On 9 December 2010, the Australian Energy Market Commission (Commission) gave notice under sections 311 and 313 of the National Gas Law of the making of the "Timetable for Prescribed Gas STTM Reviews" Rule and Rule determination. The Rule as Made provides for the following:

• the first three prescribed gas Short Term Trading Market (STTM) reviews will be consolidated, which will now have to be completed by 31 March 2012; and
• the review of the Minimum Market Price (MMP) will be moved to the 31 December 2012 so that the MMP can be reviewed at the same time as the other STTM parameter settings.

Background

Overview

AEMO's Rule change request sought to amend the timetable for prescribed market reviews of the STTM to allow for sufficient time to collect and analyse market data for a full winter and two summer periods, and to undertake adequate review and consultation. This amendment would entail consolidating the first three market reviews into one review which would be completed by 31 March 2012.

Additionally, AEMO sought to move the review of the MMP from 31 December 2011 to 31 December 2012 so that it can be reviewed alongside the other STTM parameters to ensure these market settings are considered holistically.

Current arrangements

Under the National Gas Rules (NGR), AEMO must complete six market reviews of the STTM by particular dates as described below. These dates did not change when AEMO delayed the commencement of the operation of the STTM from 4 June 2010 to 1 September 2010. The six market reviews that AEMO must complete are:

• by 31 December 2010, it must complete a review of the operation of the STTM that considers whether the Market Operator Service (MOS) is operating effectively and efficiently, and identifies any improvements in the operation of the STTM that can be implemented by 31 May 2011, by May 2012 or in a longer time period;
• by 30 June 2011, it must complete a review of the potential for the STTM to operate at prospective additional hubs, including the identification of options to integrate scheduling for hubs and prospective hubs that are connected by the same pipeline;
• by 31 December 2011, it must complete a review of the operation of the STTM that:

- considers whether the graduated deviation parameters, the graduated variation parameters, the MMP and the MOS cost cap are set at appropriate levels;

- considers whether the MOS is operating effectively and efficiently; and

- identifies options for the allocation of settlement surpluses and shortfalls on a daily basis;

• by 31 December 2012, it must complete a review of available options for additional or alternative STTM market processes that would operate within a gas day;
• by 31 December 2012 (and subsequently every five years), it must complete the first periodic reviews of the Market Price Cap (MPC), the administered price cap, the Cumulative Price Threshold (CPT), and the CPT horizon; and
• after the last gas day that the contingency gas was scheduled because of the first contingency gas trigger event, a review of the operation of Division 8 of Part 20 of the NGR.

For each review, AEMO must comply with the extended consultative procedure under rule 9A.

What the Rule change request sought

The Rule change request sought to:

• consolidate the first three reviews into one review by amending rules 489 and 490;
• complete the consolidated review by 31 March 2012 by amending rules 489(1) and 490; and
• move the review of the MMP to the fifth review by amending rules 489(2)(a) and 492.

The expedited Rule making process

On 28 October 2010, the Commission gave notice under section 303 of the NGL to commence consultation on AEMO's Timetable for Prescribed Gas STTM Reviews Rule change request. The Commission also gave notice under section 304 of the NGL that it intended to expedite the Rule making process on the grounds that it considered the proposed Rule is non-controversial, subject to the receipt of written objections.

Written objections to the expedited Rule making process closed on 11 November 2010. No written objections were received. Submissions on the content of the Rule change request closed on 25 November 2010.

All enquiries in relation to this project should be addressed to Charles Hoang (02) 8296 7800.