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

Contingency gas is an emergency mechanism which participants can make an offer or bid to supply. It may be called on by the Australian Energy Market Operator to balance supply and demand if normal mechanisms in the Short Term Trading Market  are unlikely to achieve this balance.

In emergency situations, the availability and use of contingency gas reduce the risk of supply issues for customers. To date, contingency gas has never been required. 

Under the final rule, trading participants will have greater flexibility in structuring their bids or offers for providing contingency gas. Participants will be able to better reflect the prices of different sources of contingency gas, which will encourage them to provide contingency gas in times of emergency.

The final rule also clarifies the Australian Energy Market Operator’s ability to request evidence from trading participants following a contingency gas event to determine whether contingency gas was provided as scheduled and to assist with reporting on contingency gas events.

The final rule is expected to provide 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.

The final rule will come into effect on 5 November 2015 to provide the Australian Energy Market Operator sufficient time to undertake amendments to the Short Term Trading Market Procedures to ensure consistency with the revised rules. 

For information contact:

AEMC Senior Director: Anne Pearson 02 8296 7800

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