The Council of Australian Governments’ (COAG) Standing Council on Energy and Resources (SCER), has requested the Australian Energy Market Operator (AEMO), in co-operation with other relevant parties, to develop the design for a physical gas trading hub at Wallumbilla, Queensland. The trading hub is planned to be active from March 2014.

AEMO has recognised that more efficient secondary transactions in pipeline capacity services could enhance commodity trading at the new Wallumbilla hub. Moreover, the issues confronting pipeline capacity trading in Australia are consistent with issues experienced by gas markets internationally. Accordingly, a better understanding of overseas models and approaches to capacity trading, including an overview of how these have evolved in practice, and their relative ‘successes’, could provide a potential roadmap for the evolution of effective short-term trading in pipeline capacity in Australia.

To help in developing this understanding, AEMO has commissioned The Brattle Group to undertake a study which summarises experiences with international capacity trading, and measures that have been taken to make unused capacity available for trading.

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International Experience In Pipeline Capacity Trading