Inter-regional products and pricing

Subject to available generation capability, Hydro Tasmania is able to show the following products to authorised counterparties on request.

Tasmanian swaps

Hydro Tasmania shows Tasmania swap offers to authorised counterparties on request, subject to available generation capability.

Authorised counterparties are wholesale counterparties (as defined under the Corporations Law) with whom we have an ISDA contract in place and which meet Hydro Tasmania’s credit requirements. In practice this would cover most existing participants in NEM with a reasonable credit rating.

Tasmanian caps

Hydro Tasmania will also show Tasmania $300 cap offers to authorised counterparties on request, subject to available generation capability.

Southward Inter-Regional Revenues (IRRs)

Hydro Tasmania will also show over-the-counter offers in respect of southward flows by means of Basslink.  These are similar to the Settlement Residue units which AEMO auctions for the other NEM inter-regional links.  Basslink, however, is not a regulated link and the southward IRRs represent the difference between the value of energy in Victoria and the value of that energy once it has been transferred to Tasmania.  This difference in value is primarily due to the price difference between the two regions.  Price differences can be due to the applications of inter-regional transmission constraints or the dynamic loss factors that apply between the two regions. 

Inter-regional swaps (IRSs)

IRS’s are the result of the simultaneous purchase of and sale of swaps against two different regions.  Hydro Tasmania will offer inter-regional swaps (selling Tasmania to buy Victoria) to authorised counterparties which will be negotiated around prevailing market prices.

Given the relatively large flows across Basslink, Tasmanian prices are related to prices in Victoria, although there are a number of factors in the Tasmanian system which are unique including the reliance on hydro plant and associated water values.  In addition, transmission constraints and marginal losses result in price differences between Tasmania and Victoria.

More information

For more information please contact the Wholesale Transactions team:

Phone     +61 3 6230 5663

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