The EPA's Hunter director Karen Marler said multiple witnesses observed excess dust at the power station over a sustained period in September last year.

"The dust was the result of a vacuum truck depositing dry ash in high winds," Ms Marler said. 

"It appears that Origin did not follow their own management practices to minimise dust despite having received a penalty notice for a similar alleged offence in January 2017."

Ms Marler said the incident was avoidable and the appropriate management of dust was a key issue for the community.

"The EPA considers any non-compliance with licence conditions a very serious matter," she said. 

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The incident has drawn criticism from the Hunter Community Environment Centre (HCEC), which says the penalty highlights the mounting pollution risk of accumulating coal ash at Lake Macquarie’s power stations.

“There are growing piles of coal ash on the shores of Lake Macquarie and they are posing a serious pollution risk to both air and water," HCEC coordinator Jo Lynch said.

“This is a big waste problem that needs concerted action by the power stations and the EPA: issuing a fine here and there when the community spots visible pollution … is tinkering around the edges of a problem that can only be solved with regulatory reform that requires coal ash to be safely reused, rather than dumped."

The HCEC recently carried out research on heavy metal leachate and water quality issues caused by both the Eraring and Vales Point power stations. 

The results of the investigation are set to be published in the Out of the Ashes report, due to be released in coming weeks.