The Australian Energy Regulator (AER) has fined a service provider over their alleged failure to provide key information for the east coast gas Day Ahead Auction.

Victorian-based Lochard Energy has paid a $20,000 penalty for the alleged failure.

AER Chair, Clare Savage, said reporting obligations under the National Gas Rules (NGR) are important to ensure the Day Ahead Auction runs smoothly.

“The Day Ahead Auction was introduced to improve competition by ensuring access to pipeline capacity in the east coast gas market,” Ms Savage said.

“A key priority for the AER is ensuring energy markets operate effectively and transparently through strengthened gas reporting requirements, which can benefit consumers through lower wholesale gas prices.

“The AER is prepared to take action where energy companies have breached their obligations.”

The AER issued an infringement notice to Lochard Energy alleging it failed to submit auction quantity limits to the Australian Energy Market Operator (AEMO) for its Iona Compression Facility (ICF) over three days in May 2020, as required by the NGR.

The Day Ahead Auction is run across multiple parts of the east coast gas grid, providing access to contracted but unused capacity on gas pipelines through mandatory auctions.

Lochard Energy’s alleged conduct resulted in AEMO suspending the ICF from participating in the Day Ahead Auction market for three days.

If three auction facilities are suspended on the same day, the entire east-coast Day Ahead Auction market is cancelled. Lochard Energy’s alleged conduct increased the risk of the Auction being cancelled, and could have undermined the efficient operation of the market.

The Day Ahead Auction began in March 2019 and provides access to contracted but unused capacity on gas pipelines by way of mandatory auctions and is designed to improve competition in the gas market.

It is run across multiple parts of the east coast gas grid, including on different pipeline segments and at major compression facilities. Gas shippers commonly bid into the Day Ahead Auction at multiple locations to bring gas from one location in the system to another.

A market delay at one facility location delays the auction on all facilities, giving shippers less time to bid for unused capacity across the transportation grid. If this is followed by a facility suspension for one location, it may prevent shippers from using the Day Ahead Auction to transport gas along certain flow paths between facilities.

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