GTAC Overview Presentation - PowerPoint Presentation

Slide1

GTAC Overview Presentation

Q2 2019

Slide2

Agenda

Agenda Item

1

Welcome and Introductions

2

GTAC Overview

3

Shipping under the GTAC

4

Interconnections and Allocations

5

Mismatch and Trades

6

Day to Day Nominations

7

Prudentials

8

GTAC Implementation

Programme

9

Quiz

Slide3

GTAC Overview

Slide4

First Gas Transmission Commercial Team

Angela Ogier

Transmission Commercial Manager

Steve Kirkman

Transmission Development Manager

John Blackstock

Senior Commercial Advisor

Mao Reyes

Commercial Advisor

Shane Haswell

Senior Commercial Analyst

Rob Gajland

Senior Commercial Analyst

James Murch

GTAC Project Coordinator

Slide5

Some key concepts

Transmission

Balancing

First Gas doesn’t own the gas in the pipeline

Customers need to put in as much gas as they take out

If they put in less th

an they take out = negative mismatch

First Gas buys gas

/sells gas to correct for mismatch and allocates costs/gas to those who cause the mismatch

How much customers pay to transmit gas through the pipeline

Key factors are transmission capacity required and how far the gas is travelling

First Gas charges transmission fees for the use of the system

Allocation

Difference between the actual quantity of gas taken or injected into the system (metered quantity) and the intended quantity (swing)

Difference allocated among the shippers

At the receipt point this is done using the gas transfer rules

At the delivery point this is done using the allocation rules

Shared delivery points use the Downstream Reconciliation Rules

Operational Balancing Arrangement

Specific type of allocation/gas transfer rule where end users/producers can take the swing at a point

Slide6

Key GTAC Benefits

Transmission

Balancing

Daily balancing charges (ERM fees)

Flexibility separating receipt and delivery nominations

Increased incentive for users to balance

Non-standard contracts

Quality and information

Governance

Harmonisation

Daily capacity charging

Simplified delivery zones

Priority rights to allocate scarcity

Underrun and overrun charges to encourage accurate nominations

More specificity on criteria for non-standard agreements

Many non-standard agreements no longer needed

Clear process for code changes open to all shippers and interconnected parties

GIC assesses changes against Gas Act objectives

Optionality for shippers and users in allocation methods

Removal of transaction costs between the networks

Improved provision of outage information

Better compliance with

odorisation

and quality

New IT system will enhance user experience

6

Slide7

What are the key differences between current codes and the GTAC? (1)

Scope

Access Products

Pricing

Balancing

Shippers

ICAs are separate bilateral contracts

Reserved Capacity booked annually

Non-standard agreements

Capacity Reservation Fee

Overrun charge

Throughput charge

Balancing charges from MPOC passed on

VTCShippers and welded point owners

Nominated Capacity point to point (daisy chain)No non-standard agreementsThroughput (GJ) x Distance (km) charges Throughput (GJ) charges

Imbalance at individual welded points cashed out when above tolerancePricing incentivizes balancingMPOCShippersICA common terms in code

Daily Nominated Capacity for a zone (receipt and delivery)Priority Rights to manage congestion

Non-standard agreements (under specified conditions)Throughput for a zoneOverrun/Underrun chargesPR chargesCharges shipper and OBA Party mismatch across system in excess of toleranceCharge incentivizes balancing

Pass through of balancing gasGTAC

7

Slide8

What are the key differences between current codes and the GTAC? (2)

Allocation

Mass Market

Gas Transfer Agreements (GTAs) for receipts

DRRs for shared delivery points

Not considered

VTC

OBA only

Not considered

MPOC

GTAs or OBAs for receipt points

Allocation Agreement or OBA at dedicated delivery points

DRRs for shared delivery points

Automated nomination provided for mass market load (specified shippers)Mass market subject to average network overrun/underrun

