Regulation Impact Statement Updates

Official website for publishing regulatory impact analysis information for regulatory decisions announced by the Australian Government, COAG and COAG Councils.

Simplified wholesale pricing arrangements for the Victorian Declared Wholesale Gas Market (DWGM)

COAG
18th March 2020

COAG Decision Regulation Impact Statement – Australian Energy Market Commission

On 12 March 2020, the Australian Energy Market Commission (AEMC) released a final rule determination that amends the National Gas Rules to simplify wholesale pricing in relation to the Victorian Declared Wholesale Gas Market (DWGM) by:

  • requiring that when the Australian Energy Market Operator (AEMO) produces pricing schedules, which determine market prices, it takes into account transmission constraints that affect withdrawals of gas at system withdrawal points at which withdrawal bids may be made
  • removing the link between authorised maximum daily quantity (AMDQ) or capacity certificates and uplift payments, such that a congestion uplift category is no longer required.                                                                                          

Having regard to the issues raised in the rule change request and during consultation, the Commission is satisfied the rule will, or is likely to, contribute to the achievement of the National Gas Objective for the following reasons:

  • Improved risk management in the DWGM — in situations where there is a physical withdrawal constraint in the declared transmission system (DTS), the rule reduces uncertainty and scheduling risk for market participants around whether their injection bids may be constrained off despite being below the market price. The rule also removes the need for market participants to manage the risk of incurring congestion uplift payments.
  • Improved signals and incentives for efficient operation and use of pipeline capacity — compared to the current arrangements, the rule results in a more efficient scheduling process and utilisation of pipeline capacity.
  • Promotion of competition in downstream markets — the rule removes the need for market participants to protect against the risk of incurring congestion uplift payments, which may encourage new entrants to the Victorian retail gas market.
  • Lower regulatory and administrative burden — removing the need to manage the risk of congestion uplift will reduce the administrative burden.

 

The AEMC’s final rule determination has been assessed by the Office of Best Practice Regulation as compliant with requirements for a Council of Australian Government’s Decision RIS.

Please note: any accessibility queries should be directed to the Australian Energy Market Commission.

                                  

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