The Australian Energy Regulator (AER) has today released an August 2012 gas markets report analysing drivers of higher priced gas in the Victorian wholesale gas market and the STTM gas markets (Sydney, Brisbane, and Adelaide).
The average ex ante prices in August 2012 were significantly higher than for the same month last year. Sydney, Victoria, and Adelaide exceeded the August 2011 average prices by 98, 42, and 60 per cent respectively. These increases were caused in part by reductions in lower priced gas being offered to the market.
The highest prices were seen in the Sydney market. Following this analysis, the AER has identified that demand was under forecast on 25 of the 31 August gas days in the Sydney market. Under forecasting of demand by participants usually results in higher ex post prices relative to the ex ante price. On four of the gas days the ex post price was more than $5/GJ higher than the ex ante price.
The AER is currently assessing the demand forecasting and rebidding during August for compliance with the Gas Rules.