QUARTERLY REPORT. Quarter ended 30 June 2018

Transcription

1 QUARTERLY REPORT Welcme t Gas Industry C s June 2018 Quarterly Reprt. Gas Industry C recrds its appreciatin t the Minister f Energy and Resurces fr her supprt in the levy prcess which led t the finalisatin f ur levy and wrk prgramme fr the year ahead. The 2018 Levy Regulatins came int frce n 1 July 2018, the same date as the publicatin f ur Statement f Intent. Bth these dcuments are available n ur website. Gas Industry C thanks all stakehlders wh participated in the cnsultatin prcess. During the quarter, Gas Industry C, First Gas and industry stakehlders cntinued wrk n the design fr a single gas transmissin access cde (GTAC) t replace the existing Maui Pipeline Operating Cde (MPOC) and the Vectr Transmissin Cde (VTC). In May, Gas Industry C released its final assessment f First Gas s prpsed GTAC. Quarter ended 30 June 2018 A prerequisite fr that cde t cme int frce is an assessment by Gas Industry C that the GTAC is materially better than the existing arrangements when assessed against the bjectives and utcmes in the Gas Act and Gvernment Plicy Statement n Gas Gvernance (GPS). We cncluded that it did nt meet that threshld and accrdingly were unable t recmmend it. Hwever, there was general stakehlder cnsensus that it wuld be useful fr the industry t reengage t address the key issues identified by Gas Industry C s final assessment and industry submissins. A significant part f the wrk t date has been undertaken in a series f wrkshps which have been used t debate and develp the material prepared by First Gas. Stakehlders nted that the wrkshps have been a useful frum and were satisfied they shuld be the way f prgressing industry engagement n the currently identified GTAC issues. A number f stakehlders had als requested that Gas Industry C appint an independent facilitatr t run future GTAC wrkshps t ensure independence frm any f the GTAC parties. Gas Industry C agreed t this request n the basis that facilitatin f rbust and effective industry engagement was cnsistent with Gas Industry C s rle and bjectives; and that the appintment f a facilitatr preserves Gas Industry C s independence, in the cntext f its rle in assessing future GTAC prpsals that may be put frward. In June, an independent facilitatr was subsequently appinted. Gas Industry C cntinues t supprt the GTAC wrk, and we recgnise the cnstructive engagement and significant investment that First Gas, industry participants, and stakehlders have put int the develpment f a new cde t date. Gas Industry C s Quarterly Industry Perfrmance Measures reprt fr the perid ended June 2018 has als been published. The reprt prvides an update n the perfrmance measures that Gas Industry C mnitrs n a regular basis. The purpse f thse measures is t track the perfrmance f the Gas (Switching Arrangements) Rules 2008, the Gas (Dwnstream Recnciliatin) Rules 2008, and the Gas Gvernance (Critical Cntingency Management) Regulatins 2008, bth in terms f activity related t these gvernance arrangements and the cmpetitive utcmes that they fster. 1

2 The reprt als tracks transmissin pipeline balancing measures, as a means f infrming Gas Industry C s wrk n this issue. The full reprt is available n ur website, highlights f which include: There are abut 3,700 nt withdrawn switches cmpleted per mnth, which translates t an annual churn rate f abut 15.8 percent. S far in 2018, abut 74 percent f custmer switches have been cmpleted within three business days. 65 percent f residential cnsumer sites have switched retailer at least nce in the past eight years; 67 percent f small cmmercial and 55 percent f large cmmercial sites have switched at least nce. Over 99 percent f gas custmers are cnnected t a gate where seven r mre retailers trade, suggesting that the gas retail sectr is generally cmpetitive thrughut the Nrth Island. Average annual unaccunted-fr gas (UFG) ver the past year stands at abut 1.1 percent (cmpared with abut 2 percent in 2009 when the gas registry went live). Genesis is the largest retailer by custmer share. Nva has the largest share f cmmercial and industrial custmers. Nva is the largest retailer by vlume market share. We are happy t reprt that gd prgress cntinues t be made in achieving the bjectives and utcmes fr Gas Industry C and the industry in Part 4A f the Gas Act, and the GPS, thrugh the Wrk Prgramme included in the Cmpany s Statement f Intent. An updated summary f ur wrk is included n page three. Nga mihi nui. Andrew Knight Chief Executive Wrkstream develpments during the quarter are summarised in this Quarterly Reprt. Further details f the develpments have generally been reprted previusly thrugh Gas Industry C s peridic News Bulletins and are available n ur website 2

