)
    the reference in each of cl. 23.5(a)(i) and cl. 23.5(b)(i) to the phrase ‘to meet the Station Annual Forecast’; and
  1. (c)
    the reference in cl. 23.5(c)(i) to ‘if GPS was dispatched in accordance with the Station Annual Forecast’.
  1. A declaration that, upon the proper construction of the IPPA, each of the following is a reference to the primary dispatch forecasts:
  1. (a)
    the reference in each of clauses 23.4B(a)(i), 23.4B(a)(ii) and 23.4B(b)(i) to ‘anticipated levels of dispatch as disclosed in the Station Annual Forecast’; and
  1. (b)
    the reference in each of cl. 23.4B(a)(ii) and cl. 23.4B(b)(i) to ‘the level of dispatch identified in the Station Annual Forecast’.”
  1. [132]
    Paragraphs 1 and 2 of CS Energy’s application are for:

Content of Station Annual Forecast

  1. Declarations that on the proper construction of the IPPA, “Station Annual Forecast” for the purposes of each of clauses 5A.4(c), 23.4A(b), 23.4A(c), 23.4B(a), 23.4B(b), 23.5(a)(i), 23.5(b)(i) and 23.5(c)(i):
  1. (a)
    means all the material prescribed by clause 5A.3(b) and contained in the current Station Annual Forecast;
  1. (b)
    includes the upper and lower estimates of dispatch of GPS on an annual basis prescribed by clause 5A.3(b)(ii).
  1. A declaration that on the proper construction of the IPPA, clause 23.4A(b) requires the Participants to prepare the Annual Coal Procurement Plan taking into account that part of the Station Annual Forecast constituted by the upper and lower estimates of dispatch of GPS on an annual basis prescribed by clause 5A.3(b)(ii).”
  1. [133]
    The clearest dispute between the parties in the present proceeding is as to the role of the Upper Estimate and the Lower Estimate for Contract Year 1 in the Station Annual Forecast.
  2. [134]
    In setting out the requirements for a Station Annual Forecast, clause 5A.3(b) distinguishes between the “anticipated level of dispatch of GPS… for the next year on a Monthly basis” (in sub-para (i)) and “the upper and lower estimates of dispatch of GPS on an annual basis for the next five (5) Contract Years” (in sub-para (ii)). The latter are to be provided “in order to assist in coal procurement and planning”. That information, inter alia, is to be provided in the form provided in Schedule 8 Part 1.
  3. [135]
    Schedule 8 Part 1 is broken into a separate table for Contract Year 1 and another table for Contract Years 2 to 5. The headings for columns 1 to 4 of the two tables are nearly identical. The substantial difference between the two tables is in the rows. The Contract Year 1 table has monthly rows for twelve months and an “Annual Total” row at the bottom, whereas the Contract Years 2 to 5 table has annual rows for each of Contract Years 2, 3, 4 and 5.
  4. [136]
    Column 2 of both tables, headed “Contract Energy (Sent Out Basis) GPS Units (GWh)” is broken into three sub-columns, headed “Sent Out Basis (GWh)”, “Upper Estimate Sent Out Basis (GWh)” (which I will abbreviate to “Upper Estimate”) and “Lower Estimate Sent Out Basis (GWh)” (which I will abbreviate to “Lower Estimate”). The monthly cells in the Contract Year 1 table under the “Sent Out Basis (GWh)” sub-column have “GWh” entered, signifying the anticipated level of dispatch for the month is to be entered in those units. However, the monthly cells in the Contract Year 1 table under the Upper Estimate and Lower Estimate sub-columns have “N/A” entered, signifying that they are “not applicable”, except for the Annual Total row, which has “GWh”, signifying the Upper Estimate for the whole year and the Lower Estimate for the whole year are to be entered, in order to assist in coal procurement and planning.
  5. [137]
    The Contract Years 2 to 5 table has “GWh” in each of the yearly cells in the “Sent Out Basis” sub-column, but “N/A” has been altered to “GWh” in each of the annual cells under the Upper Estimate and Lower Estimate sub-columns, signifying that estimates in those units are to be entered in those cells, in order to assist in coal procurement and planning.
  6. [138]
    Clause 5A.4 provides that a Commitment and Dispatch Estimate is to be provided by Wednesday of each week in the (current) Contract Year, and is to include “the anticipated level of dispatch”, inter alia, “on a daily basis for the first week of the following eight weeks and on a weekly basis for the remaining seven (7) weeks”. That information, inter alia, is to be provided in the form provided in Schedule 8 Part 2.
  7. [139]
    Schedule 8 Part 2 consists of a table broken into two sections. The first section is identified in column 1 by the heading “Week 1 Commitment and Dispatch Estimate”. The seven rows below in column 1 are for the first week’s daily estimates. The second section is headed in column 1 as “Weeks 2 to 8 Commitment and Dispatch Estimate”. The seven rows below that heading in column 1 are for the week 2 to week 8 estimates.
  8. [140]
    Column 2 of the Schedule 8 Part 2 table is headed “Generated Energy (Sent Out Basis) – GPS Units (GWh)”.  Each of the daily and monthly cells in that column has the entry “GWh”, signifying that the estimate for the relevant period is to be entered in those units. There are no sub-columns for the Upper Estimate or Lower Estimate in the Commitment and Dispatch Estimate table. That is consistent with the Commitment and Dispatch Estimate being confined to Contract Year 1 in the relevant Station Annual Forecast, and the lack of any monthly or shorter period information as to the Upper Estimate or Lower Estimate sub-columns in the Station Annual Forecast Contract Year 1 table.
  9. [141]
    Despite these express provisions, CS Energy contends that the Participants are required to provide for the Upper Estimate and Lower Estimate in formulating their Annual Coal Procurement Plan and Monthly Coal Procurement Plans. The Participants contend that they are only required to have regard to the monthly “Sent Out Basis” column in the Contract Year 1 table that they term the “primary dispatch forecasts”.
  10. [142]
    Under clause 23.4A(b), the Annual Coal Procurement Plan  must be prepared (by 15 October of the year before) “taking into account the final Station Annual Forecast” for the ensuing year. And under clause 23.4A(c), the Participants’ express obligations to manage the overall supply of coal are to be undertaken “so that the Station Annual Forecast can be met.” In context, those references are directed to the ensuing Contract Year 1 of the Station Annual Forecast which, by clause 5A.3 and Schedule 8 Part 1 has an annual Upper Estimate and annual Lower Estimate, but only as an annual total.
  11. [143]
    Under clause 23.4A(d)(iii), the Annual Coal Procurement Plan is to include the Participants’ anticipated end of month coal stockpile forecasts for the next Contract Year, on a month by month basis. Under clause 23.4A(e) and (f), the Monthly Coal Procurement Plan, to be prepared by the last Working Day of each month, is to include the anticipated end of month coal stockpile forecast, in the form of the Revised Monthly Coal Stockpile Forecast “for each of the next two (2) Months”. In doing so, the Participants are to take into account “the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate”, being that made on the Wednesday prior to the end of the month.
  12. [144]
    There is no express provision which directs attention to the Contract Years 2 to 5 information as to the Upper Estimate or Lower Estimate, as part of the anticipated levels of dispatch. Logically, the only possibly relevant reference to the Upper Estimate or Lower Estimate for Contract Year 1 as part of the anticipated levels of dispatch would be to the annual totals for that year, formulated as at September of the prior year.
  13. [145]
    The Station Annual Forecast is referred to in clauses 5A.4(c), 23.4A(b), 23.4A(c), 23.4B(a), 23.4B(b), 23.5(a)(i) and 23.5(c)(i). CS Energy submits that its construction is to be preferred, for a variety of reasons, advanced in relation to the particular clauses. It is convenient to deal with the particular clauses in the order advanced by CS Energy.

