Stronger regulation of gas pipelines and monitoring the effectiveness of changes already underway

Changing the way gas pipelines are regulated will make it cheaper and easier to move gas around the market. This helps keep gas and electricity prices for consumers as low as possible. Gas markets are transforming. Isolated point-to-point pipelines have evolved into an interconnected network with two-way flows. We have built on our comprehensive reviews of the east coast and Victorian gas markets to rebalance negotiating power between pipeline users and owners.

Tracking reforms

In August 2018 the AEMC published its inaugural biennial review of gas market liquidity to track the growth in liquidity in wholesale gas and pipeline trading markets. This first review is focussing on providing a baseline for future reviews. Biennial reviews will enable the AEMC to track progress and assess the effectiveness of our gas market reforms over time.

Improving pipeline regulation

In July 2018 the AEMC published the final report on the review into the scope of economic regulation applied to covered pipelines . This review has made recommendations that if implemented in full, will help gas pipeline users negotiate lower prices and better deals, making it cheaper and easier to move gas around the market, allowing gas consumers to benefit from lower prices. On 10 August 2018 the COAG Energy Council agreed to progress most of the recommended changes immediately through changes to the National Gas Rules (NGR) and others pending further work by the Senior Committee of Officials.

Redesigning Australia’s gas markets

Redesigning Australia’s gas markets will improve competition and lower the costs to households and businesses.

The AEMC’s 2016 review into the east coast gas market provided a roadmap of reforms to deliver the COAG Energy Council’s vision for an east coast gas market that can respond to changing dynamics in global markets.

The proposed reforms establish a new approach to trading gas, supported by improved access to pipeline capacity and increased transparency through additional information provisions.

If implemented in full, the reforms have the potential to increase Australia’s GDP by $8.7 billion in net present value terms by 2040 through improved viability of gas-using industries and flow-on benefits to employment and tax revenues.

The COAG Energy Council established the Gas Market Reform Group following our East coast gas review . The Gas Market Reform Group is consulting on changes to the national gas laws, regulations and rules and the introduction of a number of new instruments to deliver the AEMC’s recommendations and reform package.

The AEMC reform package comprised of:

  • Redesigning wholesale markets – Concentrating wholesale gas trading at two hubs; a northern hub in Queensland and a southern hub in Victoria, the key points of demand and supply on the east coast. This is complimented by a final rule made by the AEMC to apply a common start time of 6am (AEST) to gas markets on the east coast from 1 April 2021.
  • More closely aligning the market arrangements across the east coast by introducing a clean and simple wholesale price, a new forward trading exchange and improved pipeline capacity rights for the Victorian declared wholesale gas market.
  • Reducing costs and complexity by simplifying the Adelaide, Sydney and Brisbane short-term trading hubs to become balancing markets.
  • Improving access to pipeline capacity – Introducing day ahead auctions for unused capacity, improving capacity trading platforms to facilitate short-term gas trading and developing standard products and information on all trades.
  • Increasing capacity – Increasing the amount and frequency of data reported on the Gas Bulletin Board to enable market participants to make more informed production, consumption, trading and investment decisions and introducing greater data accuracy requirements and stronger compliance framework.

At the request of the Victorian government, the AEMC’s 2017 review of the Victorian DWGM proposed a number of recommendations to lower barriers to entry, streamline trading practices and improve transparency to help support greater competition in the Victorian gas market.

The AEMC completed a review of gas trading reforms in the Northern Territory that found extending our east coast gas market reforms will make it cheaper and easier to move gas around the Northern Territory as well as between the Northern Territory and soon-to-be-connected east coast gas market. This would bring benefits to both the Northern Territory and the east coast gas market. Most of these reforms have been applied to the Northern Territory gas market, and at the request of the Northern Territory government, the COAG Energy Council has agreed to delay the application of one reform relating to day-ahead auctions.

Find more information about Australia’s gas system.