Significant Price Event Report - 20 June 2007

Significant Price Event Report

Gas Day:20 June 2007

VENCorp

October 2007

Significant Price Event Report - 20 June 2007

Table of Contents

1Introduction

2Summary of Results

3Details of Events across the Day

3.16am Schedule

3.210am Schedule

3.32pm Schedule

3.46pm Schedule

3.510pm Schedule

4Conclusions

Appendix 1: LNG Bids for Origin and AGL

Appendix 2: Total Uplift Payments by Type

Authorised by VENCorp Level 2, YarraTower, World Trade Centre, Melbourne 3005

VEN_DOCS-#225525-v4-Significant_Price_Events_Report_for_20_June_2007_Public_Version.DOC

Significant Price Event Report - 20 June 2007

Significant Price Event Report

20 June 2007

1Introduction

VENCorp is required to monitor daily trading activity within the market to ensure such trading is in accordance with the MSO Rules and to identify any significant market events in and between trading intervals. This report provides an explanation of the events for 20 June 2007 and examines whether the activities of market participants may have significantly affected market outcomes on which significant pricing or settlement events have occurred.

2Summary of Results

Significant price and settlement variations occurred on gas day 20 June 2007. This day is considered significant due to the large ancillary payments that occurred across the day. The total ancillary payments for the day were $9,123,195. See Table 1 for the wholesale spot market prices and ancillary payments.

Payment Type / Gas Day / Schedule
1 / Schedule
2 / Schedule
3 / Schedule
4 / Schedule5 / Total
Market Price / 20 Jun 07 / $3.65/GJ / $3.65/GJ / $19.90/GJ / $4.47/GJ / $3.51/GJ
Ancillary Payment / 20 Jun 07 / $0 / $9,262,402 / -$1,520,400 / $1,381,193 / $0 / $9,123,195

Table 1: Price and Ancillary Payments

The following summarises the events during the day.

At the start of the gas day,

  • cold temperatures were predicted by the Bureau of Meteorology (BOM);
  • Market participants’ (MPs) demand forecasts were 1,166.9TJ including some 88TJ of gas fired power generation; and
  • LNG was not required and there was no ancillary payment.

As the gas dayprogressed,

  • actual temperatures were close to the forecasts;
  • MPscontinued to revise the demand forecasts up due to increased gas fired power generation;
  • VENCorp did not override MPs’ demand forecasts except in the last schedule when MPs’demand forecasts were reduced by 8.1TJ;
  • LNG was called in the 10am schedule, but reduced then increased in the subsequent schedules. This has resulted in $9.3M of ancillary payments in the 10am schedule which were subsequently reduced then increased;
  • market prices varied between $3.51/GJ and $3.65/GJ except for the 2pm schedule when gas was priced at $19.90/GJ; and
  • there were no significant changes in the injection bids across the schedules.

At the end of the gas day,

  • the total actual withdrawals were 1,199.5TJ (including 147.2TJ of gas fired power generation) and 5TJ higher than the 10pm scheduled quantity (see Figure 1 for MPs’ demand and the price for each schedule);
  • Iona withdrawals were scheduled in the 10pm schedule but did not occur;
  • the total actual injections were 1,208.6TJ(including 34.3TJ of LNG) and 4.4TJ lower than the 10pm scheduled quantity (see Table 2 for the comparison between actual and scheduled injections);
  • LNG[1] bids for AGL and Origin did not change across the schedules. The offered price varied between $34.99/GJ and $800/GJ (see Appendix 1);
  • the end-of-day (EOD) linepack was 323.3TJ and;
  • 23.3TJ higher than the target of 300TJ due to forecast errors; and
  • 12TJ higher than the beginning-of-day (BOD) linepack of 311.3TJ.

Injection Point MIRN / Injection Point Name / 10PM Scheduled Injections (TJ) / Actual Injections (TJ)) / Actual – Scheduled (TJ)
20000001PC / Culcairn / 0.0 / 0.0 / 0.0
30000001PC / Longford / 935.2 / 934.3 / -0.9
30000101PC / LNG / 28.0 / 34.3 / 8.1
30000154PC / Iona / 175.0 / 159.8 / -15.2
30000167PC / VicHub / 1.7 / 3.3 / 1.6
30000168PC / Seagas / 15.0 / 12.0 / -3.0
30000170PC / BassGas / 60.0 / 64.9 / 4.9
Total / 1,214.9 / 1,208.6 / -4.4

Table2: Comparisons of Actual and Scheduled Injections by Injection Points

Figure 1: Actual and Forecast Demand and Market Price

Figure 2: Injection Bid Stacks by Schedule

See Appendix 1 for bid stacks for the three largest market participants – AGL, Origin and TRUenergy.

