The Australian Energy Market Commission has made a draft rule that aims to improve incentives for trading participants to efficiently provide and price contingency gas.

Contingency gas is an emergency mechanism, which may be called on by the Australian Energy Market Operator (AEMO)  to balance supply and demand if normal mechanisms in the Short Term Trading Market (STTM) are unlikely to achieve this balance. 

The use of contingency gas reduces the risk of supply issues for customers. To date, contingency gas has never been called for by AEMO.

Under the draft rule, trading participants would have greater flexibility in structuring their bids or offers for providing contingency gas. This would allow participants to better reflect the prices of different sources of contingency gas, which could encourage them to provide contingency gas in times of emergency.

The draft rule would also clarify AEMO’s ability to request evidence from trading participants following a contingency gas event.  This evidence would be used to determine whether contingency gas was provided as scheduled and to assist AEMO’s reporting on contingency gas events.

The draft rule is likely to provide for a more transparent and accountable process for the payment of contingency gas and improve the confidence of trading participants that they are only paying for contingency gas that has been delivered.

Stakeholders are invited to make submissions in response to the AEMC’s draft determination and draft rule by Thursday 26 March 2015.

For information contact:

AEMC Acting Director, Sarah Lau (02) 8296 7800

Media: Communications Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817