Issue date
AER reference
NR 26/23

The Australian Energy Regulator (AER) has instituted proceedings in the Federal Court against Santos Direct Pty Ltd (Santos) for alleged breaches of important record keeping obligations in the National Gas Rules relating to the Day Ahead Auction for gas pipeline capacity.

The Day Ahead Auction commenced in 2019 and was designed to improve competition in the gas market by providing access to contracted but unused capacity on gas pipelines. The AER alleges that on 4,701 occasions between March 2019 and June 2021, Santos failed to keep the required records of its material renominations for the Day Ahead Auction across six different auction facilities, contravening Rule 666(1) of the National Gas Rules.

AER Board Member Mr Justin Oliver noted that these record keeping obligations are critical for transparency and reinforced calls for gas market participants to have the necessary checks and balances in place to maintain the Day Ahead Auction.

“The Day Ahead Auction is vital to moving gas between markets on the east coast and relies on market participants providing accurate information to AEMO to operate efficiently.

“This includes maintaining contemporaneous records to enhance the AER’s ability to monitor, investigate and ensure compliance with the National Gas Rules in the wholesale gas market,” Mr Oliver said.

The AER is seeking pecuniary penalties, declarations, an order requiring the implementation of a compliance program, and costs.

The proceedings follow separate action the AER has taken against EnergyAustralia, Incitec Pivot and Jemena for alleged breaches of the National Gas Rules, demonstrating the AER’s commitment to compliance in downstream gas markets to ensure their efficient operation for the benefit of energy consumers.

Note to Editors

Day Ahead Auction – nominations and renominations

To facilitate the Day Ahead Auction, companies that have existing entitlements to capacity make a nomination a day in advance of when they intend to move gas from one location to another, specifying how much capacity they intend to use the next day. Any spare capacity is then made available in the auction.

A renomination is a request made, after the nomination cut-off time, to vary an earlier nomination for the use of transportation capacity. Renominations can only be made in limited circumstances and transportation facility users, such as Santos, are required to make contemporaneous records of material renominations in order to clearly state the reason for each renomination, when the event giving rise to each renomination occurred and when the transportation facility user became aware of this event.