GTACTrades

Not catered forCost to transport to/from marketManual entry of nominations

Virtual gas marketNo charge to tradeAutomated updates of traded quantities

PeakingNot catered for

Fixed tolerance at all points regardless of load

Peaking applies only to loads causing impact on system

Hourly nominations to provide information

8

Slide9

Shipping under the GTAC

Slide10

Standard charge for delivery of gas to a delivery point or zone

Exceeding physical capacity of a delivery point

Paid to Interruptible load

C

ollected from shippers at beneficiary DPs

Mass market load

Average o

f other load overrun/underrun across system

GTAC Pricing - Transmission

Daily Nominated Capacity for Transmission

Overrun charge at DNC Fee x 1.5

Underrun charge at DNC Fee x -0.5

Overrun/Underrun

Charge

Automated

Nominations ChargePeaky load with hourly profile

Mirrors overrun/Underrun Charge

Peaking chargeOverflow Charge

PR Auction determines price

Rebated within year

Priority Rights Charges

Congestion Management Charge

Supplementary Capacity - Fixed/Throughput Fees

Interconnection Fees

Non-standard charges

Slide11

$0.5/GJ for Running Mismatch over tolerance

No change in title of gas

GTAC Pricing – Non-Transmission

OBA Parties pay Overrun/Underrun and Balancing charges for their points

Excess Running Mismatch Charge

Pass-through of balancing gas bought/sold to thos

e with ERM in direction of sale

Passed through at cost

Doesn’t always clear a Running Mismatch position

Not all gas will be able to be passed through

Balancing Gas Costs/Credits

The plain English guide to GTAC charging can be found here:

https://firstgas.co.nz/wp-content/uploads/GTAC-Charging-Explained-HighRes.pdf

Slide12

GTAC Transmission Pricing Zones

Grouping delivery points into zones:

Geographically contiguous areas

Information requirements for operations

Location in relation to infrastructure (e.g. compressor stations)

Individual points on Maui line to maintain revenue

Provide the basis for aligning pricing from an area

16 delivery zones:

Excludes points on supplementary agreements

5 individual points:Bertrand Road (Methanex)Faull Road (Methanex)Huntly Power Station (Genesis Energy)Ngatimaru Road (Delivery) (Methanex)Mangorei (Nova Energy)

Slide13

Delivery Zone Listing

13

Zone Code

Delivery Zone

Delivery Points

NTHL

Te

Tai

Tokerau

(Northland)

Marsden 2,

Waitoki

, Warkworth, Wellsford, Whangarei AUCK

Tāmakimakaurau (Auckland)

Alfriston, Drury 1, Flat Bush, Glenbrook, Greater Auckland, Harrisville 2, Hunua, Hunua (Nova), Hunua 3, Kingseat, Pukekohe, Ramarama, Tuakau 2, Waiuku

WKTN Waikato ki te Raki (Waikato North) Cambridge, Horotiu,

Kiwitahi 1 (Peroxide), Kiwitahi 2, Matangi, Morrinsville, Morrinsville DF, Tatuanui DF, Waitoa

HMTNKirikiriroa (Hamilton)

Greater Hamilton

KING

Te Rohe Pōtae-Taupiri (King Country-Taupiri)

Huntly,

Ngaruawahia

,

Otorohanga

,

Pirongia

,

Te

Awamutu DF,

Te

Kuiti

North,

Te

Kuiti South, Greater Kihikihi

WKTS

Waikato ki te Tonga (Waikato South)

Kinleith, Kinleith (Pulp & Paper), Lichfield 2, Lichfield DF, Okoroire Springs, Putaruru, Tirau, Tirau DF, Tokoroa, Waikeria

TNGA

Tauranga

Greater

Mt

Maunganui

,

Greater

Tauranga,

Rangiuru

, Te

Puke

TAPO

Central Plateau

Broadlands, Kawerau, Kawerau (Tissue), Kawerau (Pulp & Paper),

Reporoa

, Rotorua, Taupo

WHAK

Whakatane

Edgecumbe, Edgecumbe DF, Te Teko, Whakatane

EAST

Te Tai Rawhiti (Eastland)

Gisborne, Opotiki

TKIE

Taranaki ki Uta (Inland Taranaki)

Ballance 8201, Ballance 9626, Eltham, Inglewood, Kaimiro Mixing Station Delivery, Kaponga, Kapuni (Lactose et al), KGTP Delivery, Kupe Delivery Point, New Plymouth, Stratford, Stratford 3 Delivery Point, Tikorangi 3 Delivery, Waitara

TKIW

Taranaki ki Tai (Coastal Taranaki)

Oakura, Okato, Opunake, Pungarehu 1, Pungarehu 2

ATEA

Aotea (South TaranakiWhanganui)

Hawera, Hawera (Nova), Kaitoke, Manaia, Matapu, Mokoia, Patea, Waitotara, Whanganui, Waverley

TRUA

Tararua (Manawatu-Horowhenua)

Ashhurst, Feilding, Flockhouse, Foxton, Kairanga, Kakariki, Kuku, Lake Alice, Levin, Longburn, Mangatainoka, Marton, Oroua Downs, Pahiatua, Pahiatua DF, Palmerston North

HWKB

Kahungunu (Hawkes Bay)

Dannevirke, Hastings, Hastings (Nova), Mangaroa, Takapau

WGTN

Whanganui- a- tara / Kapiti (Kapiti-Wellington)

