AEMC urges integration of east coast gas market

gas

The Australian Energy Market Commission (AEMC) released recommendations to integrate the east coast gas market, including creating two trading hubs in Queensland and Victoria.

The reform package also included improving access to pipelines and delivering better information to gas businesses.

The Review of the Victorian Declared Gas Market was requested by the Victorian Government to look at the state’s current market arrangements in light of the COAG Energy Council’s gas reform agenda.

Consultation is open and submissions welcome until December 2.

The review found a more efficient gas market would improve the power system’s ability to integrate renewables, such as wind and solar. Increasingly, the system is dependent on gas-fired generation, particularly where it provides fast-start back-up for intermittent generation.

AEMC chairman John Pierce said the recommendations would improve access to a reliable supply of efficiently priced gas to Victorian consumers, and maintain victoria’s key role in the east coast gas markets as one of two trading hubs.

“There is a need to progress the Victorian gas market reforms in a timely manner in the face of significant structural changes in both gas and electricity sectors across the east coast,” Mr Pierce said.

“The largely isolated point-to-point pipelines of the past are now an interconnected network, and the way wholesale gas is bought and sold needs to reflect this.

“By the end of 2018 all the new LNG export projects in Gladstone are expected to be operational, coinciding with the expiration of long-term gas supply agreements which will require domestic customers to enter the market to secure new supply.”

The recommendations are expected to introduce more flexibility into gas trading, giving the market better management of price risk and improving longer-term price signals.