Project teams’ consideration of the options While pipeline operators did not put forward a proposal to operate the capacity trading platform(s), the Capacity Trading and Day-Ahead Auction project teams still assessed the relative merits of an AEMO operated platform and a pipeline operated platform(s) using the of choice’ evaluation criteria outlined in Chapter 2. The table below provides ‘platform a summary of this evaluation. 3.2: Evaluation of the capacity trading platform(s) options Pipeline Operated Platform(s) AEMO Operated Single Platform Multiple Platform Platforms Evaluation criteria Could be Operated by independent and independent if a experienced operator Joint Venture is established Untested but Untested but Operated in a predictable and expected to be expected to be reliable manner operated in this operated in this Operation of manner manner platform: Operation of platform (Already established in Would need to be need to be underpinned by a robust NGL, NGR and established established governance framework Exchange Agreement) Transparency in costs and Could be be Could be mandated operation of platform mandated mandated (while transaction costs were considered Provides for low transaction relatively low, some costs and quick and effective Untested Untested concerns were raised Trading execution of trades about the barrier the System annual licence fee may Features: pose to small players) Integrated with pipeline Separate Separate Separate processes operators’ nominations and processes processes required scheduling processes required required Shippers can readily co-ordinate trades across pipelines Co-ordination Shippers can readily co-ordinate benefits: trades with other services on the Gas Supply Hub (e.g. new capacity and Potentially but not Potentially but not other gas services can to the same to the same Scale and Capable of capturing scale and be added over time extent as the extent as the scope benefits scope benefits and shippers can AEMO operated AEMO operated and aggregate prudential platform platform adaptability: requirements across the GSH) Future scalable and Potentially Potentially adaptable No estimate provided but expected to be higher than the AEMO option Implementation Costs: Est. $90,000-$140,000 because new exchange trading platform and matching algorithm, settlement, prudential, reporting
Project teams’ consideration of the options While pipeline operators did not put forward a proposal to operate the capacity trading platform(s), the Capacity Trading and Day-Ahead Auction project teams still assessed the relative merits of an AEMO operated platform and a pipeline operated platform(s) using the ‘platform of choice’ evaluation criteria outlined in Chapter 2. The table below provides a summary of this evaluation. 3.2: Evaluation of the capacity trading platform(s) options Evaluation criteria AEMO Operated Platform Pipeline Operated Platform(s) Single Platform Multiple Platforms Operation of platform: Operated by independent and experienced operator Could be independent if a Joint Venture is established Operated in a predictable and reliable manner Untested but expected to be operated in this manner Untested but expected to be operated in this manner Operation of platform underpinned by a robust governance framework (Already established in NGL, NGR and Exchange Agreement) Would need to be established need to be established Transparency in costs and operation of platform Could be mandated Could be mandated be mandated Trading System Features: Provides for low transaction costs and quick and effective execution of trades (while transaction costs were considered relatively low, some concerns were raised about the barrier the annual licence fee may pose to small players) Untested Untested Integrated with pipeline operators’ nominations and scheduling processes Separate processes required Separate processes required Separate processes required Co-ordination benefits: Shippers can readily co-ordinate trades across pipelines Shippers can readily co-ordinate trades with other services on the Gas Supply Hub Scale and scope benefits and adaptability: Capable of capturing scale and scope benefits (e.g. new capacity and other gas services can be added over time and shippers can aggregate prudential requirements across the GSH) Potentially but not to the same extent as the AEMO operated platform Potentially but not to the same extent as the AEMO operated platform Future scalable and adaptable Potentially Potentially Implementation Costs: Est. $90,000-$140,000 No estimate provided but expected to be higher than the AEMO option because new exchange trading platform and matching algorithm, settlement, prudential, reporting
consultation-operation-of-capacity-trading-platform-auction.docx