Belmont, Greater

Kapiti

, Greater

Waitangirua

, Otaki,

Pauatahanui

2, Tawa A, Tawa B (Nova),

Te

Horo

Slide14

Peaking

First Gas / Presentation

14

End-users/receipt points which have the ability to impact other users of the transmission system will be included in the Peaking regime

First Gas will issue the list of peaking regime loads by 30 June each year

Shippers delivering gas to peaking parties need to enter an Agreed Hourly Profile at each nomination cycle

Peaking charges based on nominations >25% different from:

Nomination in that hour

Three hourly running average of nominations

Minimum limit of 1 TJ

Slide15

Mass Market Load

15

Specified Shipper load is category 4 and 6 (mass market) load

Algorithm built to estimated category 4 and 6 loads and provide a nomination for the day

Forecast based on historic inputs:

Historic specified shipper load at the gate

Seasonality

Number of ICPs

Nomination provided at each nomination cycle and updated based on hourly gate metering

Shippers can opt out each year Shippers can overwrite nomination at any cycle – no further nomination is givenIf shippers overwrite nomination all load in the zone is subject to overruns/underrunsSpecified Shipper load get the average overrun/underrun for other load on the networkSeeking Shipper permission for GIC to send us allocation data and number of ICPs automatically to expedite estimateThe report on the model development is located here: https://firstgas.co.nz/wp-content/uploads/Specified-Shipper-Outline-of-Model-Investigation-Stakeholder-Copy.pdf

Slide16

Congestion

16

Managing congestion

New investment

Interruptible load

Priority Rights (PRs) – gives priority for DNC

Annual Process

First Gas notifies any congested delivery points by 30 June each year

Notify any PRs to be issued

Congestion Arising within a yearFirst Gas may identify congestion for a periodMay issue PRs/identify interruptible load if there is timeMay arise in the short term due to operating conditionsCurtailments are in accordance with s.10.3 and incentive charges multiplied by 5No congestion foreseen in GY2020

Slide17

Interconnections and Allocation

Slide18

Allocation at an Interconnected Point

18

Between producer (transferor) and each shipper (transferee)

Defines rules for allocating metered quantity between shippers

One agreement for each shipper

Appoints Gas Transfer Agent (often First Gas)

Between end user and all shippers

Defines rules for allocating metered quantity between shippers

One agreement for the delivery point

Appoints Allocation Agent (often First Gas)

Selection by interconnected partyDifference between metered quantity and nominations is allocated to interconnected party

Selection by interconnected partyDifference between metered quantity and nominations is allocated to interconnected party

Receipt Point

Gas Transfer Agreements

Operational Balancing Arrangement

Dedicated Delivery Point

Allocation Agreement

Operational Balancing Arrangement

Shared Delivery Point

Downstream Reconciliation Rules

Provided by Allocation Agent according to regulation

Slide19

19

GTA/Allocation Rules/OBA:

Primary Rule and back up rules defined in the agreement

Standard Allocation/Gas Transfer Rules selected in TACOS are pro-rata, swing and ranking will calculate Shippers’ delivery quantities from their nominations

Non-standard Allocation/Gas Transfer Rules allowable – Allocation Gas Transfer Agent uploads allocation/gas transfer quantities

Interconnected Party determines the Allocation/Gas Transfer Rules or decides on an OBA

How it works day to day:

Shippers enter nominated receipt/delivery quantities in TACOS for the Dedicated DP/Receipt Point

TACOS applies the Allocation/Gas Transfer Rules of OBA methodology to allocate gas to the Shipper or Allocation/Gas Transfer Agent uploads allocation

Results available after metering validation completeNo emails or spreadsheets transferred

Allocation Functionality

Slide20

Allocation Methods/Gas Transfer Rules

20

Alloc

. Method

Operation

Equation

Pro rata

Allocate metered quantity proportional to shipper nomination

 

Allocate rounding delta to the largest nominator

Ranking

Allocate each shipper’s nominated quantity meter in priority order

 

Remaining unallocated to the swing shipper

Swing

All shippers except the swing party are allocated their nominated quantity

 

Remaining metering +/- delta is allocated to the swing party

OBA

All shippers are allocated their nominated quantity

 

Remaining metering +/- delta is allocated to the OBA Party

No Meter Quantity

Default to scheduled quantity

Slide21

Mismatch and Trades

Slide22

Mismatch and Running Mismatch

22

Mismatch:

Shipper: Receipts – Deliveries + Aggregate Trade Quantities (ATQ)

