Discussion paper on reforming the Victorian declared wholesale gas market

30 March 2017

Today the AEMC released a discussion paper on alternative market designs for the Victorian declared wholesale gas market (DWGM). The discussion paper sets out options to improve specific aspects of the DWGM that have been raised by stakeholders. Submissions on the paper are due by 11 May 2017.

This follows the publication of a draft final report in October 2016, which set out detailed draft reforms to address the issues with the DWGM and meet the COAG Energy Council’s vision for the east coast gas market.

Following extensive consultation on the draft reforms, the Commission agrees with stakeholders that there are benefits from re-assessing potential alternative reform suggestions. This will allow consideration of several new options that were not raised earlier in the review, and may undercover new benefits to already examined options.

To enable the AEMC to undertake additional analysis and consultation, on 9 March 2017 the Victorian Government extended the DWGM review to 31 August 2017, with a final report to be published by 14 September 2017.

This review of the Victorian DWGM aims to improve access to a reliable supply of efficiently priced gas for Victorian consumers, while maintaining Victoria’s key role in Australia’s east coast gas market as one of two wholesale gas trading hubs.

Gas market reform is also expected to benefit the electricity sector, as gas powered generators will have more flexible and reliable access to gas. Gas powered generation can: help to reduce electricity outages; lower emissions by balancing with renewable generation; and provide hedge contracts to help the electricity market manage risks.

Recommendations for extensive gas market reform for Australia’s east coast were accepted by the COAG Energy Council in August 2016. The reform package included establishing wholesale gas markets with trading hubs concentrated in Victoria and Queensland; improving access to pipelines; and delivering new and improved information to gas businesses and consumers.

The COAG Energy Council has established a Gas Market Reform Group to implement the reform package in consultation with stakeholders. Work is already underway to improve gas pipeline transportation arrangements, and the development of a northern hub for gas trading at Wallumbilla in Queensland.

 

Media: Prudence Anderson, Communications Director, 0404 821 935 or direct line 02 8296 7817