Clause 23.4A(b) and (c)

  1. [146]
    As previously mentioned, there is nothing that expressly calls for the Upper Estimate and Lower Estimate for Contract Years 2 to 5 to be taken into account under clause 23.4A(b) or (c).
  2. [147]
    For the Contract Year 1 of a Station Annual Forecast, CS Energy submits that the definition of “Station Annual Forecast” in the Annex to the 2009 IPPA “is not limited to the monthly forecasts” in Schedule 8 Part 1. The definition is generally expressed: “a forecast containing the material prescribed by Clause 5A.3(b).” Having regard to the detailed and complex structure of the interrelated forecasting of dispatch of and coal procurement for GPS described above, in my view, the definition’s reference to the material prescribed by clause 5A.3 does not assist much in resolving the disputed constructional question as to clause 23.4A(b) and (c).
  3. [148]
    Second, CS Energy submits that the context of the use of “Station Annual Forecast” in clause 23.4A(b) and (c) does not require the phrase to bear a meaning in clause 23.4A that excludes the Upper Estimate and Lower Estimate of dispatch on an annual basis, as provided for by clause 5A.3(b)(ii).
  4. [149]
    Both an Annual Coal Procurement Plan and a Monthly Coal Procurement Plan are required to contain monthly “coal stockpile forecasts”. In the Annual Coal Procurement Plan, it is for each of the twelve months of Contract Year 1. In the Monthly Coal Procurement Plan it is to be for the next two months from the last day of the current month.[66]
  5. [150]
    Clause 23.4B refers to the coal “stockpile level forecast” and requires an assessment of what the level is “attributable to”, if that forecast falls outside the “Acceptable Coal Stockpile Range”.
  6. [151]
    Nothing in those provisions refers to the monthly “stockpile forecast” or “stockpile level forecast” itself being a range, based on the Upper Estimate or Lower Estimate information provided for Contract Year 1 (or subsequent year).
  7. [152]
    In any event, as set out in the Contract Year 1 table in Schedule 8 Part 1, and clause 5A.3(b)(ii), the Upper Estimate and Lower Estimate data is to be provided on an annual basis. There is no clear basis to convert the relevant Contract Year 1 annual estimates to monthly estimates.
  8. [153]
    CS Energy submits that “the only commercially sensible method” of doing so is to pro rata the “annual estimate” (the Upper Estimate or the Lower Estimate) by multiplying the annual estimate, in either case, by the ratio of the year-to-date sum of the “monthly estimates” (presumably from the monthly Sent Out Basis sub-column of the Contract Year 1 table) to the “whole year sum of the monthly estimates” (presumably meaning the Annual Total under the Sent Out Basis sub-column of the Contract Year 1 table). Whilst that is one way of generating a monthly Upper Estimate or monthly Lower Estimate for Contract Year 1, there are other possible ways. CS Energy’s methodology assumes that the Upper Estimate and the Lower Estimate are to be distributed in the same way as the quantities for the monthly Sent Out Basis sub-column for Contract Year 1.
  9. [154]
    The risks in relation to coal procurement and supply to GPS include possible over-supply or under-supply for the actual levels of dispatch and a price risk. If there is over-supply, it is likely that the Participants would be exposed to take-or-pay liabilities under their coal supply contracts, if supplies have to be interrupted and there will likely be unnecessary holding costs of the coal before it is burnt. If there is under-supply, the parties are exposed to the risk of not being able to dispatch GPS to the extent as agreed in the 2009 IPPA. Most of CS Energy’s submissions as to clauses 23.4A(b) and (c) were predicated upon the Participants being obliged to procure coal in accordance with the Upper Estimate. Almost no attention was given by them to the Participants’ obligations or how they would be discharged in relation to the Lower Estimate.
  10. [155]
    An important contextual point is that the operation of clause 23.4B and the rights and obligations in relation to coal procurement and payment under that clause and under clause 10 turn, in part, on stockpile levels that are to be ascertained to a particular tonnage, not to a range of tonnes. If the Participants are obliged to take the Upper Estimate into account for the relevant Contract Year 1 in procuring coal, how are they to take the Lower Estimate into account at the same time, and how could that affect their rights and obligations otherwise under clause 23.4B and Schedule 16 as previously described? These points were not addressed by CS Energy.
  11. [156]
    Another indicator in reaching the proper construction of clause 23.4A(b) and (c), is that the Participants’ obligation under paragraph (c) is to manage the supply of coal so that the Station Annual Forecast can be “met”, and the Participants’ obligation in preparing and providing the Monthly Coal Procurement Plan is to take into account the “anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate”. There is no provision for an Upper Estimate or Lower Estimate in the weekly Commitment and Dispatch Estimate, as provided for in Schedule 8 Part 2, only an “anticipated level of dispatch” on the “Generated Energy (Sent Out Basis)”. In context, it is clear enough that the Monthly Coal Procurement Plan does not call for a range of estimates to be provided to meet the Station Annual Forecast.
  12. [157]
    Third, CS Energy submits that it is inherent in the nature of an estimate that the actual outcome may vary from the estimate and that “it is reasonable and commercially sensible that the entity procuring coal should have regard to potential variances from the most likely estimate”, as supporting the conclusion that the Participants are required to take the Upper Estimate (and possibly Lower Estimate) into account in the Annual Coal Procurement Plan and the Monthly Coal Procurement Plan and for the actual procurement of coal. In my view, this argument has almost no weight in the context of the proper construction of clauses 5A and 23.4A, 23.4B and 23.5 generally. The detailed provisions of those clauses in the context of the rest of the 2009 IPPA shows a close concern by the drafters with the rights and obligations and risks undertaken by the parties associated with the dispatch of and the procurement and supply of coal for GPS respectively. At no point did CS Energy grapple with the interrelationship of this broad submission with the allocation of those risks and responsibilities under clause 23.4B and clause 23.5, or the rights to payment that might be generated under clause 10, Schedule 16 and the 2009 CPAs.
  13. [158]
    Lastly, CS Energy relied upon the purpose provision in clause 23.1 as assisting to resolve the disputed constructional question as to clause 23.4A(b) and (c). Clause 23.1(c) provides that one purpose of clause 23 is to establish procedures for the procurement of coal for GPS and the management of the associated risks with a view to ensuring that there are adequate supplies of coal to meet the station Annual Forecast and the actual generation requirements of GPS. This is relied on by CS Energy to support the conclusion that the Participants are obliged to procure coal to meet generation requirements in excess of the Commitment and Dispatch Estimate anticipated levels of dispatch up to the Upper Estimate of the Station Annual Forecast, applied to a monthly, weekly or daily dispatch level.
  14. [159]
    But clause 23.1 contains a number of purposes, some of which pull in opposite directions. One purpose, under paragraph (b), is to minimise the long term costs of electricity generation to meet the requirements of the Smelter and CS Energy. Another purpose, under paragraph (d) is to minimise BSL’s and CS Energy’s exposure to coal price fluctuations and another, under paragraph (e), is to provide the Participants with the flexibility to acquire low cost coal under contract.
  15. [160]
    In any event, in my view, close analysis of the forecasting procedures for the procurement of coal, beginning with clause 23.3, continuing through the Station Annual Forecast and the Annual Coal Procurement Plan processes and culminating in the weekly Commitment and Dispatch Estimate and the Monthly Coal Procurement Plan processes, on which the rights and obligations under clause 23.4B then turn, and from which the rights to payment in accordance with clause 10 and Schedule 16 and the CPAs follow, is the more reliable guide to ascertaining the intended operation of clauses 23.4A and 23.4B.
  16. [161]
    CS Energy further submits that the requirement of the process of preparing the Monthly Coal Procurement Plan to make the Revised Monthly Stockpile Forecast for the ensuing two months is consistent with the Participants being obliged to take into account the risk that actual dispatch may vary from the most likely forecast in the Station Annual Forecast.
  17. [162]
    But in doing so, CS Energy leaves out of consideration that the end of month analysis for the Monthly Coal Procurement Plan begins from the latest Commitment and Dispatch Estimate, that does not have any Upper Estimate or Lower Estimate (as do not the prior weeks’ estimates of the same kind). To say that actual dispatch must be taken into account, that may or will vary from the most likely forecast for Contract Year 1 in the Station Annual Forecast formulated in the prior October, is to say nothing about any obligation to pay attention to the Upper Estimate and the Lower Estimate.
  18. [163]
    Lastly, CS Energy submits that if the Upper Estimate and Lower Estimate are not relevant to clause 23.4A, it is difficult to see what purpose they serve. In my view, it would not be correct to conclude that the Upper Estimate or Lower Estimate are irrelevant to coal procurement. CS Energy’s obligation to provide them is intended to benefit the Participants, who are to be provided with them, to assist in coal procurement and planning, and with a view, inter alia, to providing the Participants with the flexibility to acquire low cost coal under contract.
  19. [164]
    That does not require the conclusion that the Upper Estimate and Lower Estimate are to be converted to monthly amounts, in Contract Year 1, contrary to the express provision of Schedule 8 Part 1, and must be then taken to increase the financial risk to the Participants of CS Energy varying from the forecasts in the Station Annual Forecast and the Commitment and Dispatch Estimates. It is one thing to say that CS Energy may have the right to dispatch bids at variance from its forecasts of dispatch, except as constrained by the provisions of the 2009 IPPA. It is another to say that the Participants took the financial risk that CS Energy might do so, at least to the extent of the range between the Upper Estimate and the Lower Estimate for the relevant Contract Year 1.

