On 17 March 2011, the Commission released a Rule to remove physical gas balancing mechanisms from calculations of contributions made by gas shippers to the Short Term Trading Market's (STTM) Participant Compensation Fund. The Rule for the Calculation of STTM Participant Compensation Fund Contributions commenced on 17 March 2011.

This Rule applies to the Short Term Trading Market (STTM) - a daily market for the wholesale trading of natural gas.

Its key purpose is to clarify the process of calculating the STTM Participant Compensation Fund which compensates gas shippers and users for scheduling errors.

The Commission has determined that Market Operator Services (MOS) and overrun MOS would be excluded from the calculation of STTM shippers' contributions to the compensation fund.

In the STTM, Market Operator Services (MOS) is a physical balancing mechanism that is used to address deviations between scheduled and actual gas that is injected or withdrawn for a particular gas day.

This Rule does not currently affect any market participants because there are no STTM shippers registered to withdraw gas who are concurrently registered as MOS providers.

However, looking to the future, this Rule sharpens the integrity of calculations made in relation to the management of the STTM Participant Contribution Fund by preserving:

• the soundness of MOS and overrun MOS as physical gas balancing services; and
• the approach that Participant Compensation Fund contributions would be based solely on withdrawals of gas.

Background

AEMO sought to change the method of calculating STTM Participant Compensation Fund (PCF) contributions as applied to STTM Shippers.

Currently, the calculation of STTM Participant Compensation Fund Contributions for STTM Shippers includes, as inputs, both MOS and overrun MOS.

AEMO considered that MOS and overrun MOS should be excluded from the calculation of STTM Shippers' PCF contributions. AEMO stated that MOS and overrun MOS provide a balancing service and should not be used in the calculation of PCF contributions.

Consequently, AEMO proposed that the National Gas Rules (Rules) be changed such that the PCF contributions for STTM Shippers excludes, as inputs, both MOS and overrun MOS.

The expedited Rule making process

On 3 February 2011, the Commission gave notice under section 303 of the NGL to commence consultation on this Rule change request. On the same day, the Commission also gave notice under section 304 of the NGL that it would expedite the Rule making process on the grounds that it considered the proposed Rule would be non-controversial, subject to the receipt of written objections.

Written objections against the expedition of the Rule making process were required by 17 February 2011. No written objections were received.

Submissions on the content of the Rule change request were required by 3 March 2011. No submissions were received.