POLICY BENEFITS COSTS KEY RISKS OPTION Concerns may be raised Shippers Incumbent Shippers regarding sovereign risk due to 4B. Mandatory Mitigate costs by more easily trading unused The property rights of existing shippers intervening in established Trading firm capacity. would be impacted. contractual agreements of Obligations: existing GSAs and/or GTAs. UIOSI Trading/auction platform Pipeliners Market Operator establishment and operation costs may not be justified if there is Would reveal the value of pipeline capacity Trading platform establishment and limited/inadequate demand for rights and should assist informing efficient operational costs. released firm capacity. investment and operational decisions by pipeline owners. May create uncertainty for potential underwriters of new or Australian Governments/Regulatory expanded pipeline capacity. Agencies Industry Participants and Consumers If shippers are forced to sell Legislative/regulatory change costs, capacity which they otherwise Market participants with insufficient including the development of an would have derived value (i.e. contracted capacity able to more easily objective rule to define when capacity managing risks associated with access firm capacity to ship gas. must be offered up. peak demand) it may lead to Lower barriers to market entry for new Monitoring and enforcement costs. inefficient allocation of capacity retailers. and undermine the incentives that Improved contestability may result in wider underpin investment. choice of gas retailers and potentially competitive pressure could result in lower prices. Transparent discovery of volume and price for secondary pipeline capacity. More efficient use of existing infrastructure. Better-informed decision making. Policy Makers Better-informed decision making.
POLICY OPTION BENEFITS COSTS KEY RISKS 4B. Mandatory Trading Obligations: UIOSI Shippers Mitigate costs by more easily trading unused firm capacity. Pipeliners Would reveal the value of pipeline capacity rights and should assist informing efficient investment and operational decisions by pipeline owners. Industry Participants and Consumers Market participants with insufficient contracted capacity able to more easily access firm capacity to ship gas. Lower barriers to market entry for new retailers. Improved contestability may result in wider choice of gas retailers and potentially competitive pressure could result in lower prices. Transparent discovery of volume and price for secondary pipeline capacity. More efficient use of existing infrastructure. Better-informed decision making. Policy Makers Better-informed decision making. Incumbent Shippers The property rights of existing shippers would be impacted. Market Operator Trading platform establishment and operational costs. Australian Governments/Regulatory Agencies Legislative/regulatory change costs, including the development of an objective rule to define when capacity must be offered up. Monitoring and enforcement costs. Concerns may be raised regarding sovereign risk due to intervening in established contractual agreements of existing GSAs and/or GTAs. Trading/auction platform establishment and operation costs may not be justified if there is limited/inadequate demand for released firm capacity. May create uncertainty for potential underwriters of new or expanded pipeline capacity. If shippers are forced to sell capacity which they otherwise would have derived value (i.e. managing risks associated with peak demand) it may lead to inefficient allocation of capacity and undermine the incentives that underpin investment.
Gas%20Transmissin%20Pipeline%20Capacity%20Trading%20-%20Decision%20RIS%20-%20Dec%202013.docx