Table 4.2: Evaluation of the options AEMO Centralised Auction Pipeline Operated Auction Platforms Evaluation criteria Operated by independent and experienced operator Requires common auction Operated in a predictable and Requires a common auction standards to be developed and reliable manner standard to be developed Operation of implemented by all pipelines platform: Operation of platform A new governance framework underpinned by a robust would need to be established governance framework Transparency in costs and Could be mandated Could be mandated operation of platform The use of existing systems is expected to result in low transaction costs, although the implementation costs are estimated to be higher. The use of the SRA algorithm is also expected Pipeline operators have to result in the effective proposed to absorb Provides for: execution of the auction. transaction low transaction costs Data exchange Because data exchanges Platform quick and effective requirements are, are not required under this System execution of the auction however, expected to option, the auction is Features: result in the auction be expected to be executed conducted later than a relatively quickly. pipeline operated auction. Some project team members noted that AEMO would not have the same incentives to minimise costs as a pipeline operator. Integrated with pipeline Separate processes required Separate processes required operators’ nominations and scheduling processes Co-ordination of auction products only possible when Possible across all pipelines pipelines are operated by the Shippers can co-ordinate that are subject to the same pipeline operator trades across pipelines auction, regardless of ownership Shippers can, however, with primary products. Shippers can co-ordinate trades between the capacity benefits: trading platform and the auction Shippers can readily (The GSH and auction would trades with other be housed on the same web services on Gas Supply Hub portal, EMMS) Capable of capturing scale and (in so far as it relates to other Scale and scope benefits services offered by the pipeline scope operator) benefits and This option is expected to be Depending on the governance adaptability: Future proof, scalable and future proof and scalable, but arrangements that are put in adaptable questions were raised about place, this option may be future
Table 4.2: Evaluation of the options Evaluation criteria AEMO Centralised Auction Pipeline Operated Auction Platforms Operation of platform: Operated by independent and experienced operator Operated in a predictable and reliable manner Requires a common auction standard to be developed Requires common auction standards to be developed and implemented by all pipelines Operation of platform underpinned by a robust governance framework A new governance framework would need to be established Transparency in costs and operation of platform Could be mandated Could be mandated Platform System Features: Provides for: low transaction costs quick and effective execution of the auction The use of existing systems is expected to result in low transaction costs, although the implementation costs are estimated to be higher. The use of the SRA algorithm is also expected to result in the effective execution of the auction. Data exchange requirements are, however, expected to result in the auction be conducted later than a pipeline operated auction. Some project team members noted that AEMO would not have the same incentives to minimise costs as a pipeline operator. Pipeline operators have proposed to absorb transaction Because data exchanges are not required under this option, the auction is expected to be executed relatively quickly. Integrated with pipeline operators’ nominations and scheduling processes Separate processes required Separate processes required benefits: Shippers can co-ordinate trades across pipelines Possible across all pipelines that are subject to the auction, regardless of ownership Co-ordination of auction products only possible when pipelines are operated by the same pipeline operator Shippers can, however, with primary products. Shippers can co-ordinate trades between the capacity trading platform and the auction Shippers can readily trades with other services on Gas Supply Hub (The GSH and auction would be housed on the same web portal, EMMS) Scale and scope benefits and adaptability: Capable of capturing scale and scope benefits (in so far as it relates to other services offered by the pipeline operator) Future proof, scalable and adaptable This option is expected to be future proof and scalable, but questions were raised about Depending on the governance arrangements that are put in place, this option may be future
consultation-operation-of-capacity-trading-platform-auction.docx