The Australian Energy Regulator (AER) has published a report into the events of 19 and 21 June, when there were high ancillary payments in the Victorian Declared Wholesale Gas Market.
On 19 and 21 June there were high ancillary payments in the Victorian Declared Wholesale Gas Markets of $354,976 and $341,944.
These amounts triggered thresholds of $250,000 under the AER Significant Price Variation Guideline reporting requirement.
The two days in June saw gas market prices increase above expected levels because of high winter demand. On these days there were also transmission constraints in supplying gas into metropolitan Melbourne which resulted in some lower priced gas from western Victoria being unable to be delivered to Melbourne. As a result, higher priced gas was sourced and supplied from interstate to satisfy gas demand generating ancillary payments above the thresholds.
These ancillary payments are the first events in Victoria since November 2017.
Background
The AER reports on significant price variations in the Declared Wholesale Gas Market (DWGM) in Victoria.
The AER investigates significant price variations as they may indicate that the gas markets are operating in an inefficient way. The efficient functioning of gas markets allows consumers and industry to be supplied with least cost and reliable gas. In general, market outcomes are optimised when participants have access to information as early as possible.
This report is published by the AER in accordance with the requirements under Rule 355(1)(b) of Part 19 of the National Gas Rules (Gas Rules).