Clause 5A.4(c)

  1. [165]
    CS Energy submits that the reference to the Station Annual Forecast in clause 5A.4(c) includes the Upper Estimate and the Lower Estimate. Since that paragraph identifies the matters that CS Energy must take into account in preparing a weekly Commitment and Dispatch Estimate during Contract Year 1, CS Energy must be referring to the Upper Estimate and Lower Estimate for Contract Year 1, prepared as at September of the prior year.
  2. [166]
    In my view, there is nothing about clause 5A.4(c) that requires CS Energy to ignore the Upper Estimate and Lower Estimate in all respects. But to say that does not answer any relevant question in dispute in the proceeding. It is trite that some of the information to which CS Energy must have regard will have been produced later in time than when the Upper Estimate and Lower Estimate were formulated, including the Monthly Coal Procurement Plan and the Revised Monthly Coal Estimates. CS Energy must prepare the Commitment and Dispatch Estimate in good faith having regard to all the specifically identified information and other relevant factors.
  3. [167]
    I do not agree, however, that the requirement to take into account the Station Annual Forecast entitles CS Energy to simply use a derived monthly Upper Estimate to increase the quantity of the week’s Commitment and Dispatch Estimate, or vice versa. The Commitment and Dispatch Estimate is a single forecast amount for each of the succeeding seven days and for each of the seven weeks after that, not a range of outcomes.

Clauses 23.5(a)(i), 23.5(b)(i) and 23.5(c)(i)

  1. [168]
    Clause 23.5 is concerned with the purchase of “additional”[67] coal for GPS, through a bidding process. There are two ways in which the process may be initiated: by CS Energy under clause 23.5(a); or by the Participants under clause 23.5(b). In either case, the process is regulated by clause 23.5(c). Importantly, by clause 23.5(d), if the process was started by CS Energy, it may require the Participants to enter into a binding contract to acquire coal from a bidding supplier. Otherwise, the Participants have the power to decide on any contract of supply of coal.
  2. [169]
    I note also that a contextual consideration is that a “shortfall” that leads to a meeting request under clause 23.5(a)(i) or to a notification under clause 23.5(b)(i) leads possibly to a request for bids for a supply of additional coal for a term of five to twelve years with a ten percent flexibility in the average annual rate of delivery, under clause 23.5(c)(ii).
  3. [170]
    Clause 23.5(c)(i) is important in resolving the constructional dispute as to the role of the Station Annual Forecast in these clauses. Neither of the parties is to purchase additional coal that would result in the Actual Coal Stockpile level exceeding 450,000 tonnes if GPS were dispatched in accordance with the Station Annual Forecast (including any approved Allowed Adjustment under clause 5A.8 to 5A.10).
  4. [171]
    In my view, the reference to the Station Annual Forecast in clause 23.5(c)(i) does not include a dispatch up to the Upper Estimate or down to the Lower Estimate for Contract Year 1 of the Station Annual Forecast. First, the structure of stockpile forecasts is that they are to be made for monthly intervals in both the Annual Coal Procurement Plan and the Monthly Coal Procurement Plans. So, there is the problem previously discussed of converting the annual Upper Estimate and the Lower Estimate to a monthly basis, in order to be able to take either estimate into account to assess whether the proposed additional coal purchase would result in the Actual Coal Stockpile exceeding 450,000 tonnes.
  5. [172]
    Second, if both the Upper Estimate and the Lower Estimate were taken into account, the forecast Actual Coal Stockpile level would be a range, whereas clause 23.5(c)(i) assumes that a single level will be the result. Different results against the 450,000 tonne benchmark will be the outcome, if different assumptions as to the estimates of generated energy are deployed. How would the possible contradictory outcomes be resolved in terms of the parties’ rights and obligations under clause 23.5?
  6. [173]
    Returning to clause 23.5(a)(i), the relevant right is CS Energy’s right to request a meeting to relation to coal supply to meet a “projected shortfall in the amount of coal under contract to meet [the] Station Annual Forecast”. And for clause 23.5(b)(i), the relevant right is to notify that the Participants may decide to seek bids for coal for GPS to meet the same shortfall.
  7. [174]
    Under the 2009 IPPA, the coal intended to meet the Station Annual Forecast is that forecast in the Annual Coal Procurement Plan and the Monthly Coal Procurement Plans, as previously discussed. The postulated shortfall is between that coal and the (arranged deliveries of) coal under contract to the Participants.
  8. [175]
    For similar reasons to clause 23.5(c)(i), in my view, the references to meeting the Station Annual Forecast in clause 23.5(a)(i) and clause 23.5(b)(i) do not refer to meeting the Upper Estimate or the Lower Estimate.

Clause 23.4B(a) and (b)

