This review, on behalf of the COAG Energy Council, recommended that pipeline capacity trading reforms developed by the AEMC for the east coast gas market, should apply in the Northern Territory. The reforms would make it cheaper and easier to move gas around the NT market and also the connected east coast market.

The proposed reforms are:

1. a day-ahead auction of contracted but un-nominated pipeline capacity
2. a capacity trading platform to facilitate sales by capacity holders ahead of the auction and provide for exchange based trading
3. standardised provisions in capacity agreements to make capacity more fungible and allow shippers greater receipt and delivery point flexibility
4. a reporting framework for secondary trades of pipeline capacity and hub services.

Final report

On 20 March 2018 the Australian Energy Market Commission (AEMC) published a final report for the review of the application of gas pipeline capacity trading reforms in the Northern Territory (NT).

The report found that the proposed capacity trading reform package would have significant benefits to the NT market, as well as benefits for the connected east coast market. The Commission therefore recommended the implementation of the reforms in full in the NT.

The Commission’s recommendations will be considered by the COAG Energy Council.

Background

In January 2018 the AEMC initiated a review into the application of gas pipeline capacity trading reforms in the Northern Territory. The AEMC was tasked with conducting the review by the COAG Energy Council.

East coast gas markets are currently being redesigned to support faster and more efficient gas trading and access to pipeline transportation along the east coast of Australia. The changes are based on a package of reforms developed by the AEMC and endorsed by the COAG Energy Council. Implementation of the reform program is being overseen by the COAG Energy Council’s Gas Market Reform Group.

The new pipeline linking Tennant Creek in the Northern Territory with Mount Isa in Queensland is presently under construction with first gas scheduled to flow in late 2018.

As the new pipeline effectively connects the Northern Territory with the east coast gas market for the first time, the COAG Energy Council tasked the AEMC with considering whether the capacity trading reform package should also be implemented, in whole or in part, in the Northern Territory.

AEMC Director, Shari Boyd (02) 8296 7869 or Shari.boyd@aemc.gov.au

AEMC Senior Adviser, Russell Pendlebury (02) 8296 0620 or Russell.pendlebury@aemc.gov.au