Market Review: Open

Overview

On 13 February 2018 the Australian Energy Market Commission (AEMC) published a scoping paper that outlines the approach proposed to be used by the Commission for the biennial review into liquidity in wholesale gas and pipeline trading markets, including the liquidity metrics that form the basis of the baseline measures, and the methodology for determining those metrics.
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On 13 February 2018 the Australian Energy Market Commission (AEMC) published a scoping paper that outlines the approach proposed to be used by the Commission for the biennial review into liquidity in wholesale gas and pipeline trading markets, including the liquidity metrics that form the basis of the baseline measures, and the methodology for determining those metrics.

The purpose of the scoping paper is to seek stakeholders’ comments on the metrics and the proposed approach for determining those metrics.

Submissions on the scoping paper are due by 6 March 2018.

Background

On 20 December 2017 the Council of Australian Governments Energy Council (the COAG Energy Council) provided the Australian Energy Market Commission (AEMC) with terms of reference to conduct a biennial review into the growth in liquidity in the wholesale gas and pipeline capacity trading markets.

Broadly, the terms of reference requires the AEMC to:

  • monitor changes in liquidity in wholesale gas and pipeline capacity markets
  • report on the effectiveness of reforms
  • identify the need for any further reforms, if appropriate.

The COAG Energy Council is currently redesigning the east coast gas market to support faster and more efficient gas trading and access to pipeline transportation along the east coast of Australia. This work is based on a package of reforms developed by the AEMC in 2016.

Implementation of the complete reform package will take several years. For this reason, this first review of gas market liquidity will focus on providing a baseline for future reviews and will not provide recommendations.  In particular, the review will provide baseline measures of liquidity for the east coast and the Victorian Declared Wholesale Gas Market, wherever possible, and also develop the methodology for tracking liquidity over the medium and longer term.

The baseline measures will enable the AEMC to assess the effectiveness of reforms to wholesale gas and pipeline trading markets over time.

In accordance with the terms of reference, the AEMC will publish three reports as part of this review:

  • a scoping paper outlining the approach proposed to be used by the Commission for this review, including the liquidity metrics and the methodology for determining those metrics
  • a draft report containing draft results and draft recommendations on any further reforms that may be required, if appropriate
  • a final report containing the final liquidity metrics and recommendations, if appropriate.

The AEMC is required to provide the final report to the COAG Energy Council six weeks prior to the Council's mid-year meeting in July 2018.

The scoping paper is due to be published in February 2018.

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Documentation

INITIATION

AEMC Documents

COAG Energy Council documents