See Appendix 2 for the total market uplift payments by type.

3Details of Events across the Day

3.16am Schedule

The highlights of the events are summarised below and shown in Figure 3.

At 6am,

  • the gas day started with 311.3 TJ of system linepack which was slightly above the target level of 300TJ;
  • cold temperatures were forecast by the BOM (the forecast minimum and maximum temperatures were 7oC and 13oC respectively);
  • MPs’aggregate demand forecasts were 1,166.9TJ and included about 88.1TJ of forecast gas fired generation (GPG);
  • VENCorp did not override the MPs’ aggregated demand forecasts;
  • there were no controllable withdrawals scheduled for the day;
  • 1,156.6TJ of gas supplies were scheduled from Longford, SEAGas, BassGas and the Iona underground storage;
  • there were no ancillary payments; and
  • the market price of $3.65 was set by Longford gas injections.

Figure 3: 6am Schedule - Forecast Demand and Temperatures

3.210am Schedule

The highlights of the events are summarised below and shown in Figure 4.

For the 10am schedule,

  • the BOM did not change the temperature forecasts for the remaining hours of the day even though the actual temperatures for 6am – 9am were warmer than previously forecast;
  • theactual demand for 6am – 10am was estimated to be about 11.5TJ lower than forecast previously;
  • MPs revisedup the demand forecasts to account for the increase in forecast GPG;
  • VENCorp did not override MPs’ demand forecasts of 1,182.9TJ (taking into account the estimated actual demand between 6am and 10am);
  • there were no controllable withdrawals scheduled;
  • 1,177.3 TJ of gas supplies including LNG were scheduled from Longford, SEAGas, BassGas, the Iona underground storage;
  • 28TJ of LNG priced at $34.99/GJ and $400/GJ were scheduled out of merit order. This resulted in $9.3M of ancillary payments;
  • the market price of $3.65/GJ was set by Longford gas;
  • there were some small changes to theLongford and Ionarebids, in both quantity and price; and
  • there were no LNG rebids.

Figure 4: 10am Schedule – Actual and Forecast Demand and Temperatures

3.32pm Schedule

The highlights of the events are summarised below and shown in Figure 5.

At the 2pm schedule,

  • the forecast temperatures for 10am – 1pm were closely tracking the actual temperatures;
  • the BOM did not change the temperature forecasts for the remaining hours of the day;
  • the cumulative actual demand up to 2pm was estimated to be about 11.5TJ lower compared to the forecasts in the previous schedules;
  • again MPsslightly revisedup the demand forecasts for the remainder of the day to accommodate the forecast increase in GPG;
  • VENCorp did not override MPs’ aggregated demand forecasts. The revised forecast demand was 1,224.2TJ (taking into account the estimated actual demand between 6am and 2pm);
  • No controllable withdrawals were scheduled;
  • A total of1,212.0 TJ gas supplies including LNG were scheduled from Longford, SEAGas, BassGas and the Iona underground storage;
  • LNG was scheduled down to 24TJ from 28TJ in the previous schedule. This resulted in $1.5M of negative ancillary payments;
  • the market price of $19.9/GJ was set by VicHub gas injections;
  • there were small changes to the quantity of Longford rebids; and
  • there were no LNG rebids.

Figure 5: 2pm Schedule – Actual and Forecast Demand and Temperatures

3.46pm Schedule

The highlights of the events are summarised below and shown in Figure 6.

For the 6pm schedule,

  • the actual temperatures between 2pm – 5pm were colder than forecasts in the previous schedule;
  • the BOM slightly revised down the temperature forecasts for the remaining hours of the day;
  • the cumulative actual demand up to 6pm was estimated to be about 11.9TJ lower compared to the forecasts in the previous schedules;
  • MPs did not revise the demand forecasts for the remainder of the day;
  • VENCorp did not override MPs aggregated demand forecasts. The revised forecast demand was 1,223.8TJ (taking into account the estimated actual demand between 6am and 6pm);
  • no controllable withdrawals were scheduled;
  • 1,216.5TJ gas supplies including LNG were scheduled from Longford, SEAGas, BassGas and the Iona underground storage;
  • LNG was scheduled up from 24TJ to 28TJ causing $1.4M of increased ancillary payments;
  • the market price fell to $4.47/GJand was set by Longford gas;
  • some VicHub gas was rebid at a slightly lower price; and
  • there were no LNG rebids.

