Gas trading market enters trial phase

The Short Term Trading Market (STTM) entered the second phase of market trials in March. Operated by the Australian Energy Market Operator (AEMO), the one-day-ahead wholesale market will commence in early June 2010 if it is deemed ready by the marker operator.

AEMO executive general manager of planning, Tim George said five key criteria must be satisfied before the market will commence.

“We will track operational readiness, participant readiness, industry-wide readiness, jurisdictional/common readiness and external rulings,” Mr George said at FutureGas 2010 in Brisbane in March.

“The final market readiness report will be presented to AEMO in May,” he said.

Mr George said the purpose of the market trial was to test a full-scale, industry-wide operational dry-run of STTM systems. The current scripted trial phase, which will test for unusual situations and security events, will be followed by an unscripted phase for participants to test their systems.

The STTM is a market-based wholesale gas balancing mechanism. The market will set a daily market price at each hub and settle each hub based on the schedules and deviations from schedules.
Hubs will initially be established in Sydney and Adelaide and the market has been designed so it can be rolled out in other locations, with the possibly for further hubs in areas such as Queensland and the Australian Capital Territory.

According to AEMO, the establishment of the market is a major step in the Ministerial Council on Energy’s (MCE) policy agenda for reform of the energy industry and is supported and monitored closely by the MCE.

The existing retail gas markets in South Australia and New South Wales will also continue to operate in conjunction with the STTM wholesale gas market in each state. The Victorian wholesale gas market will continue to run in parallel with the emerging national gas market.