  1. [176]
    The rules for managing the coal stockpile contained in clause 23.4B create specific rights and obligations that turn on the “stockpile level forecast” for any given Month as contained in the Revised Monthly Coal Stockpile Forecast, and what that level “is attributable to”, having regard to the intention to maintain the coal stockpile within the Acceptable Coal Stockpile Range of between 300,000 tonnes and 800,000 tonnes. Paragraph (a) applies if the stockpile level forecast is less than 300,000 tonnes. Paragraph (b) applies where it is greater than 800,000 tonnes. In either case, the succeeding sub-paragraphs provide for the rights and obligations of the parties, depending on what the cause of the forecast that the stockpile will fall out of Acceptable Coal Stockpile Range is.
  2. [177]
    In the less than 300,000 tonnes case, if the stockpile level forecast is attributable to actual dispatch exceeding “the anticipated levels of dispatch as disclosed in the Station Annual Forecast (taking into account the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate)”, then CS Energy is to remedy the situation.  On the other hand, if it is attributable to the deliveries of coal being less than the deliveries necessary “to meet the level of dispatch identified in the Station Annual Forecast”, the Participants are to remedy the situation.
  3. [178]
    In the greater than 800,000 tonnes case, if the stockpile level forecast is attributable to the actual levels of power dispatched being less than “the anticipated levels of dispatch as disclosed in the Annual Station Forecast (taking into account the anticipated levels of dispatch as disclosed in the most recent Commitment and Dispatch Estimate)”, CS Energy is to remedy the situation. On the other hand, if it is attributable to either “the deliveries of coal arranged by the Participants being greater than… necessary… to meet the level of dispatch identified in the Station Annual Forecast” or to a reduction in the Availability of GPS, the Participants are to remedy the situation.
  4. [179]
    To apply the Upper Estimate or the Lower Estimate to the “anticipated levels of dispatch” disclosed in or the “level of dispatch” identified in the Station Annual Forecast in these arithmetical comparisons would be complex, if it could be done at all. It is appropriate to consider that question by using the operation of clause 23.4B(a)(i) as an example.
  5. [180]
    It is necessary to make two assumptions for the example: first, that the forecast of the relevant Revised Monthly Coal Forecast in the Monthly Coal Procurement Plan is a single quantity of tonnes for the relevant month, not a range, and that the stockpile level forecast is less than 300,000 tonnes; second that a calculation can be made to calculate the amount of the annual Upper Estimate for the relevant Contract Year 1 up to the relevant month to assess the anticipated levels of dispatch.
  6. [181]
    If the Upper Estimate were taken into account in assessing the application of clause 23.4B(a)(i), it would affect whether or to what extent a level forecast below 300,000 tonnes is attributable to the actual levels of dispatch exceeding the anticipated levels of dispatch disclosed in the Station Annual Forecast. It would increase the anticipated levels of dispatch from the levels shown in the “Sent Out Basis” sub-column in the Contract Year 1 table, up to the relevant month to the calculated amounts (for the relevant monthly “N/A” cells in the Upper Estimate sub-column of the table) up to the relevant month.  Doing that would favour CS Energy, who might be relieved of the obligation to remedy the situation, if the actual level of dispatch does not exceed the anticipated levels of dispatch using the Upper Estimate.
  7. [182]
    But what role would the Lower Estimate play in this scenario? If the Lower Estimate were taken into account, it too would affect whether a forecast level below 300,000 tonnes is attributable to the actual levels of dispatch exceeding that disclosed in the Station Annual Forecast, because it would decrease the anticipated levels as disclosed in the Station Annual Forecast from the levels shown in the Sent Out Basis sub-column to those to be calculated (for the monthly “N/A” cells in the Lower Estimate sub-column) up to the relevant month.  Doing that would favour the Participants, by increasing the exposure of CS Energy to the obligation to remedy the situation, because it is more likely that the actual level of dispatch will exceed the anticipated levels of dispatch using the Lower Estimate.
  8. [183]
    CS Energy seeks to meet this apparent difficulty by proposing that, in the application of clause 23.4B(a)(i) and (ii) the “anticipated levels of dispatch” and “level of dispatch” are only the Upper Estimate to be calculated (for the “N/A” cells in the Upper Estimate sub-column), whereas, in the application of clause 23.4B(b)(i) and (ii) they are only the Lower Estimate to be calculated (for the “N/A” cells in the Lower Estimate sub-column).
  9. [184]
    But in doing so, CS Energy gives a different meaning to the “anticipated levels of dispatch” disclosed or “level of dispatch” identified in the “Station Annual Forecast” in clause 23.4B(a)(i) and (ii), on the one hand, and clause 23.4B(b)(i) and (ii), on the other, without any identified textual or contextual support for doing so or, for that matter, to support the particular choice as between the Upper Estimate and the Lower Estimate values which it urges should be deployed in each paragraph. I observe that CS Energy’s choices would commercially favour CS Energy, by reducing the scope of its obligation in each context, as compared to choosing the opposite alternative, or the “primary forecast” value taken from the “Sent Out Basis” sub-column.
  10. [185]
    CS Energy marshalled a number of points in support of its argument as to the proper construction of clause 23.4A and 23.4B. Some of them assumed that the Upper Estimate and the Lower Estimate were to be deployed in the formulation of the Monthly Coal Procurement Plan and the Revised Monthly Coal Stockpile Forecast and may be put to one side, but there were others as well.  CS Energy submits that to estimate the anticipated levels of dispatch or the level of dispatch in the Station Annual Forecast by reference to the “Sent Out Basis” sub-column of the Contract Year 1 table of the Station Annual Forecast is not harmonious with the 2009 IPPA, as a whole, and unduly restricts the discretion given to CS Energy to maximise its profit and revenue across its portfolio in making bids to dispatch GPS. It submits that it is a strange result that notwithstanding that CS Energy pays significant sums to have the capacity of GPS available to dispatch under the CPAs, that it might be prevented from dispatching the margin between the “Sent Out Basis” sub-column amounts and the calculated Upper Estimate amount up to the relevant month.
  11. [186]
    In my view, none of these points is sustainable or persuasive. First, clause 23.4B(a) and (b) do not restrict the possible dispatch, at least not directly. They create obligations to remedy the coal stockpile being out of the agreed Acceptable Stockpile Range. Second, there is nothing unharmonious with the 2009 IPPA, as a whole, if the amounts to be taken into account for assessing the anticipated levels of dispatch or level of dispatch in the Station Annual Forecast, for the relevant month, are the amounts shown under the “Sent Out Basis” sub-column of the Contract Year 1 table. Third, nowhere does CS Energy address the difficulty of giving a different meanings to the same expressions in paragraphs (a) and (b) of clause 23.4B. Fourth, as I attempted to summarise above, the payment entitlements and mechanisms under the 2009 IPPA are far more complicated than the payment of Capacity Charges payable under the 2009 CPAs. Fifth, in focussing only on CS Energy’s discretion to maximise profit across its portfolio, CS Energy leaves out a number of express obligations it undertook by the 2009 IPPA, including that the entitlement to submit offers to maximise profits in that way is “subject to … the provisions of Clause 23.4B”. As well, CS Energy promises to “use reasonable endeavours to submit [offers] that… have regard to the Commitment and Dispatch Estimate for the [relevant] Trading Day”, which is an estimate formulated no earlier than the Wednesday before the relevant Trading Day.
  12. [187]
    CS Energy also refers in its submissions to the operation of the provisions for the Stockpile Incentive Payment under paragraph 10.11 of Schedule 16. The operation of that clause has been described above. CS Energy submits, rightly, that it gives an incentive for the parties to maintain the stockpile level at between 450,000 tonnes and 600,000 tonnes. Below that level, depending on the reason for the level, the Participants must pay an amount to CS Energy. Above it, CS Energy must pay an amount to the Participants. CS Energy submits that the operation of the Stockpile Incentive Payment provisions indicates that there is no substantial disadvantage to the Participants in maintaining a higher stockpile level in order to meet the Upper Estimate. 
  13. [188]
    I do not think I understand this submission. If, by deploying the Upper Estimate in the assessment of the application of clause 23.4B(a)(i), CS Energy is able to dispatch more energy by way of the actual level of dispatch without becoming responsible to remedy the stockpile level, the Participants’ rights are diminished. If the Participants arrange deliveries of coal that maintain the stockpile at a level that is below 450,000 tonnes, they must pay an amount for the Stockpile Incentive Payment to CS Energy. But that does not turn on anything to do with the Upper Estimate. If the Participants maintain the stockpile at higher levels than they might otherwise do, because they arrange greater deliveries of coal than they otherwise would, there is a financial disadvantage to them in paying for the purchase price of the coal so delivered unless they are paid by CS Energy for or in respect of it before it is burned. As discussed previously, that is not the case generally. In my view, this argument adds nothing to CS Energy’s case upon the proper construction of clauses 23.4B(a) and (b).
  14. [189]
    In my view, the example of the operation of clause 23.4B(a)(i) set out above demonstrates that the parties are not to be taken to have intended that the either the Upper Estimate or the Lower Estimate should be taken into account under clause 23.4B(a)(i). The same reasoning applies, mutatis mutandis, to clause 23.4B(a)(ii) and to clause 23.4B(b)(i) and (ii).
  15. [190]
    It follows that the declarations sought by CS energy as to these clauses should not be granted. I will permit the parties a further opportunity to make submissions on the form of the relief sought by the Participants on these questions in light of these reasons.

Role of Good Operating Practice in Stockpile Management

  1. [191]
    Paragraph 3 of the Participants’ application is for:

“3. A declaration that, upon the proper construction of the IPPA:

  1. (a)
    the steps contained in clauses 23.4A(a) to (b), (d) to (g) and 23.4B comprise Good Operating Practice for the purposes of clause 23.4A(c);
  1. (b)
    to the extent (if any) that such steps would not comprise Good Operating Practice if this term were given the meaning set out in the Annex to the IPPA, the context in which the expression ‘Good Operating Practice’ is used in clause 23.4A(c) of the IPPA requires that the expression not have this meaning;
  1. (c)
    further or alternatively, it is necessary to have regard to such steps in determining what comprises ‘reasonable steps’ for the purposes of the definition of Good Operating Practice;
  1. (d)
    further or alternatively, the parties implicitly agreed in clause 23.4A(g) that the coal stockpile would fall within an acceptable range if it fell within the Acceptable Coal Stockpile Range;
  1. (e)
    to the extent (if any) that Good Operating Practice would stipulate that the acceptable range for the coal stockpile was something other than the Acceptable Coal Stockpile Range, the context in which the expression ‘Good Operating Practice’ is used in clause 23.4A(c) of the IPPA requires that the expression not have this meaning.”
  1. [192]
    The Participants thereby apply for a number of declarations that are intended to further establish the relative rights and obligations of CS Energy and the Participants under the rules for Coal Stockpile Management under clause 23.4B.
  2. [193]
    Some of the relevant provisions expressly refer to “Good Operating Practice”, that is defined to be:

“the practices, methods and acts engaged in or approved by electricity generating, transmission and power system operation undertakings (whether private or public) in Australia that, at the relevant time and in the exercise of reasonable judgment in light of the facts known or that reasonably should have been known at the time a decision is made, would be expected to accomplish the desired result in a manner consistent with the law, regulation, reliability, safety, environmental protection, economy and expedition. Good Operating Practice is not intended to be limited to the optimum practice or method to the exclusion of all others, but rather to be a spectrum of reasonable and prudent practices, methods and acts, and includes, but is not limited to, taking reasonable steps to ensure that:

