The AEMC has made a draft rule that simplifies risk management for market participants and improves wholesale gas prices in the Victorian Declared Wholesale Gas Market (DWGM). 
The draft rule would require AEMO to take physical constraints on withdrawals into account when setting pricing schedules. This will result in pricing schedules that better align with the physical capability of the system and reduce uncertainty and scheduling risk for market participants. 

The draft rule will also simplify the way market participants can protect against the risk of congestion uplift payments. Currently congestion uplift payments are a penalty paid by market participants who do not have a congestion uplift hedge. Currently to hold a congestion uplift hedge participants must be capable of injecting gas and must submit an injection hedge nomination.

Under the draft rule it will be simpler for participants to protect against the risk of congestion uplift payments because it will be based on exit capacity certificates they purchase, and not on whether or not they can inject gas into the system.

The draft rule does not spread congestion uplift payments across all market participants, but retains the current approach and allocates them, as far as practicable, to market participants that cause congestion. Spreading congestion uplift payments across the market would remove an incentive for market participant to avoid causing constraints.

In deciding to make this draft rule, the Commission has taken into account interactions with the draft rule for the separate rule change on DWGM improvement to AMDQ regime, also published on 5 September 2019.

Stakeholders are invited to make submissions by 24 October 2019.

For information contact:

Director, Owen Pascoe (02) 8296 7856

Senior Adviser, Andrew Pirie (02) 8296 7867

Media: Prudence Anderson, Communication Director, 0404 821 935 or (02) 8296 7817