Capacity Trading Reform Package Legal and Regulatory Framework – Consultation paper

Date: 
Monday, 19th March 2018

The Gas Market Reform Group (GMRG) is undertaking a public consultation on the legal and regulatory framework required to implement the capacity trading reform package. Before the reforms can be implemented, a number of amendments will need to be made to the National Gas Law (NGL), the Regulations made under the NGL and the National Gas Rules (NGR). Further, a new regulatory instrument, the Operational Transportation Service Code (Code), will need to be developed.

The proposed changes to the NGL, Regulations and NGR, as well as the draft initial Code and Consultation Paper can be found below. With the exception of a small number of refinements to the design of individual reforms that the GMRG is consulting upon through this process, the proposed legal and regulatory framework reflects the GMRG’s final recommendations on the design of the capacity trading reform package, which were endorsed by the COAG Energy Council (Energy Council). The draft package of legal and regulatory changes should therefore be read in conjunction with the GMRG’s final recommendations.

The purpose of this consultation process is to obtain stakeholder feedback on the draft package of legal and regulatory changes, which includes:

  1. the proposed amendments to the NGL and Regulations (National Gas Laws Amendments (Capacity Trading and Auctions));

  2. the proposed amendments to the NGR, which include:

    • changes to existing parts of the NGR and, in particular, to Part 15A: Registered participants, Part 18: Natural Gas Services Bulletin Board and Part 22: Gas Trading Exchange;

    • the insertion of new parts into the NGR, including Part 24: Facilitating capacity trades and the capacity auction, Part 25: Capacity Auctions and Part 26: Standard market timetable;

    • a number of transitional rules, which are set out in Schedule 5: Transitional provisions for the introduction of the capacity trading reforms; and

  3. the proposed Operational Transportation Service Code.

The GMRG is also seeking feedback on a number of refinements that have been made to the design of the reforms, which Energy Council will need to agree to.

The GMRG has also prepared a template that stakeholders can use to provide their written feedback on:

  • the proposed amendments to the NGL, NGR, Regulations and the Code;

  • the questions posed in the Explanatory Note; and

  • any other issues that they would like to provide feedback on.

Stakeholders are strongly encouraged to use this template and to submit their responses by 5pm (AEST) 27 April 2018. Electronic submissions are preferred and can be sent via email addressed to the GMRG at enquiries@gmrg.coagenergycouncil.gov.au.  

The draft package of legal and regulatory changes includes an outline of the matters expected to be dealt with in the Capacity Transfer and Auction Procedures, which the Australian Energy Market Operator (AEMO) will consult upon at the completion of this consultation process. The outline is provided for stakeholder reference during their consideration of the proposed changes to the NGL, Regulations and NGR, but is not intended to be consulted upon in this process.

Public forum

To help inform the consultation process, the GMRG hosted a public forum on the proposed legal and regulatory framework implementing the capacity trading reform package. The presentation from this forum is available below.

Background

The GMRG’s final design recommendations on the capacity trading reform package were endorsed by the Energy Council in November 2017 / January 2018. The Energy Council agreed at its 24 November 2017 meeting, that the capacity trading reform package should be implemented by 1 March 2019 and the harmonisation of gas day start times and nomination cut-off times should occur by 1 October 2019.