  1. (a)
    adequate materials, resources and supplies, including fuel, are available to meet the needs of each power station and the transmission system under normal conditions and reasonably anticipated abnormal conditions;
  2. (b)
    sufficient operating personnel are available and are adequately experienced and trained to operate each power station and the transmission system properly, efficiently and taking appropriate account of manufacturer’s guidelines and specifications and are capable of responding to abnormal conditions;
  3. (c)
    preventative, routine and non-routine maintenance and repairs are performed on a basis that ensures reliable long-term and safe operation taking account of manufacturer’s recommendations and are performed by knowledgeable, trained and experienced personnel utilising proper equipment, tools and procedures;
  4. (d)
    appropriate monitoring and testing is done to ensure equipment is functioning as designed and to provide assurance that equipment will function properly under both normal and abnormal conditions;
  5. (e)
    equipment is operated in a manner safe to workers, the general public, the environment, plant and equipment and with regard to defined limitations such as steam pressure, temperature, moisture and chemical content, quality of make-up water, operating voltage, current, frequency, rotational speed, polarity, synchronisation and control system limits; and
  6. (f)
    in relation to System Control, available generating plant is dispatched and the available transmission system is operated and controlled (including where relevant the operation and control of reactive and quadrature control equipment) so as to manage power flows and voltage levels to minimise to the maximum extent possible the risks of interrupting the supply of electricity following a generation or transmission contingency and to restore supply as quickly as possible following any interruption.”
  1. [194]
    Particular references to Good Operating Practice in this context may be summarised as follows:
  1. (a)
    clause 5.2(a) – “[t]he Participants shall operate and maintain GPS in accordance with Good Operating Practice… including the securing of adequate fuel supplies (subject to clause 23)”;
  2. (b)
    clause 23.1 – “[t]he purpose of this Clause 23 is to establish procedures for the procurement of coal… with a view to… [inter alia] ensuring that there are adequate supplies of coal to meet the Station Annual Forecast and the actual generation requirements of GPS”;
  3. (c)
    clause 23.4A(c) – “[i]t is the responsibility of the Participants to manage, at their discretion, the overall supply of coal using Good Operating Practice so that the Station Annual Forecast can be met”; and
  4. (d)
    clause 23.4A(g) – “[i]t is the… intention to maintain the coal stockpile at GPS within a range between 300,000 tonnes and 800,000 tonnes, (“Acceptable Coal Stockpile Range”).”
  1. [195]
    Summarising, the declarations are sought to establish that the “steps contained in clauses 23.4A(a) to (b), (d) to (g) and 23.4B” comprise Good Operating Practice, or inform what is Good Operating Practice, or operate free of any additional obligation required by Good Operating Practice.
  2. [196]
    There is more than one difficulty in deciding these questions. First, it is not precisely clear what the “steps” referred to are. Second, there is no identified factual context against which the questions are to be decided. Third, the declaration sought that if the “steps” would not comprise Good Operating Practice, or Good Operating Practice would require a coal stockpile level outside the Acceptable Stockpile Range, the context requires that Good Operating Practice not have that meaning is not in a proper form for a declaration of right – it amounts to statement of legal conclusion that does not state the proper construction of the relevant contractual provision.
  3. [197]
    Perhaps the point the Participants seek to raise is that if Good Operating Practice would otherwise require the Participants to procure coal contrary to a right that they have under clause 23.4B, then clauses 5.2(a) and 23.4A(c) should be construed to operate subject to clause 23.4B, to the extent of any inconsistency, on the principle that a specific provision will be construed to operate to the exclusion of a general provision in resolving questions of contractual inconsistency, if both cannot operate harmoniously.[68] However, if it is possible to give the provisions of the contract a “harmonious” operation, the court must do so.[69]
  4. [198]
    In my view, any such question could only be resolved when the potentially inconsistent contractual right and obligation are identified in particular factual circumstances, with precision, and an appropriate declaration as to the proper meaning and operation of the contract is sought.
  5. [199]
    The declarations sought on these questions in the present case do not meet those requirements. In my view, they should not be made.

Usable coal

  1. [200]
    Paragraph 5A of CS Energy’s application is for:

“5A. In the alternative to paragraph 5, a declaration that on the proper construction of the IPPA, where in clause 23.4A and 23.4B:

  1. (a)
    there is reference to a coal stockpile forecast or a stockpile level forecast, that forecast is to be a forecast of the “Actual Coal Stockpile” as defined in the IPPA;
  1. (b)
    there is a reference to a coal stockpile, that is a reference to the “Actual Coal Stockpile” as defined in the IPPA.”
  1. [201]
    A number of the provisions discussed so far turn on an assessment of the “coal stockpile” level as forecast from time to time. CS Energy originally applied for a declaration that the references in clause 23 to the tonnage of coal in the coal stockpile or forecasts of the same are references to the tonnes of coal in the stockpile that are or will be able to be accessed and burned, defined by CS Energy as “Usable coal”. However, CS Energy did not press that part of its application at the final hearing.
  2. [202]
    CS Energy submits that because the coal stockpile is a repository of coal available to be used to produce electricity references to the coal stockpile should be taken to coal available to be burned and coal unfit for that purpose is to be excluded, and that the contrary construction would be absurd.
  3. [203]
    In support of its contention, CS Energy relies on an expert who opines that it is misleading to report total coal stocks including the unrecoverable threshold, by which he means to exclude coal laid down on the ground which over time gets mixed which the pad of earth on which a relevant stockpile is placed. Accordingly, he would reduce the survey measured volumes of the stockpile at GPS by a percentage. The expert allowed 10 percent but there was no expert opinion or factual basis given to support that factor.
  4. [204]
    The Participants object to the expert’s evidence as inadmissible upon the proper construction of clause 23. I agree. It was not submitted that the expert’s opinion on these points was something notoriously known in 2009, so that knowledge of the same kind may be attributed to CS Energy’s predecessor and the Participants in making the 2009 IPPA.
  5. [205]
    Neither party adduced evidence as to whether measurements or forecasts of the coal stockpile made before the 1994 IPPA, or made after the 1994 IPPA but before the 2009 IPPA, included any practice of making any allowance for unusable coal or similar or that the parties knew of any such practice.
  6. [206]
    In any event, the 2009 IPPA has a provision relevant to the question of the proper construction of the expressions “end of month coal stockpile forecasts”, “coal stockpile” and “stockpile level forecast” in clauses 23.1 to 23.4B. Clause 23.5(c)(i) refers to the “Actual Coal Stockpile level”, in providing that unless the parties agree otherwise, additional coal shall not be purchased that would result in the Actual Coal Stockpile level exceeding 450,000 tonnes.
  7. [207]
    The term “Actual Coal Stockpile” is defined to mean:

“the amount of coal, in tonnes, that is held in a stockpile at GPS and which can be recovered from the stockpile using normal site facilities at a continuous rate sufficient to operate GPS at its [Net Maximum Capacity].”

  1. [208]
    The defined term Actual Coal Stockpile is used in only clauses 3.1(b)(iii), 23.5(c)(i) and 30.6.
  2. [209]
    The Participants submit that a distinction is to be drawn between the meaning of “coal stockpile” in clause 23 otherwise and the meaning of “Actual Coal Stockpile” in clause 23.5(c)(i). I am not sure that the distinction should be drawn. In clause 23.5(c)(i), the question to be asked is whether additional coal would cause the Actual Coal Stockpile to exceed 450,000 tonnes. That is a forecast. I can see no obvious reason, having regard to the purpose of the respective provisions, why the parties would have intended to exclude coal that can’t be recovered at a continuous rate sufficient to operate GPS in clause 23.5(c)(i) but intended to include that coal in the meaning of “coal stockpile” when it is used elsewhere in clause 23.
  3. [210]
    The Participants submit that a reason for a different meaning of “coal stockpile” in clause 23 is that the stockpile maintenance incentives are related to notional holding costs that are indifferent to whether coal can be recovered. I do not accept that argument. The parties’ respective rights under clause 23.4B are not simply about notional holding costs. If anything, that is what the Stockpile Incentive Payment provided for in clause 10.11 of Schedule 16, previously discussed, is directed towards. But that provision uses the definition of “Stockpile Level” in clause 1.1 of Schedule 16, that specifically refers to the bi-monthly physical measurement on a tonnes basis as reported in the Operator’s Monthly Report, which is not used in clause 23.
  4. [211]
    It does not follow, therefore, that the “coal stockpile”, or equivalent, referred to in clause 23, apart from the use of Actual Coal Stockpile in clause 23.5(c)(i), is necessarily to be assessed without regard to the recoverability of the coal in the stockpile, on a survey basis only. But it also does not follow that some notional reduction of the quantity of the stockpile, as surveyed, is required based on an allowance for the amount of unusable coal that may be compacted into the pad below the stockpile.
  5. [212]
    The result, in my view, is that the declaration sought by CS Energy should not be made.

