The Day Ahead Auction Focus Report is delivered under the new wholesale gas market monitoring and reporting powers granted in May 2024. The AER is required to monitor and report on efficiency and competition in the east coast wholesale gas markets. This report on the Day Ahead Auction (DAA) is the first in a series AER will deliver before the inaugural biennial gas competition report in May 2026.
The DAA focus report looks at the structure and performance of the DAA and the conduct of shippers winning capacity at auction. We considered whether the DAA is supporting efficiency and competition in the east coast gas market, including whether it has met its policy objectives of improving shipper access to unused pipeline capacity and providing incentives to reduce over-contracting of firm capacity.
Key findings include:
- The DAA has unlocked significant unused capacity on key pipelines and compression facilities. This looks like an efficiency benefit to the market as previously underutilised capacity is now available.
- Access to additional capacity on the DAA has better equipped shippers to manage long term commodity agreements by being able to sell or supplement firm commodity on a short-term basis.
- A wider range of participants are securing capacity through the DAA, with a notable increase in auction participation from traders.
- In the busiest facilities, surplus capacity available via the DAA has decreased, potentially indicating more efficient long-term contracting of pipeline capacity. However, there may be opportunities to further improve efficiency in gas transportation outside of key routes with surplus capacity persisting on these pipelines.