SLIDE 1 PORTFOLIO RIGHT TRADING – PROPOSED MARKET DESIGN 19 June 2012 PRESENTED BY CANH DIEP

SLIDE 2 OBJECTIVES Outline the proposed design options for portfolio right trading Invite GWCF’s feedback and inputs to the next steps of the design phase

SLIDE 3 WHY PORTFOLIO RIGHT TRADING (PRT)? To promote more efficient use of transportation capacity o For e.g., 990 TJ Longford authorised MDQ fully allocated, but supply offers <700TJ/d Trading allows transfer of unused authorised MDQ to MPs who can contract additional supply from Esso or divert supply from other pipelines Defer the requirements for new pipeline capacity

SLIDE 4 WHAT IS PORTFOLIO RIGHT TRADING? Process to allow a market participant (MP) to trade its transportation rights at Longford CPP and Non Longford CPP What can be traded—MP’s AMDQ including o Authorised MDQ (the sum of diversified Tariff D auth MDQ, allocated Tariff V auth MDQ and auth MDQ allocated to hub) o AMDQ credits (whether nominated to sites or not) Traded quantities used for creating uplift hedge and injection tie-breaking rights (ITR) ONLY Trading does not change ownership of auth MDQ (curtailment rights) and AMDQ credits (under contracts with APA and the contracting MP) Involves a transferor and one or more transferees

SLIDE 5 AMDQ, UH AND ITR CALCULATIONS– CURRENT PROCESS 2. IHN & 3. AMDQ (%) 1. Determine available 5. Calculate 4. Calculate UH across all CPP Market systems WebExchanger Key

SLIDE 6 AMDQ, PRT, UH AND ITR CALCULATIONS– PROPOSED CHANGES 2. IHN & 3. AMDQ (%) 1.1 Update available AMDQ after PRT 5. Calculate ITR 4. Calculate UH across all CPP 0. PRT nomination/ confirmation 1. Determine available Two new modules added to account for PRT and update AMDQ. No change to UH & ITR calculations Market systems WebExchanger Key New market process New WebExchanger

SLIDE 7 PRT NOMINATIONS Via new PRT nomination WebExchanger A transferor can nominate multiple transferees A transferee can receive PRT from multiple transferors Daily nominations for D+0 o by CPP o before 9pm cut-off time D-1 (to be confirmed) before Tariff V AMDQ allocation batch jobs run 10pm-11pm AEST o no updates during gas day (difficult to track used PRT from schedule to schedule) Transferors nominate PRT quantities (GJ), CPP, date range, PRT cap, and transferees’ details o Need PRT confirmation by transferees??

SLIDE 8 PRT NOMINATIONS Nomination types—by apportionment or preference (like AIHN) Transferors can cap total quantity to be transferred, i.e. to make sure there is enough AMDQ for own UH & ITR PRT <= available AMDQ prior to transfers

SLIDE 9 UPDATE AVAILABLE AMDQ AFTER PTR MP’s updated available AMDQ = pre-transfer available AMDQ + total received PRT – total transferred PRT Total transferred PRT cannot exceed pre-transfer available AMDQ or PRT cap if specified Otherwise allocations by apportionment or preference apply as specified Updated available AMDQ used for calculating UH & ITR

SLIDE 10 EXAMPLE 1 MP A = transferor, MP B & C = transferees PTR nominations, (A,B) = 20TJ, (A,C) = 20TJ, PRT cap =40TJ, allocation type = apportionment Total nominated quantity = = 40TJ (=capped quantity) Nominated quantities transferred in full MP AMP BMP C Pre-transfer available AMDQ Total received PRT 020 Total transferred PRT 4000 Post-transfer available AMDQ 60 TJ = TJ = TJ =

SLIDE 11 EXAMPLE 2 PTR nominations, (A,B) = 20TJ, (A,C) = 20TJ, PRT cap =20TJ, allocation type = apportionment Total nominated quantity = = 40TJ (>20TJ, capped amount) Half of the nominated quantities is transferred MP AMP BMP C Available AMDQ before transfer AMDQ received010 AMDQ transferred 2000 Available AMDQ after transfer 80 TJ = TJ = TJ =

SLIDE 12 EXAMPLE 3 PTR nominations, (A,B) = 20TJ, (A,C) = 20TJ, cap total =20TJ, allocation type = preference, B = priority 1 allocation Total nominated quantity = = 40TJ (>20TJ, PRT cap) B allocated 20TJ, C gets nothing MP AMP BMP C Available AMDQ before transfer AMDQ received0200 AMDQ transferred 2000 Available AMDQ after transfer 80 TJ = TJ = TJ =

SLIDE 13 CREATE UH & ITR USING AIHN VS PRT PRT transferree o Inject gas at the SIPs o Submit IHN o Receive ITR (via PRT from transferor) o Receive IH AIHN injector o Inject gas on behalf of the AIHN recipient at the SIPs o Submit AIHN o Can receive ITR from AIHN recipient (recipient nominate to transfer AMDQ suing AMDQ nomination WEX) AIHN recipient o Receive AIH

SLIDE 14 PRT AND WITHDRAWAL TIE-BREAKING RIGHTS (WTR) Subject to AEMO Planning approval, MPs can nominate available AMDQ to system withdrawal points (SWP) for prioritising tied withdrawal bids—withdrawal tie-breaking rights (WTR) Nominating PRT to SWP requires: o implementation of a separate WTR nomination process o Resolution to planning review requirements o Resolution to priority of ability to nominate (eg as received, auction process etc) To be considered in the next phase of the design

SLIDE 15 MARKET IMPACTS NGR change submission to allow for PRT o Probably minor additions Updates to o uplift payments functional design and procedures o ITR functional design Market system changes targeted for Release R34 for Mar-Apr 2014

SLIDE 16 WHAT ELSE SHOULD BE COVERED? PRT confirmation by transferees? What else?