Key recommendations of the report include:
- Concentrating wholesale gas trading at two hubs – a Northern Hub at Wallumbilla in Queensland and a Southern Hub in Victoria, with improved trading arrangements and price discovery in Victoria. This will reduce market complexity and concentrate trading at key points of demand and supply on the east coast, allowing for increased liquidity and more risk management options for gas users.
- Facilitating short-term pipeline capacity trading markets, including a short-term auction for unused capacity and improved capacity trading platforms. Access to pipeline capacity is a key enabler of wholesale market trading.
- Improved information provided through the Gas Bulletin Board to enable market participants to make better-informed decisions about trading, investing in, or using gas.
The Australian gas and pipeline industry’s representative bodies have welcomed the findings of the report, saying they are far more sensible than the suggestions made by the Australian Competition and Consumer Commission (ACCC).
“Recommendations in the report generally outline a sensible approach to improving the market, which contrasts with the ACCC’s recommendations to increase regulation,” said Australian Pipelines and Gas Association (APGA) Chief Executive Cheryl Cartwright.
“In fact, gas transportation companies have been very receptive to the AEMC’s recommendations for mechanisms to improve capacity markets and will work closely with stakeholders to develop workable auction and trading programs.
“Introducing pipeline capacity trading platforms and capacity auctions will encourage retailers and others who have unused pipeline capacity to offer it for sale, helping to increase competition in the gas market.