3 PROGRESS TOWARDS OBJECTIVES AND OUTCOMES 1 APRIL 30 JUNE 2018 This sectin prvides an update f prgress twards bjectives and utcmes fr Gas Industry C the gas industry bdy, as set ut in the Gas Act 1992 and the April 2008 Gvernment Plicy Statement n Gas Gvernance, particularly as implemented thrugh the Cmpany s FY Statement f Intent. Objective 1: Prmte efficient, cmpetitive and cnfident gas markets Retail Gas Cntracts Enhanced cnsumer utcmes by Administer the Retail Gas Cntracts Furth assessment f retailers standard Oversight Scheme prviding clarity arund the Oversight Scheme. published cntracts with small cnsumers respective rles and bligatins f cnsumers and industry participants invlved in the supply f gas t small cnsumers. Cnduct a full review f retail cntracts every 3 years. Review retailers cntracts therwise n an exceptins basis (ie new entrants and changed cntracts). Prvide additinal infrmatin t assist new entrant retailers t understand their bligatins and gvernance prcesses. published in Octber 2015; shwed further imprvements in alignment with the cntract benchmarks. Since the Retail Scheme s intrductin in 2010, retailers verall rating has increased frm Mderate t Substantial alignment with the benchmarks. The 2018 full review has cmmenced, with results expected in Octber. Gas Distributin Cntracts Gas industry participants and new Mnitr and reprt t the Minister n Reprt n the secnd assessment f Oversight Scheme entrants are able t access the status f distributin arrangements. distributin cntracts issued in May 2014 distributin pipelines n reasnable terms and cnditins. Develp and publish distributin cntract principles. shwed that verall alignment imprved frm Mderate t Substantial. Ensure cnsistency in distributin services arrangements. Encurage publicatin f netwrk services agreements. Gas Industry C plans t survey distributrs in FY2019 t cnfirm prgress with retailers mving t new cntracts cnsistent with the Scheme principles. 3

4 Objective 1: Prmte efficient, cmpetitive and cnfident gas markets Gas Quality Maintain an acceptable standard f gas quality. Ensure csts f gas quality incidents are met efficiently. Achieve imprved transparency n gas quality incidents. Rule Changes Imprved industry gvernance thrugh regular review f existing arrangements and recmmending changes where apprpriate. Gas Measurement Wrkstream arse frm industry stakehlder discussins at annual C-Regulatry Frums undertaken in cntext f GPS utcme f prviding efficient market fr metering services. Onging review f industry arrangements fr managing gas quality. Cnsider ptins fr imprving gas quality arrangements. Maintain rule change registers. Review Switching, Recnciliatin, and CCM rules/regulatins nce the new GTAC design is sufficiently advanced. Develp a minimum vluntary standard fr advanced metering. Gas Quality: Requirements and Prcedures Dcument was first issued in 2015, and will be reviewed and updated by Gas Industry C as required. The 2017 Gas Quality Update prpsed that additinal time be allwed fr a new GTAC t take shape befre recnsidering matters relating t gas quality. In the Final Assessment f the prpsed GTAC released in May 2018, Gas Industry C highlighted sme cncerns regarding First Gas s prpsed arrangement fr gas quality. A pilt f day-after (D+1) gas allcatin and daily balancing and peaking pl (BPP) infrmatin delivery is cntinuing successfully. The pilt will be reviewed in light f the develpment f the new GTAC, and changes t the Recnciliatin Rules may be prpsed when apprpriate. In September 2017, Gas Industry C published an analysis f submissins n tw gas metering review papers. As part f its next steps, Gas Industry C established a technical advisry grup t develp a minimum vluntary standard fr advanced metering. 4

