systems to incorporate the auction results into the pipeline scheduling process; and reporting system if they don’t already have one, to allow information on the capacity available for auction and results of the auction to be published on the Bulletin Board. To ensure a consistent approach is employed across pipelines, APGA has proposed the development of a common standard for key elements of the auction that pipeline operators would be required to comply with. APGA has estimated that it cost $2.2 million to implement this option across all the pipeline operators that could be captured by the auction, of which: $1 million would be spent on installing auction interfaces and algorithms; $1 million would be spent on system integration; and $0.2 million would be spent on reporting. The implementation cost is estimated to be $1.35-$1.45 million lower than the centralised auction, because the data exchange infrastructure that is required to support a centralised auction will not be required under this option. On the of cost recovery, APGA noted that pipeline operators would absorb the implementation costs and any ongoing costs of operating the auction. While this was considered a point of distinction between APGA’s proposal and AEMO’s proposal, the AEMC has subsequently advised that it had intended the costs of running the auction to be recovered from the auction proceeds with any residual revenue to then be provided to pipeline operators. This intention is reflected in the following statement from the Stage 2 East Coast Review: preferred method of allocating auction revenue is to give it to pipeline owners, the “The costs of running the auction have been recovered.” the proceeds of the auction would be used to recover the costs incurred under AEMO’s proposal, some pipeline operators claimed that AEMO would not have the same incentive they have to minimise costs. Some pipeline operators also noted that if the auction proceeds were insufficient to cover the costs, then market participants would bear the additional costs under an AEMO operated auction. Project consideration of the options Table 4.1 provides a summary of the key features of the proposals that AEMO and APGA presented to the project teams. Table 4.1: Day-ahead auction: Options considered by the project teams Key features AEMO Centralised Auction Pipeline Operated Auction Platforms
systems to incorporate the auction results into the pipeline scheduling process; and reporting system if they don’t already have one, to allow information on the capacity available for auction and results of the auction to be published on the Bulletin Board. To ensure a consistent approach is employed across pipelines, APGA has proposed the development of a common standard for key elements of the auction that pipeline operators would be required to comply with. APGA has estimated that it cost $2.2 million to implement this option across all the pipeline operators that could be captured by the auction, of which: $1 million would be spent on installing auction interfaces and algorithms; $1 million would be spent on system integration; and $0.2 million would be spent on reporting. The implementation cost is estimated to be $1.35-$1.45 million lower than the centralised auction, because the data exchange infrastructure that is required to support a centralised auction will not be required under this option. On the of cost recovery, APGA noted that pipeline operators would absorb the implementation costs and any ongoing costs of operating the auction. While this was considered a point of distinction between APGA’s proposal and AEMO’s proposal, the AEMC has subsequently advised that it had intended the costs of running the auction to be recovered from the auction proceeds with any residual revenue to then be provided to pipeline operators. This intention is reflected in the following statement from the Stage 2 East Coast Review: “The preferred method of allocating auction revenue is to give it to pipeline owners, the costs of running the auction have been recovered.” the proceeds of the auction would be used to recover the costs incurred under AEMO’s proposal, some pipeline operators claimed that AEMO would not have the same incentive they have to minimise costs. Some pipeline operators also noted that if the auction proceeds were insufficient to cover the costs, then market participants would bear the additional costs under an AEMO operated auction. Project consideration of the options Table 4.1 provides a summary of the key features of the proposals that AEMO and APGA presented to the project teams. Table 4.1: Day-ahead auction: Options considered by the project teams Key features AEMO Centralised Auction Pipeline Operated Auction Platforms
consultation-operation-of-capacity-trading-platform-auction.docx