OBA Parties: Scheduled Quantity –metered Quantities + ATQ

First Gas: amount purchased for operations (fuel, UFG) – amount used in operations + ATQ

Running Mismatch:

Sum of previous day’s mismatch + ATQ + Wash-ups

Estimates of current Running Mismatch and end of day Running Mismatch updated hourly and provided confidentially to each Shipper/OBA Party

Daily Running Mismatch for each Shipper OBA Party published within TACOSExcess Running Mismatch:Running Mismatch in excess of the Running Mismatch ToleranceCharged at $0.5/GJ except when Acceptable Line Pack Limits are breached in the direction of the ERM when this is multiplied by 5

Slide23

Tolerance as a receipt and delivery allocation

X/2 TJ Receipts

X/2 TJ Deliveries

+/- (Overall Tolerance)/2

For Running Mismatch Tolerance

Overall Tolerance

Target Line Pack

Positive Tolerance

Negative Tolerance

Tolerance/Limit Type

Mokau

Off

Mokau

On

Overall Tolerance

30 TJ

50 TJ

Positive/Negative Tolerance

15 TJ

25 TJ

Receipt Line Pack Tolerance (LPT

RECEIPTS

)

7.5 TJ

12.5 TJ

Delivery Line Pack Tolerance (LPT

DELIVERIES

)

7.5 TJ

12.5 TJ

Slide24

Allocating Tolerance between users

Interconnected Party

GTA Points

(IP has no balancing risk)

Interconnected Party

Shipper

Shipper Tolerance

OBA Party Tolerance

OBA Points

(IP has balancing risk)

OBA Points

(IP has balancing risk)

Tolerance is allocated to shipper

Gas Receipts

Gas DeliveriesShippingTolerance is allocated to shipper

Tolerance is allocated to OBA Party

Tolerance is allocated to OBA PartyAllocation Agreement Points(IP has no balancing risk)

Allocate to Shippers and OBA Parties:

Pro-rata in relation to flows over last 14 days for each Shipper/OBA party and the entire Shipper/OBA pool

Minimum tolerance of 400 GJ

Slide25

Balancing Gas Allocation

25

First Gas may buy/sell gas to balance the pipeline

Costs and title to gas passed through to Shippers/OBA Parties with running mismatch in the direction of the trade:

Purchase of gas passed through to those with negative running mismatch

Sale of gas passed through to those with positive running mismatch

Only the amount purchased/sold is passed through

May not cash out a running mismatch position if less gas is bought/sold than the aggregate running mismatch position of Shippers/OBA parties

Passed through at cost

Weighted average balancing gas price for that dayIncludes any broker fees as required

Slide26

Trades

26

Trades occur in the Receipt Zone

Essentially a trade in Running Mismatch

No cost to trade

Trades accounted for in Running Mismatch as soon as they are executed

Pre-arranged/Bi-lateral Trades

Executed via a form on TACOS

Party A enters the quantity to be traded

Party B confirms the tradePrice information entered for First Gas trades onlyEmsTradepoint TradesAggregate Trade Quantity sent to TACOS through the dayNo need to enter nominationsPrice information entered for First Gas trades only

Slide27

Day to Day Nominations

Slide28

28

Timing of nominations and Extra ID cycles

Nomination Cycle

Nominations Deadline

Week-ahead

(Provisional NQ)

The time on the last Business Day of a week published by First Gas on TACOS

Day-ahead

(Changed Provisional NQ)

The time published by First Gas on TACOS on the Day before the Day to which the NQs relate

Intra-day (Intra-day NQ)

The time published by First Gas on TACOS on a Day of an Intra-day NQExtra intra-day nomination cycle can be requested by a Shipper or Interconnected Party or First GasIf practicable, First Gas will provide extra intra-day nomination cycle to:a Shipper, when it experiences an unforeseeable and material change in its receipt of gas or customer’s demandan Interconnected Party, when it experiences unforeseeable and material unplanned outageFirst Gas, when it experiences technical problems

Notification by First Gas of an extra intra-day cycle <1 hour prior to the ID nomination deadline of that cycleExtra intra-day cycle will be available to all Receipt Points and Delivery Points, and to all Shippers, Interconnected Parties and First Gas

Slide29

29

Timing of nominations and confirmations

First Gas must notify each Shipper via TACOS that Shipper’s Approved NQs (DNC) and whether there is or is expected to be congestion at a Delivery Point

Slide30

Types of Nominations

30

Receipt Point nomination

Each receipt point must be nominated for

Confirmed by Interconnected Party

Delivery Point nomination

Each Individual Delivery Point must be nominated for

Confirmed by Interconnected Party (if they have an OBA)