Forecast obligations

Paragraph 7

  1. [213]
    Paragraph 7 of the Participants’ application is for a declaration that:

“7. A declaration that, upon the proper construction of clauses 5.1(b), 5A.3(b)(i) and 5A.3(c) of the IPPA, [CS Energy] is obliged to prepare the Station Annual Forecast in good faith and in accordance with Good Operating Practice.”

  1. [214]
    There seem to be two points to the declaration sought in paragraph 7. First, that the Station Annual Forecast is to be prepared in good faith under clause 5A.3(c). Second, that preparation of the Station Annual Forecast under clause 5A.3(a) is an obligation of CS Energy to which the requirement of performance in accordance with Good Operating Practice applies by reason of clause 5.1(b).
  2. [215]
    There is no dispute about the first point, so no declaration is needed to that extent. As to the second point, CS Energy submits that because it is not required to submit any bids using Good Operating Practice, it is also not required to prepare a Station Annual Forecast on that basis.
  3. [216]
    The premise of this argument, namely that if CS Energy makes a bid, it is not performing any obligation that attracts the requirement of performance with Good Operating Practice”, does not mean that CS Energy is not performing an obligation in preparing the Station Annual Forecast. If it was, Good Operating Practice applies, unless that application is excluded by the context of clause 5A.3.
  4. [217]
    The strongest contextual reason for that conclusion is that whilst Good Operating Practice is defined by reference to the exercise of reasonable judgment and taking reasonable steps to ensure a number of outcomes, the obligation to prepare the Station Annual Forecast is expressly required to be done in good faith, a standard usually recognised to be less exacting than the exercise of reasonable care. Second, Good Operating Practice requires a number of matters that have no application to the preparation of the Station Annual Forecast.
  5. [218]
    Even if, notwithstanding these considerations, the conclusion might be that the preparation of the Station Annual Forecast must to be made using Good Operating Practice, CS Energy submits that no declaration should be granted because the question is hypothetical and lacks any utility. I agree.

Paragraph 9

  1. [219]
    Paragraph 9 of the Participants’ application is for a declaration that:

“9. A declaration that, upon the proper construction of clauses 5.1(b) and 5A.4(c) of the IPPA:

  1. (a)
    [CS Energy] is obliged to prepare each Commitment and Dispatch Estimate in good faith and in accordance with Good Operating Practice;
  2. (b)
    in preparing the Commitment and Dispatch Estimate, [CS Energy] is required to take into account the matters listed in clause 5A.4(c)(i) to (vii);
  3. (c)
    the matters listed in clause 5A.4(c)(i) to (vii) are the only matters [CS Energy] is permitted to take into account when preparing the Commitment and Dispatch Estimate;
  4. (d)
    the fact that a party to the IPPA may be advantaged or disadvantaged by the Commitment and Dispatch Estimate is a ‘relevant factor’ for the purpose of cl. 5A.4(c)(vii);
  5. (e)
    the identity of the party being advantaged or disadvantaged by the Commitment and Dispatch Estimate is not a ‘relevant factor’ for the purpose of cl. 5A.4(c)(vii);
  6. (f)
    in taking into account the matters listed in clause 5A.4(c)(i) to (vii), [CS Energy] is obliged to give such matters:
    1. the weight required by Good Operating Practice;
    2. alternatively, reasonable weight;
  7. (g)
    further or alternatively, the reference in clause 5A.4(c)(v) to ‘taking into account the Station Annual Forecast’ requires [CS Energy] to take into account, inter alia, the impact on the Participants of the Commitment and Dispatch Estimate departing from the Station Annual Forecast.”
  1. [220]
    The declarations sought in paragraph 9 raise six points.

Paragraph 9(a)

  1. [221]
    First, is the preparation of the Commitment and Dispatch Estimates an obligation of CS Energy to which the requirement of performance in accordance with Good Operating Practice applies by reason of clause 5.1(b)? That point raises the same considerations, mutatis mutandis, as discussed in relation to paragraph 7 of the Participants’ application, and for similar reasons, in my view, no declaration should be made.

Paragraph 9(b)

  1. [222]
    Second, is the estimate contained in the Commitment and Dispatch Estimate to be prepared taking into account the matters listed in clause 5A.4(c)(i) to (vii)? There is no dispute about this point, so no declaration is needed to that extent.

Paragraph 9(c)

  1. [223]
    Third, are the factors listed in clause 5A.4(c)(i) to (vii) the only relevant matters? There seems to be no contextual reason to decide this point one way or the other. There is no matter that the Participants identify that CS Energy claims to be entitled to take into account that would be excluded by deciding that only the factors listed on clause 5A.4(c)(i) to (vii) may be taken into account. In any event, since the last item on that list comprises “other relevant factors”, it seems pointless to decide that the list operates exclusively, unless there is a matter in contention between the parties that is not “relevant”.
  2. [224]
    In my view, no declaration should be made on this question.

Paragraph 9(d)

  1. [225]
    Fourth, is advantage or disadvantage to a party to the 2009 IPPA one of the “other relevant factors” within the meaning of clause 5A.4(c)(vii)? The Participants’ written submission develops at some length a submission that CS Energy is required to take the interests of the Participants into account.
  2. [226]
    In particular respects that is true. An express example under clause 5A.4(c)(iii) is the impact of generation levels and dispatch on long-term Unit performance. But it is another thing to extrapolate from the specific to a general obligation to take the interests of the Participants into account in preparing the weekly Commitment and Dispatch Estimate in advance of CS Energy’s right to make GPS Dispatch Offers and GPS Rebids under clause 6.3. The express constraints on the right to make such bids are those contained in clause 6.3(d), together with the operation of the obligation imposed under clause 6.3(c). It is not readily apparent why preparation of the Commitment and Dispatch Estimate must also be made in a way that requires CS Energy, in some general way, to take into account the interests of the Participants.
  3. [227]
    However, it is not necessary to further explore this question. Again, the declaration sought is separated from any factual context. CS Energy submits that in the circumstances it is not appropriate to make any declaration. I agree.

Paragraph 9(f)

  1. [228]
    Fifth, what it the weight to be given to the listed factors in clause 5A.4(c)(i) to (vii)? The Participants submit that the weight required to given to each factor is either the weight required by Good Operating Practice or a reasonable weight.
  2. [229]
    Above, I have reasoned that it may not be harmonious to construe the express contractual provision to prepare the Commitment and Dispatch Estimate “in good faith” under clause 5A.4(c) as requiring that it be done “in accordance with Good Operating Practice”, because, where it applies, the latter obligation is measured by a standard of reasonableness, rather than a standard of good faith.
  3. [230]
    If CS Energy is not required to perform the obligation of preparing a Commitment and Dispatch Estimate in accordance with Good Operating Practice, but is required to to do so in good faith, it would be counterintuitive to conclude that, in taking into account the factors expressly identified in clause 5A.4(c), in preparing a Commitment and Dispatch Estimate, the weight to be given to each or any of such factors is to be determined in accordance with Good Operating Practice.
  4. [231]
    However, it is not necessary to explore these questions further. CS Energy submits that the question of what weight is required to be given to any factor is not a matter that should be declared in the absence of particular facts. I agree.

Paragraph 9(g)

  1. [232]
    Sixth, does the obligation under clause 5A.4(c)(v) to prepare the Commitment and Dispatch Estimate, taking into account the Station Annual Forecast, require consideration of the impact on the Participants of departing from the Station Annual Forecast?
  2. [233]
    In a general sense, it may seem likely that it might do so.
  3. [234]
    But CS Energy submits that this is not a matter that should be declared in the absence of a factual context and that the form of the declaration sought is too vague to have any utility. I agree.