5 Objective 1: Prmte efficient, cmpetitive and cnfident gas markets Infrmatin Gathering If required, due t nn-cmpliance, Gas Industry C can cnsult n regulatins fr mandatry supply f infrmatin by participants t infrm relevant issues. Prtcl established in 2012 as an industry arrangement rather than a frmal regulated prcess. Subject t utcme f cnsultatin, Gas Industry C may make a recmmendatin t the Minister fr regulatins fr the prvisin f infrmatin. Infrmatin was prvided under the Prtcl in relatin t the review f market-based balancing and metering cntracts review. Objective 2: Facilitate efficient use f, and investment in, gas infrastructure Transmissin Access Ensure transmissin pipeline access arrangements transparently prvide fr the efficient utilisatin f physical capacity and effectively signal any need fr efficient investment in additinal capacity. Address, using regulatry and/r nnregulatry ptins, any lessening f cmpetitin due t transmissin cnstraints. Imprve the quality and availability f pipeline security and supply/demand infrmatin. Cnsider changes t transmissin access arrangements. Frmer Vectr and Maui transmissin systems under the wnership f First Gas wh wishes t implement a single gas transmissin access cde (GTAC). First Gas leading a prcess fr develping a new GTAC t replace the VTC and MPOC. Gas Industry C determined that First Gas s GTAC submitted n 8 December 2017 is nt materially better than the current MPOC and VTC. First Gas is engaging with its stakehlders t develp a revised GTAC. 5

6 Objective 2: Facilitate efficient use f, and investment in, gas infrastructure Gas Supply/Demand Study Lng-Term Gas Supply and Demand Scenaris cmmissined t prvide industry stakehlders with infrmatin that may be useful fr making business decisins. Update the supply/demand study biannually. Third editin f Reprt was released in Octber 2016 and presented t the industry. Gas Industry C has cmmissined Cncept Cnsulting t prduce the next update due fr release in September Transmissin Pipeline Balancing Imprved industry arrangements. Gas industry participants and new entrants are able t access transmissin pipelines under reasnable terms and cnditins. Assess balancing market develpments. Market-Based Balancing (MBB) intrduced n 1 Octber 2015 with trading f balancing gas n emstradepint whlesale market. First Gas and stakehlders are cnsidering balancing in cntext f the develpment f a new GTAC. Our analysis f the balancing regime in the prpsed GTAC can be fund in ur May 2018 dcument, Final Assessment f GTAC. Transmissin Cde Change Ensure nging relevance and Transmissin Cde Change Requests N changes t the MPOC are expected Requests efficiency f multilateral terms f prcessed as required. while First Gas is develping the GTAC in access t transmissin pipelines. cnsultatin with its stakehlders. Intercnnectin Imprved industry utcmes. Gas industry participants and new entrants are able t access transmissin pipelines under reasnable terms and cnditins. Review intercnnectins as required. Address any cncerns regarding reasnable access. Amend Intercnnectin Guidelines if needed. Intercnnectin Guidelines have been in place since Transmissin System Owner plicies are largely cnsistent with thse guidelines. First Gas and stakehlders are cnsidering replacing intercnnectin arrangements in 6

7 Objective 2: Facilitate efficient use f, and investment in, gas infrastructure cntext f the develpment f a new GTAC. In the Final Assessment f the prpsed GTAC released in May 2018, Gas Industry C highlighted sme cncerns with First Gas s prpsed apprach t Intercnnectin. Security and Reliability Gas Industry C s 2015/16 review f transmissin pipeline security and reliability fund arrangements were generally apprpriate but nted several pprtunities fr imprvement under current arrangements (mainly develpment f First Gas Transmissin Asset Management Plan) and several areas where arrangements were evlving (Cmmerce Cmmissin price-quality regulatins. Whlesale Market Mnitring emstradepint whlesale gas market (etp) makes a significant cntributin t the Gvernment Plicy Statement utcme fr efficient arrangements fr the shrt-term trading f gas. Gas Industry C will cntinue t review develpments and wrk with stakehlders n further imprvements. Gas Industry C cntinues t mnitr activity and develpments in the whlesale spt market as well as having a rle with the etp s Operatinal Wrking Grup Gas Industry C mnitrs whlesale market activity and develpments, particularly in relatin t Market-Based Balancing. Gas Industry C published an assessment f First Gas s Asset Management Plan and ther security and reliability related dcuments in March First Gas s adptin f Gas Industry C s suggestins will be assessed in the next Asset Management Plan. Gas Industry C cnsiders that n further analysis n the MBB data shuld be undertaken at this stage. Balancing is a matter that First Gas is cnsidering as part f its develpment f the GTAC in cnsultatin with its stakehlders. Cntinuing t supprt the Energy Trader Frum. 7