Peaking Party nomination

Agreed Hourly Profile must be submitted

Confirmed by Interconnected Party

Delivery Zone nomination

Separate nomination for TOU and Specified Shipper load

Specified Shipper nomination generated by TACOS and can be overwritten

TACOS creates an inferred nomination for each delivery point in the zone

Links to Allocation

Nominations drive the allocation

Where there is a Dedicated Delivery Point in a Zone, the inferred nomination can be overwritten to inform the allocation at that point

Slide31

Prudentials

Slide32

32

First Gas requires reasonable assurance of the Interconnect Party (in respect of an ICA) and the Shipper’s (in respect of a TSA) financial standing

Where FG makes a claim against any Credit Support, Shipper must procure replacement within 10 Business Days from notice

 If new or additional Credit Support is required, the Shipper must do so within 20 Business Days of FG’s written request

 If required by FG, IP to show evidence of comprehensive liability insurance cover with a reputable insurer up to the Capped Amounts

Prudential requirements

Term

At all times during the term of the TSA and ICA

Up to 26 months from termination of the agreements

Form

IP/Shipper must hold an acceptable credit rating

IP/Shipper must arrange for a 3

rd

party to provide one or a combination of:

Unconditional payment guarantee or letter of creditUnconditional third party payment guarantee

Security bondAmount (plus GST)

$100k (BG charges)

TSA: FG’s estimate of 3 months of Shipper’s Transmission charges and any non-standard transmission charges, or ICA: 3 months of the charges and OBA chargesc) Amount that reflects the unrecovered capital cost to FG

Slide33

GTAC Implementation

Programme

Slide34

What else is required to implement GTAC?

Gas Transmission Access Code

Interconnection Agreements and OBA/GTA/ Allocation

Transmission Services Agreements

Non-Standard Agreements

Transmission Pricing Methodology

Operating

Policies and Standards

Regulations

End user or producer signs and ICA to allow injection or take of gas

Allocation/Gas Transfer governs how the metered gas is allocated to shippers unless regulation applies either through an OBA, Gas Transfer or Allocation Agreement

Signs the shipper up to the Access Code

Shippers sign up to provide gas to end users on special terms

Allows for end users to use gas on special terms if gas would otherwise be too costly

Allows for investment in the transmission system to be recovered

States how we will collect revenue from shippers and interconnected parties

Shows compliance with Commerce Commission regulations

Policies:

Interconnection

Supplementary Agreements

Metering Requirements

Standard Operating Procedures

Specified Shippers

Balancing

Curtailment

Managed by the GIC

Critical Contingency Regulations

Downstream Reconciliation Rules

34

Slide35

35

The new Code needs to be supported by a new Transaction Management System to replace OATIS which has been used to facilitate commercial functions since 2008

The replacement is the Transmission Access Commercial Operations System (TACOS)

Advantages of this new system includes:

operational efficiencies in balancing and nominations

reduced risk as current spreadsheet systems are brought within the new IT system

a more professional interface with customers in managing use of the transmission system and general information

Project has been awarded to Tieto, a world-leading IT services provider of pipeline nominations systems to major pipeline systems across the globe

A web portal will also be developed to provide a gateway to TACOS and replace public-facing elements of the existing OATIS and BGIX sites

No change in public informationOATIS and BGIX replacements

Slide36

Quiz!

Slide37

Quiz

Who enters the allocation for an allocation at a delivery point that uses a standard allocation rule?

No one. TACOS calculates the allocation based on nominations

Slide38

Quiz

Is the RM Tolerance the same for a shipper/OBA party every day?

No. This changes based on their proportion of overall flows

Slide39

Quiz

How much do I have to pay to pick up gas in the receipt zone or trade gas?

Nothing

Slide40

Quiz

What does TACOS stand for?

Transmission Access Commercial Operations System

Slide41

Quiz

Why would I enter an AHP?

Because I am a peaking party shipping to a load that is subject to the peaking regime

Slide42

Quiz

What nominations do I need to enter if I have category 4 and 6 loads in a zone?

Nomination for TOU loads

Category 4 and 6 loads are estimated by the Specified Shipper Algorithm. I can overwrite this if I want

Slide43

We have a public website for the project here:

https://firstgas.co.nz/about-us/gtac/

This site has the following information;

Project plan

Progress reports

Contract templates

Consultation documents

Policies

Technical information on TACOS

Training information and further technical information will be populated as more information becomes availableQuestions to gtacproject@firstgas.co.nz or angela.ogier@firstgas.co.nz and we’ll direct as requiredProject Communications43

Slide44

Thank you