Dispatch obligations

  1. [235]
    Paragraph 2A of the Participants’ application is for:

“2A. Upon the proper construction of clauses 23.4B and 6.3(b)(ii), [CS Energy] is required to make GPS Dispatch Offers and/or GPS Rebids that:

  1. (a)
    meet the objectives stated in the last paragraph of clause 23.4B(a)(i), where clause 23.4B(a)(i)(B) applies; and
  1. (b)
    meet the objectives stated in the last paragraph of clause 23.4B(b)(i), where clause 23.4B(b)(i)(B) applies.”
  1. [236]
    CS Energy’s entitlement to submit bids under clause 6.3(b) is “subject to”, inter alia, “the provisions of Clause 23.4B”.
  2. [237]
    Summarising, clause 23.4B(a)(i) and 23.4B(a)(i)(B) require CS Energy to manage the dispatch of power from GPS in order to ensure that as far as is practicable the coal stockpile is maintained within the Acceptable Coal Stockpile Range, if:
  1. (a)
    the Revised Coal Stockpile Estimate in any given month is less than 300,000 tonnes and the stockpile level forecast is attributable to the actual level of dispatch being in excess of the anticipated levels of dispatch; and
  2. (b)
    CS Energy has not procured sufficient deliveries of additional coal to maintain the Acceptable Coal Stockpile Range.
  1. [238]
    Similarly, summarising, clause 23.4B(b)(i) and 23.4B(b)(i)(B) require CS Energy to increase the dispatch of power from GPS in order to ensure that as far as is practicable the coal stockpile is maintained within the Acceptable Coal Stockpile Range, if:
  1. (a)
    the Revised Coal Stockpile Estimate in any given month is more than 800,000 tonnes and the stockpile level forecast is attributable to the actual level of dispatch being less than the anticipated levels of dispatch; and
  1. (b)
    the Participants have not reduced deliveries of coal (at CS Energy’s request) to maintain the Acceptable Coal Stockpile Range.
  1. [239]
    The obligation to manage dispatch under clause 23.4B(a)(i)(B), when it applies, limits CS Energy’ entitlement to submit bids under clause 6.3(b), by requiring CS Energy to submit bids that will over the time provided in the clause increase the coal stockpile level.
  2. [240]
    Similarly, the obligation to increase dispatch under clause 23.4B(b)(i)(B), when it applies, limits CS Energy’ entitlement to submit bids under clause 6.3(b), by requiring CS Energy to submit bids that will over the time provided in the clause decrease the coal stockpile level.
  3. [241]
    However, apart from the dispute between the parties as to the matters to be taken into account in ascertaining what “the anticipated levels of dispatch” are under clauses 23.4B(a)(i) and 23.4B(b)(i), which is dealt with elsewhere in these reasons, there is no dispute between the parties as to the operation of these clauses that I can ascertain that requires a declaration to be made.
  4. [242]
    Paragraph 11 of the Participants’ application is for the declaration that:

“11.  A declaration that, upon the proper construction of clauses 5.1(b) and 6.3(c) of the IPPA:

  1. (a)
    [CS Energy] is obliged to submit GPS Dispatch Offers, GPS Rebids and Non-market Ancillary Services in accordance with Good Operating Practice and having regard to the Commitment and Dispatch Estimate for the Trading Day;
  1. (b)
    in submitting GPS Dispatch Offers, GPS Rebids and Non-market Ancillary Services, [CS Energy] is required to take into account, inter alia:
  1. (i)
    the relevant Notified Availability for the Trading Day;
  1. (ii)
    the operating limits established by the IPPA (including the Technical Specifications);
  1. (iii)
    the Commitment and Dispatch Estimate for the Trading Day; and
  1. (iv)
    opportunities to optimise supply of Economy Purchase Energy to the Participants;
  1. (c)
    the reference in clause 6.3(c)(iii) to ‘us[ing] reasonable endeavours to submit GPS Dispatch Offers, GPS Rebids and Non-market Ancillary Services that have regard to the Commitment and Dispatch Estimate’ requires [CS Energy] to have regard to the consequences for the parties of submitting GPS Dispatch Offers, GPS Rebids and Non-market Ancillary Services that cause actual dispatch (including Unit Commitment) to depart from the Commitment and Dispatch Estimates;
  1. (d)
    [CS Energy] is obliged to give such consequences:
  1. (i)
    the weight required by Good Operating Practice;
  1. (ii)
    alternatively, reasonable weight;
  1. (e)
    in determining the weight to be given to such consequences, the identity of the party being advantaged or disadvantaged is not a relevant factor.”

Paragraph 11(a)

  1. [243]
    There are three apparent difficulties with the proposed declaration. First, no clause expressly provides that CS Energy is obliged to submit any GPS Dispatch Offer, GPS Rebid or Non-market Ancillary Services. However, that difficulty could be overcome by expressing any declaration in a conditional form, as applying to any bid that is made. Second, whether any such bid must be made in accordance with Good Operating Practice raises the question of identifying the obligation of CS Energy that must be performed in accordance with Good Operating Practice. That question is brought into focus by:
  1. (c)
    the absence of any reference to CS Energy being required to submit bids in accordance with Good Operating Practice in clause 6.3(c) when that clause sets out a number of other potentially relevant constraints, including Notified Availability and Technical Specifications;
  2. (d)
    the express limit under clause 6.3(d) upon CS Energy submitting a bid where dispatch may result in a failure by the Participants to meet the requirements of Good Operating Practice.
  1. [244]
    Third, clause 6.3(c)(iii) is an express obligation that CS Energy must “use reasonable endeavours to submit [bids] that… have regard to the Commitment and Dispatch Estimate for the Trading Day”. To that extent, the declaration sought is unnecessary.
  2. [245]
    In my view the declaration in paragraph 11(a) should not be made.

Paragraph 11(b)

  1. [246]
    There is no question that clause 6.3(c) expressly provides that CS Energy “shall use reasonable endeavours” to submit bids that, respectively, “are based upon”, or “are consistent with”, or “have regard to”, or “have reasonable regard to” the matters listed in clause 6.3(c)(i) to (iv). There is no purpose in declaring that the meaning of those expressions is the same as to “take into account” those matters. Second, there is no useful purpose in declaring that they are “required” to be taken into account when the clause provides that CS Energy “shall use reasonable endeavours” that take into account the matters. Third, there is no useful purpose that those matters are to be taken into account “inter alia”, when there is no dispute about other matters to be taken into account under this declaration.
  2. [247]
    In my view the declaration sought in paragraph 11(b) should not be made.

Paragraph 11(c)

  1. [248]
    The substance of the question raised is whether the obligation under clause 6.3(c)(iii) to use reasonable endeavours to submit bids that have regard to the Commitment and Dispatch Estimate for the Trading Day requires CS Energy to consider the consequences to the Participants of dispatch under the proposed bid departing from that estimate.
  2. [249]
    In a general sense, it may be accepted that the obligation imposed by clause 6.3(c)(iii) directs CS Energy to consider the potential consequences of a proposed bid departing from the estimate for the day contained in the Commitment and Dispatch Estimate, including consequences for the Participants. However, the express obligation is to “use reasonable endeavours to submit [bids] that… have regard to” the estimate.
  3. [250]
    In choosing different language from the text of the contract for the declaration in paragraph 11(c), the Participants appear to intend that the obligation under clause 6.3(c)(iii) should be construed to mean “that CS Energy is obliged to use reasonable endeavours to cause actual dispatch to follow the planned dispatch in the [Commitment and Dispatch Estimate] when this would further the objective implicit in cl 5A.4(c)” so as to “require actual dispatch to follow planned dispatch unless circumstances changed between preparation of the [Commitment and Dispatch Estimate] and the submission of the dispatch offer”.
  4. [251]
    In my view, this submission is not attractive. It is one thing to say that regular and volatile departures from the estimates for each day in the Commitment and Dispatch Offers for each Trading Day may amount to a failure to use reasonable endeavours to submit bids that have regard to the estimate for each day and a breach of contract. It is another to say that any departure is prohibited unless circumstances have changed between preparation of the Commitment and Dispatch Estimate for the Trading Day and submission of the bid.
  5. [252]
    In any event, CS Energy submits that the proposed declaration is vague, because it does not identify the “consequences” and should not be made on that ground. I agree and would add that it is not appropriate to attempt to re-cast the language of clause 6.3(c)(iii) in the abstract, divorced from any facts, in order to ascertain whether the obligation under the clause has been breached.

Paragraph 11(d)

  1. [253]
    This proposed declaration raises similar considerations to paragraph 9(f) of the Participants’ application.
  2. [254]
    In any event, it suffers from the weakness that the “consequences” are not identified, as in the case of paragraph 11(c). In my view, this declaration should not be made.

