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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
2013-09-24 Daily Xml
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NATIONAL GAS (SOUTH AUSTRALIA) (GAS TRADING EXCHANGES) AMENDMENT BILL

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for the Status of Women, Minister for State/Local Government Relations) (17:44): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

The Government is again delivering on a key energy commitment through legislation to implement a new voluntary gas trading market that will offer a low cost, flexible method to transfer title of gas from one party to another.

The new trading market is an important development in the Eastern Australia gas market. It will assist market participants adjust to changing market conditions following the commencement of liquefied natural gas export from Queensland from 2014.

The National Gas (South Australia) (Gas Trading Exchanges) Amendment Bill 2013 will make small but important amendments to the National Gas Law, a schedule to the National Gas (South Australia) Act 2008, to provide for the establishment of gas trading exchanges.

The benefits of a gas trading exchange are expected to include enhanced transparency of gas trading, strengthening participants' short term ability to allocate and price gas efficiently and support for the efficient trade and movement of gas between regions.

This Bill will clearly provide for gas trading exchange functions as a statutory function of the Australian Energy Market Operator. New functions for the Australian Energy Market Operator provided for in the Bill include operation of a gas trading exchange, making and administering a gas trading exchange agreement, trade in natural gas for the efficient operation and of the gas trading exchange and the ability to suspend trading on a gas trading exchange.

The rights and obligations of the operator and market participants will be governed by new Rules to be included in the National Gas Rules. The Bill provides that the South Australian Minister may make initial Rules and will provide that the subject matter of the National Gas Rules may include operation, administration, settlement, duties, obligations and conduct related to the gas trading exchanges and gas trading exchange agreements.

The Rules will outline the minimum content that must be provided for in an exchange agreement, which will be the agreement that addresses the detail of market operation and participants' rights and responsibilities.

The Rules will also provide for the Australian Energy Market Operator to charge exchange fees, appoint another person to operate a gas trading exchange, and to determine the payments to be made by parties as a consequence of a failure to deliver or supply gas.

The Bill will provide that once initial Rules have been made by the South Australian Minister on the subjects provided for in the Bill, the Minister will have no power to make any further Rules under this power.

The gas trading exchange will be operated by the Australian Energy Market Operator or a person appointed by the Australian Energy Market Operator and the Australian Energy Regulator will be responsible for monitoring compliance with the market conduct rules.

Extensive consultation has been undertaken in developing the Bill, with an industry reference group working with the Australian Energy Market Operator to design and develop the gas trading exchange and a public consultation process on the draft Bill and Rules.

The first gas trading exchange is planned to begin operation in early 2014 at the Wallumbilla gas hub, Queensland.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The measure will be brought into operation by proclamation.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of National Gas Law

4—Amendment of section 2—Definitions

This clause sets out new definitions that will be required in the National Gas Law in connection with the enactment of this measure.

5—Amendment of section 74—Subject matter for National Gas Rules

This amendment will allow rules to be made with respect to AEMO's gas trading exchange functions and the operation of gas trading exchanges.

6—Amendment of section 91A—AEMO's statutory functions

This is a consequential amendment that recognises that AEMO is to undertake functions associated with the establishment and operation of gas trading exchanges.

7—Insertion of new Division

New Chapter 2 Part 6 Division 2B will set out AEMO's gas exchange functions. These will include being able to establish, operate and administer 1 or more gas trading exchanges, appointing another entity to operate a gas trading exchange, and entering into gas trading exchange agreements with participants in an exchange. A gas trading exchange will operate differently from a regulated gas market.

8—Amendment of section 91H—Obligations under Rules or Procedures to make payments

These are consequential amendments.

9—Insertion of section 294D

The Minister will be authorised to make the first set of rules required for the purposes of AEMO's gas trading exchange functions and other aspects of the scheme to be enacted by this measure.

10—Amendment of Schedule 1—Subject matter for the National Gas Rules

Schedule 1 of the National Gas Law is to be amended in order to list the matters relating to gas trading exchanges that may be the subject of rules under the law.

Debate adjourned on motion of Hon. T.J. Stephens.

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