8 Objective 3: Deliver effectively n Gas Industry C s accuntabilities as the gas industry bdy Dwnstream Recnciliatin Oversight f the Gas (Dwnstream Recnciliatin) Rules Imprved industry arrangements and cnsumer utcmes thrugh the bjective f fairly allcating, and reducing, unaccunted-frgas (UFG) and its assciated csts. Switching and Registry Oversight f the Gas (Switching Arrangements) Rules Efficient retail market and imprved cnsumer utcmes by facilitating market cntestability thrugh custmer switching between retailers. Oversight f the Recnciliatin Rules, including Allcatin Agent Service Prvider rle. Oversight f Switching Rules, including Registry Operatr Service Prvider rle. Recnciliatin Rules perating well, with Energy Market Services (EMS) perfrming the Allcatin Agent Service Prvider rle. Gas recnciliatin audits perfrmed regularly. Annual Unaccunted fr Gas (UFG) factrs and unusual metering arrangements reviewed fr any significant differences. A pilt f day-after (D+1) gas allcatin and daily balancing and peaking pl (BPP) infrmatin delivery is cntinuing successfully. The pilt will be reviewed fllwing the cmpletin f the GTAC develpment prcess, and changes t Recnciliatin Rules prpsed if apprpriate. Switching Rules perating well, with Jade perfrming the Registry Operatr Service Prvider rle. Switching statistics reprt issued mnthly, with switching levels remaining stable. Switching audits perfrmed regularly. 8

9 Objective 3: Deliver effectively n Gas Industry C s accuntabilities as the gas industry bdy Critical Cntingency Oversight f the Gas Gvernance Oversight f CCM Regulatins including CCM Regulatins perating well, with Cre Management (Critical Cntingency management f Critical Cntingency Grup perfrming the Critical Cntingency Management) Regulatins Operatr (CCO) Service Prvider rle. Operatr Service Prvider rle. Imprved industry utcmes Review effectiveness f the CCO activities are reviewed each quarter. thrugh increased market cnfidence in industry s ability t manage critical cntingency events. Regulatins fllwing events and the annual exercises. Operate critical cntingency pl fllwing an event. CCO training events and annual exercise held in May Cmpliance Oversight f the Gas Gvernance (Cmpliance) Regulatins. Imprved industry peratins thrugh prvisin f a cmpliance and dispute reslutin prcess fr industry participants. Statutry Accuntability T ensure stakehlders understand the scpe f the cmpany s intended peratins and its results t the cst theref. Oversight f Cmpliance Regulatins. Appintment f Rulings Panel and Investigatr, and management f assciated prcesses. Prepare/publish a Statement f Intent that meets statutry requirements Prepare/publish Annual Reprts that meet statutry requirements Prepare/publish Quarterly Reprts t the Minister n prgress made tward meeting the Gvernment s bjectives and utcmes fr the gas industry. Gas Industry C cntinues t fulfil its rle as Market Administratr under the Cmpliance Regulatins. Sir Jhn Hansen appinted as Rulings Panel and Jasn McHerrn as Investigatr. Breach activity remains generally lw; a psitive indicatr f industry cmpliance. Annual Reprt t be delivered t the Minister by 30 September Quarterly Reprts and News Bulletins published regularly. Gas Industry C s FY Statement f Intent was sent t the Minister n 25 June 2018, and subsequently published n the Cmpany s website. 9

10 Objective 3: Deliver effectively n Gas Industry C s accuntabilities as the gas industry bdy Perfrmance Measures Imprved industry and cnsumer utcmes thrugh prvisin f public infrmatin n industry perfrmance. Mnitr the effectiveness f gvernance arrangements. Determine and publish infrmatin n each gas gvernance arrangement that has been implemented. Perfrmance Measures Reprts published quarterly n Gas Industry C s website. Objective 4: Build and cmmunicate the New Zealand Gas Stry NZ Gas Stry/State and Facilitate nexus between industry Facilitate, influence and cmmunicate Regular liaisn with MBIE, Electricity Perfrmance f Industry and Gvernment. with the industry and Gvernment. Authrity, and ther relevant regulatrs. Maintain infrmed industry participants and ther stakehlders. Liaise with ther regulatry bdies, agencies and assciatins with In particular, liaising with Cmmerce Cmmissin n gas transmissin matters. respnsibilities and interests 2018 update t NZ Gas Stry currently encmpassing the gas industry. being develped with its annual release planned fr December