On 24 March 2016, the AEMC made a more preferable final rule which will improve the operation of the Victorian Declared Wholesale Gas Market (Victorian DWGM) in relation to the allocation process for authorised MDQ and AMDQcc.

The final rule is substantially the same as the draft rule with the exception of minor changes to address implementation and operation issues raised by stakeholders. 

The final rule:

• clarifies the type of market benefit instrument created in respect of extensions or expansions of the Victorian declared transmission system by providing that:
  • authorised MDQ will relate only to historic capacity on the Longford to Melbourne pipeline at the time of commencement of the Victorian DWGM;
  • AMDQcc will be created in relation to all extensions or expansions where new market benefit instruments are created.
• provides that AEMO will be required to use the proceeds from its allocation process to offset the operating costs of the Victorian DWGM;
• provides that AEMO will provide a minimum of twenty business days’ notice prior to undertaking the allocation process of either authorised MDQ or AMDQcc; and
• clarifies the party responsible for undertaking the allocation process by providing that:
  • AEMO is responsible for undertaking the allocation process for all authorised MDQ;
  • AEMO is the party responsible for undertaking the allocation process for AMDQcc where the costs of the extension or expansion that created or creates AMDQcc are included in the declared transmission system service provider’s opening capital base for an access arrangement period or is included in its approved capital expenditures for an access arrangement period;
  • the declared transmission system service provider is the part responsible for undertaking the allocation process for AMDQcc where the costs of the extension or expansion that created or creates AMDQcc are not included in its opening capital base for an access arrangement period or in its approved capital expenditure for an access arrangement period.

The Commission considers that the final rule will promote regulatory certainty, increase timely provision of information and promote an efficient allocation process.

The final rule is effective 24 March 2016; however, to provide time for the preparation and implementation of the AMDQcc auction procedure and register of authorised MDQ and AMDQcc, the operative provisions of the final rule will commence on 25 October 2016.

Background

On 13 November 2013, the AEMC received the rule change request from AEMO seeking to amend Part 19 of the National Gas Rules.

• Under the proposed rule:
• authorised MDQ would relate only to the historical capacity on the Longford to Melbourne pipeline at the time of the Victorian DWGM commenced and would be allocated by AEMO;
• all extensions and expansions to the Victorian Declared Transmission System (Victorian DTS) would result in the creation of AMDQcc which would be allocated by APA;
• AEMO would be required to offset any proceeds it receives from the auction of authorised MDQ against the operating costs of the Victorian DWGM; and
• both AEMO and APA would provide a minimum notice period prior to an allocation of authorised MDQ or AMDQcc.

AEMO submitted the rule change request to clarify the classification of new capacity created in the Victorian DWGM.

AEMO considers that if the rule change were to be made, it would have a benefit to the market in terms of providing greater certainty to market participants and would not impose any direct costs on the market.

On 10 September 2015, the AEMC published a consultation paper on the rule change request. Submissions on the consultation paper closed on 8 October 2015. The AEMC received three submissions on the consultation paper.

On 10 December 2016, the AEMC published a draft determination and draft more preferable rule on the rule change request. Submissions on the draft rule determination closed on 28 January 2016. The AEMC received five submissions on the draft rule determination.