Yesterday, AEMO issued an updated ‘threat to system security’ notification due to ongoing depletion of gas storage levels at the Iona storage facility in Victoria.
On Monday 11 July, an initial threat to system security notice was sent requesting participants to cease purchasing gas from Victoria’s Domestic Wholesale Gas Market (DWGM) in an attempt to reduce the depletion rate of Iona storage inventory.
Market participants have responded to this threat notice with purchases ceasing from the DWGM to supply to other jurisdictions.
However, Iona storage inventory has reduced at an average daily rate of approximately 200 terajoules since 11 July 2022, falling to 10.2 petajoules (PJ) on 18 July, due to purchases from the DWGM for supply to other jurisdictions and for Victorian electricity generation.
Yesterday’s notice requires market participants to prevent purchases from the DWGM for electricity generation after carefully considering the impact on the National Electricity Market.
This further action is necessary as AEMO forecasts that at this rate of decline, Iona storage inventory will reduce to 6 PJ on 6 August 2022, threatening the capacity to deliver gas from the facility. This reduction increases the risk of curtailment during peak demand days and during periods of high demand for gas-powered electricity generation.
If required, AEMO will take action that may include limiting participants’ withdrawals from Victoria’s Declared Transmission System (DTS) and the Iona facility, and possible activating of the Gas Supply Guarantee to ensure supply for gas-powered electricity generation.
At this stage, there is no impact to gas supply in Victoria.
This threat to system security remains until 30 September 2022 or until the threat to gas supply caused by Iona storage inventory depletion has subsided.
Since 30 May 2022, Victorian DWGM prices have been capped at $40 gigajoule (GJ), after reaching a cumulative high price threshold ($1,400/GJ over a week). Despite the system to security notice, some Victorian-based participants continue to draw-down on cheaper gas in the DWGM.