East Coast Wholesale Gas Market and Pipeline Frameworks Review
The Council of Australian Governments’ Energy Council has asked the Australian Energy Market Commission to review the design, function and roles of facilitated gas markets and gas transportation arrangements on the east coast of Australia as part of a renewed focus on market development and gas supply chain efficiency.
With Australian gas markets experiencing a rapid transition as conventional gas reserves decline, unconventional gas resources become increasingly important, the establishment of a liquefied natural gas export industry based in Queensland and the influence of international price trends increase, The Council of Australian Governments’ (COAG) Energy Council has requested a review of facilitated gas markets and gas transportation arrangements on the east coast of Australia.
The Australian Energy Market Commission (AEMC) review is to consider the role and objectives of the facilitated gas markets currently in operation, and set out a road map for their continued development in order to meet COAG’s vision to encourage competitive supply, enhance transparency and price discovery, improve risk management and remove unnecessary regulatory barriers.
The Terms of Reference for the review require the AEMC to consider:
- - the appropriate structure, type and number of facilitated markets on the east coast including options to enhance transparency and price discovery and reduce barriers to entry;
- - opportunities to improve effective risk management including through liquid and competitive wholesale spot and forward markets which provide tools to price and hedge risk;
- - changes to strengthen signals and incentives for efficient access to, use of and investment in pipeline capacity.
The Terms of Reference also ask the AEMC to develop specific actions that can be implemented to strengthen the structure and competitiveness of the east coast gas market and make recommendations for immediate implementation, where possible.
The review will be conducted over two stages. The first stage will outline the overall direction for the east coast market development. The report will include a fact base of current market outcomes and gap analysis between COAG’s vision of the future gas market and the existing arrangements. The AEMC will provide the stage 1 report to the COAG Energy Council in June 2015. The second stage will more fully develop any necessary medium and long term changes. The AEMC intends to release the final report in 2016, following a response from COAG on the draft second stage report.