The AEMC has proposed not to create a rule introducing forward trading market for gas traded on the Victorian declared wholesale gas market (DWGM), believing the potential benefits will not justify the costs.
Usage of existing industry-led risk management tools has increased over the past year. The ASX Victorian gas futures have increased in trading, and the ASX has indicated it will introduce a market maker for its Victorian gas product in the near future.
Brokers have entered the Victorian gas market in the past year which is expected to facilitate more over-the-counter trading. Information transparency about gas contracts has also improved due to increased trades on publicly listed ASX products and data in the ACCC gas inquiry interim reports.
In light of these developments, and after consulting with market participants, the Commission found that there is no longer a clear need for an additional forward trading market to help manage spot-price risk. Industry-led mechanisms are likely to be best placed to manage the risk of low demand for these risk management products.
This rule change is one of three proposed by the Victorian Minister for Energy, Environment and Climate change, and all three rule changes were based on recommendations in the AEMC’s 2017 Review of the Victorian declared wholesale gas market.