Figure 6: 6pm Schedule – Actual and Forecast Demand and Temperatures

3.510pm Schedule

The highlights of the events are summarised below and shown in Figure 7.

For the 10pm schedule,

  • the BOM did not change the temperature forecasts for the remaining hours of the day even though the actual temperatures between 6pm – 9pm were slightly colder;
  • the cumulative actual demand up to 10pm was estimated to be about 34.8TJ lower compared to the forecasts in the previous schedules;
  • MPsrevised the demand forecasts slightly up for the remainder of the day;
  • VENCorp overrode and reduced the MPs’ aggregated demand forecasts by 8TJ to1194.3TJ (taking into account the estimated actual demand between 6am and 10pm);
  • 21.2TJ of Controllable withdrawals were scheduled at Iona;
  • 1,214.9TJ gas supplies including LNG were scheduled from Longford, SEAGas, BassGas and the Iona underground storage;
  • The market price of $3.51/GJ was set by Longford gas injections;
  • there was no change in the injection bids from the previous schedule;and
  • there was no change in the scheduled LNG quantity and no ancillary payments were incurred.

Figure 7: 10pm Schedule – Actual and Forecast Demand and Temperatures

4Conclusions

Cold weather and high usage from gas fired power generation required that 34.3TJ of LNG be scheduled out of merit ordercausing large ancillary payments at the 10am schedule. However, the level of LNG use is consistent with the actual demand on the gas day.

There were no significant injection rebids during the gas day.

In summary, the LNG bids from AGL and Origin did not change across the schedules. The offered price varied between $34.99/GJ and $800/GJ.

Appendix 1: LNG Bids for Origin and AGL

Gas date / Company / Bid price ($/GJ) / Bid quantity (GJ)
20/06/2007 6AM / AGL Sales Pty Limited / $ 34.99 / 5,000
20/06/2007 6AM / Origin Energy (VIC) PTY LTD / $ 400.00 / 40,000
20/06/2007 6AM / AGL Sales Pty Limited / $ 775.00 / 20,000
20/06/2007 6AM / Origin Energy (VIC) PTY LTD / $ 800.00 / 200,000
20/06/2007 10AM / AGL Sales Pty Limited / $ 34.99 / 5,000
20/06/2007 10AM / Origin Energy (VIC) PTY LTD / $ 400.00 / 40,000
20/06/2007 10AM / AGL Sales Pty Limited / $ 775.00 / 20,000
20/06/2007 10AM / Origin Energy (VIC) PTY LTD / $ 800.00 / 200,000
20/06/2007 2PM / AGL Sales Pty Limited / $ 34.99 / 5,000
20/06/2007 2PM / Origin Energy (VIC) PTY LTD / $ 400.00 / 40,000
20/06/2007 2PM / AGL Sales Pty Limited / $ 775.00 / 20,000
20/06/2007 2PM / Origin Energy (VIC) PTY LTD / $ 800.00 / 200,000
20/06/2007 6PM / AGL Sales Pty Limited / $ 34.99 / 5,000
20/06/2007 6PM / Origin Energy (VIC) PTY LTD / $ 400.00 / 40,000
20/06/2007 6PM / AGL Sales Pty Limited / $ 775.00 / 20,000
20/06/2007 6PM / Origin Energy (VIC) PTY LTD / $ 800.00 / 200,000
20/06/2007 10PM / AGL Sales Pty Limited / $ 34.99 / 5,000
20/06/2007 10PM / Origin Energy (VIC) PTY LTD / $ 400.00 / 40,000
20/06/2007 10PM / AGL Sales Pty Limited / $ 775.00 / 20,000
20/06/2007 10PM / Origin Energy (VIC) PTY LTD / $ 800.00 / 200,000

Appendix 2: Total Uplift Payments by Type

Gas Date / Schedule Number / Congestion Uplift / Surprise Uplift / Common Uplift / Total
20-Jun-07 / 2 / $4,726,808 / $4,535,594 / $0 / $9,262,402
20-Jun-07 / 3 / -$13,322 / -$1,507,078 / $0 / -$1,520,400
20-Jun-07 / 4 / $0 / $1,381,193 / $0 / $1,381,193

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[1] LNG Injection Meter Number is 30000101PC which is the meter referred to in the table