The coal loading services demand reduction auction is one of the first steps in a medium term scheme to tackle the discrepancy.

ACCC chairman Graeme Samuel said with high international coal prices, Hunter Valley coal producers wanted to export more coal than the coal chain can deliver at present.

“The scheme proposed by PWCS essentially reduces the amount of coal each producer can export through the port on a pro rata basis so that the overall amount handled by the port better matches the amount that can be delivered by the coal chain. This is designed to substantially reduce demurrage costs that arise from an excessive queue,” he said.

The ACCC granted authorisation to a similar short term scheme in July this year, to address the significant queue (more than 40 vessels) sitting off the port. The authorisation will expire at year's end.

"The medium term scheme is seen as the next stage in the transition process for a more efficient coal chain in the Hunter Valley in the long term. For the new scheme to take effect from 1 January 2005, PWCS wants to run the auction soon to enable coal producers sufficient time to implement the outcomes, Samuel said.

"Once initial capacity allocations are made, coal producers will have opportunity through the auction to trade capacity with each other. This should lead to a more efficient allocation of scarce capacity.

"Granting interim authorisation to conduct the auction provides coal producers with greater commercial certainty regarding allocations for 2005.”

The interim authorisation does not bind the ACCC in its consideration of the substantive application for authorisation. PWCS has committed to not implementing any financial consequences of the auction until final authorisation has been granted. Further, should authorisation not be granted, any allocation transfers for 2005 that would have occurred through the auction will be unwound.