Footnotes

[1]  Alumina is refined from bauxite through the Bayer Process.

[2]  2009 IPPA, clause 18.1.

[3]  2009 IPPA, Annex – Definitions, definition “Trading Interval”, a term defined to have the same meaning as it does in the glossary to the Rules for the National Electricity Market.

[4]  2009 IPPA, Annex – Definitions, “Make-up Energy” being the amount of Active Energy to be supplied to the Smelter as a result of a relevant Interruption.

[5]  2009 IPPA, clause 8.1.

[6]  2009 IPPA, Annex – Definitions, definition “Contract Capacity”.

[7]  2009 IPPA, Annex – Definitions, definition “Contract Energy”.

[8] Electricity—National Scheme (Queensland) Act 1997 (Qld), s 6 and s 6A.

[9]  National Electricity Law, s 9.

[10]  National Electricity Rules, s 3.

[11]  National Electricity Rules, s 2.

[12]  The bidding process for a generator begins with an “offer” but the offer may be varied in the time before acceptance by dispatch notification by way of a “re-bid”. For simplicity, I will only refer to offers.

[13]  2009 IPPA, Annex – Definitions, definition “Point of Interconnection”.

[14]  2009 IPPA, Annex – Definitions, definition “Smelter Energy”.

[15]  2009 IPPA, Annex – Definitions, definition “Total Contract Energy”.

[16]  2009 IPPA, Annex – Definitions, definition “Excess Sale Energy”.

[17]  2009 IPPA, Annex – Definitions, definition “Stanwell Specific Coal”.

[18]  2009 IPPA, Schedule 16, paragraph 1.1, definition “Price for Stanwell Specific Coal” (as amended in 2011).

[19]  2009 IPPA, Schedule 16, paragraph 1.1, definition “Dedicated Coal”.

[20]  2009 IPPA, Annex – Definitions, definition “BSL Specific Coal”.

[21] Stanwell Short Term Coal is extra coal supplied by CS Energy on its election under the terms of clause 23.4C. (If BSL elects to participate in its purchase, of if the Participants otherwise agree, its cost may be taken into account in calculating ACDF, in which case it is excluded from being SSC and excluded from the first term of the TCE Charge Calculation, instead being accounted for in the second term.)

[22] The effect of CS Energy supplying the Stanwell Short Term Coal at its own expense is that PSSC would be reduced to that extent, and as such the amount of the charge made by the Participants is reduced to the same extent in the TCE Charge Calculation.

[23]  2009 IPPA, Schedule 16, paragraph 1.1, definition “Average Cost Delivered Fuel”.

[24] This is the effect of the “max” operation in the term.

[25]  2009 IPPA, Schedule 16, paragraph 1.1, definition “Total Contract Thermal Energy”.

[26]  2009 IPPA, Schedule 16, paragraph 1.1, definition “Excess Sale Thermal Energy”.

[27] The first adjustment is the subtraction of any Stanwell Specific Coal Carry Over (SSCCO), which is the thermal energy of any SSC delivered in the month that remains unburned at the end of the month, which ensures that SSC is not counted twice in the TCE Charge Calculation. The second adjustment subtracts the measured thermal energy of SSC, as it has already been accounted for in the first term of the TCE Charge Calculation.

[28]  The monthly figures for TCTE and ESTE used in the TCE Charge Calculation are calculated under items 4.3(c) and 5.2(c) as the sums of the TCTE and ESTE as calculated for each half hour interval, ‘i’.

[29]  In this sense, “energy output” is used to refer to the term “AEOG”, the “Active Energy Output of GPS” calculated in clause 4.1 of Schedule 16.

[30]  The ‘maximum smelter demand’, represented by the term MSDG, is the actual demand of power from the smelter (with a 1% addition to account for transmission losses), up to a cap which is the lesser of the ‘Final SDL’ (an agreed measure of the smelter load under clause 8.3) and the proportion of available capacity of the station allocated to the smelter (ABAC, which includes a ‘Smelter Reserve Margin’ of 35% in excess of the Final SDL and transmission losses).

[31]  Broadly, the condition is that the proportion of available capacity allocated to the smelter (including the Smelter Reserve Margin) has not fallen below the lower of Final SDL or the actual demand of power from the smelter (each with a 1% addition to account for transmission losses). If that condition does not hold, the TCE cap will necessarily have been lower and reached earlier, and some energy output above that lower TCE cap will be ignored and not counted before the excess energy output above the TCE cap reaches the level required to begin being counted as ESE.

[32]  2009 IPPA, Annex – Definitions, definition “Rules”.

[33]  2009 IPPA, Annex – Definitions, “Commitment” and Glossary of the Rules.

[34]  2009 IPPA, Annex – Definitions, “Spot Market” and Glossary of the Rules.

[35]  2009 IPPA, Annex – Definitions, “Available”.

[36]  2009 IPPA, Annex – Definitions, “Available Capacity”.

[37]  2009 IPPA, Annex – Definitions, definition “GPS Dispatch Instructions”.

[38]  2009 IPPA, Annex – Definitions, definition “Mill Start-Up”.

[39]  2009 IPPA, Annex – Definitions, definition “Mill Shutdown”.

[40]  2009 IPPA, Annex – Definitions, definition “Point of Supply”.

[41]  2009 IPPA, Annex – Definitions, definition “Smelter Reserve Margin”.

[42]  2009 IPPA, Annex – Definitions, definition “Capacity Support.

[43]  2009 IPPA, Annex – Definitions, definition “Capacity Support Energy”.

[44]  2009 IPPA, Annex – Definitions, definition “Capacity Support Charge”

[45]  2009 IPPA, Annex – Definitions, definition “Capacity Support Energy Charge”.

[46]  2009 IPPA, Annex – Definitions, definition “Acceptable Coal Stockpile Range”.

[47]  2009 IPPA, Annex – Definitions, definition “Stockpile Incentive Payment”.

[48]  2009 IPPA, Schedule 16, paragraph 1.1, definition “Stockpile Level”.

[49]  2009 IPPA, Annex – Definitions, definition “GPS Forecast Data”.

[50]  2009 IPPA, clause 23.3(b).

[51]  2009 IPPA, Annex – Definitions, definition “Station Annual Forecast”.

[52]  2009 IPPA, clause 23.3(d).

[53]  2009 IPPA, clause 5A.3(a).

[54]  2009 IPPA, clause 5A.3(b)(i).

[55]  2009 IPPA, clause 5A.3(b)(ii).

[56]  2009 IPPA, clause 5A.3(b).

[57]  2009 IPPA, clause 5A.3(c).

[58]  2009 IPPA, clause 5A.7 and Annex – Definitions, definition “Allowed Adjustment”.

[59]  2009 IPPA, clause 23.4A.

[60]  2009 IPPA, clause 5A.4.

[61]  2009 IPPA, clause 23.4A(e).

[62]  2009 IPPA, clause 23.3(d).

[63]  2009 IPPA, clauses 23.4A(e) to (g).

[64]  2009 IPPA, clauses 23.4B(a) and (b).

[65]  2009 IPPA, clause 23.5.

[66]  Of course, when the end of November is reached, the Station Annual Forecast for the next Contract Year will have been finalised and will be available to revise for the Monthly Coal Procurement Plan containing the Revised Monthly Coal Stockpile Forecast for January of the next year.

[67]  2009 IPPA, clause 23.5(c)(i).

[68] Global Advanced Metals Pty Ltd v Metallurg Inc [2017] WASCA 188, [88]; Hume Steel Ltd v Attorney-General for Victoria (1927) 39 CLR 455, 465-466.

[69] PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240, 262 [66]; Lewis Construction (Engineering) Pty Ltd v Southern Electric Authority of Queensland (1976) 11 ALR 305, 315; Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99, 109.

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Editorial Notes

  • Published Case Name:

    GPS Power Pty Ltd & Ors v CS Energy Ltd

  • Shortened Case Name:

    GPS Power Pty Ltd v CS Energy Ltd

  • MNC:

    [2018] QSC 294

  • Court:

    QSC

  • Judge(s):

    Jackson J

  • Date:

    10 Dec 2018

Litigation History

Event Citation or File Date Notes
Primary Judgment [2018] QSC 294 10 Dec 2018 Determination of cross applications for declaratory relief as to the proper construction of a contract between the parties (by way of separate questions): Jackson J.

Appeal Status

No Status