Rule Change: Completed

Overview

On 5 May 2011, the Commission published a Rule to help improve the efficiency and accuracy of price setting in the Short Term Trading Market (STTM) for natural gas. Its key purpose is to provide the market operator, AEMO, with more time to review and confirm the accuracy of STTM facility information to reduce the risk of erroneous STTM facility information affecting the setting of schedules and prices in the STTM.
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<p>
On 5 May 2011, the Commission determined that the National Gas Rules should provide for a validation process to reduce the risk of erroneous Short Term Trading Market (STTM) facility information affecting the setting of schedules and prices in the STTM.</p>
<p>
The Rule&#39;s key purpose is to provide the market operator, AEMO, with more time to review and confirm the accuracy of STTM facility information.</p>
<p>
The Rule:</p>
<ul>
<li>
provides for measures in the Rules that would reduce the risk of erroneous STTM facility information affecting the setting of schedules and prices;</li>
<li>
facilitates more accurate pricing signals which will help ensure efficient trading in the STTM and promote efficient investment in, and use of, natural gas services;</li>
<li>
promotes price certainty and foster participants&#39; confidence in the market, facilitating efficient investment in, and use of, natural gas services; and</li>
<li>
reduces the risk of market participant failure, particularly for smaller market participants, attributed to erroneous STTM facility information and would thus facilitate efficient investment in, and use of, natural gas services.</li>
</ul>
<p>
The Rule would impact upon AEMO and market participants in the STTM.</p>
<p>
The Commission gave notice under sections 311 and 313 of the National Gas Law of the making of the final Rule determination and Rule in relation to the STTM Data Validation and Price Setting Process Rule change request.</p>
<p>
The Rule reflected the Commission&#39;s position in its final Rule determination. The Rule will commence operation on 16 June 2011.</p>
<h2>
Background&nbsp;</h2>
<p>
On 9 February 2011, AEMO submitted the STTM Data Validation and Price Setting Process Rule change request. In response to two high price events in the STTM towards the end of 2010, AEMO&#39;s Rule change request proposed to provide for a validation process in the Rules that would apply to STTM facility information. By providing for a validation process in the Rules, AEMO stated that this would reduce the risk of erroneous STTM facility information being used in the setting of schedules and prices in the STTM.</p>
<p>
Specifically, the Rule change request proposed to:</p>
<ul class="unIndentedList">
<li>
bring forward the deadline for the submission of STTM facility operational capacity information to AEMO from 11:00am to 9:30am. This is intended to give AEMO more time to validate the information and if the information fails validation or is not submitted in the first place, then AEMO may request that STTM facility operators confirm or resubmit this information. AEMO would then use this information as an input in the setting of the provisional and ex ante market schedules;</li>
<li>
delay the deadline for AEMO to publish the ex post imbalance price from 12:00 noon to 4:00pm in circumstances where AEMO finds that STTM facility allocation information does not meet validation requirements or no STTM facility allocation information have been submitted in time by a STTM allocation agent. Where STTM facility allocation information does not meet validation requirements or no STTM facility allocation information have been submitted by a STTM allocation agent, this gives STTM allocation agents the opportunity to confirm this information and/or resubmit this information to AEMO for substitution;</li>
<li>
require AEMO to validate and substitute STTM facility information in accordance with the STTM Procedures; and</li>
<li>
require STTM facility operators and STTM allocation agents to provide STTM facility information to enable AEMO to validate and substitute STTM facility information.</li>
</ul>
<h2>
Rule Change Process</h2>
<p>
On 24 March 2011, the Commission published a notice in accordance with sections 303 and 304 of the National Gas Law (NGL) to initiate and assess AEMO&#39;s Rule change request. The Commission considered that this was a request for&nbsp; an urgent Rule and stated that it would assess this Rule change request under an expedited Rule making process subject to the receipt of written requests not to expedite the Rule making process. Written requests not to expedite the Rule making process&nbsp; were due by 7 April 2011. The Commission received no requests not to expedite the Rule making process.</p>
<p>
Submissions on the Rule change request were due by 21 April 2011 and the Commission received two submissions.</p>
<p>
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