The report is part of the Ministerial Council on Energy (MCE’s) wholesale gas market development program and investigates future options to accelerate the development of a reliable, competitive and secure wholesale gas market. The report takes into account relative overseas experience, the broader energy market reform program, and industry input. It identifies the wide variation between the Australian jurisdictions in terms of gas usage, transmission network topology, market reform and industry structure, and raises the question whether, left to their own devices, the markets will develop and capture the efficiency benefits that potentially exist. Four options have been selected and evaluated on the basis of efficiency, transparency, practicality, simplicity and implementation costs. The options are: Option I - the current market with organic development; Option II - the current market with bulletin board facilities; Option III - the city gate scheme; and Option IV -the extension of the Victorian model.
Based on its evaluation of the options, the Allen Consulting Group suggests that the federal government take one of two paths. First, in consultation with the gas industry and other stakeholders, the government could commission a feasibility study of some concrete and specific market development options based on a combination of Option II and III. Recommendations could then be made on how and when to implement this scheme with the state governments creating obligations for the scheme to be implemented. Alternatively, the government could set down the policy objectives for development of the gas market and allow the industry itself to bring to the MCE for approval new arrangements to achieve the policy objectives. A market entity could be part of this arrangement to implement the arrangements and a timetable for implementation. State governments could then provide the legislation and or regulation backing to implement the arrangements. The report concludes that while the gas industry could bring about these developments on its own this is not likely to happen in the short term. This makes it likely that the federal and state governments will need to take action to accelerate gas market development.
Source: Allen Consulting Group, June 2005.
