Changes to the Gas Governance (Critical Contingency Management) Regulations 2008 were made in December 2013 and came into force 1 March 2014. Information about the Regulations and amendments can be viewed here.
Gas Industry Co appointed Core Group as the new Critical Contingency Operator (CCO) following the expiration of Vector Gas Limited's five year term. Core Group commenced their role as CCO on 1 March 2014. For more information regarding the role of the CCO click here.
Gas Industry Co administers the Gas Governance (Critical Contingency Management) Regulations 2008. The purpose of the Regulations is to achieve the effective management of critical gas outages and other security of supply contingencies without comprising long-term security of supply. The Regulations achieve this principally through the appointment of a Critical Contingency Operator (CCO), which has a range of powers, particularly to curtail gas consumption during critical contingencies.
Details of the Regulations and the CCO role can be viewed under the CCM Regulations tab.
In November 2013, Gas Industry Co announced that, following the expiry of the first five-year term of the CCO appointment and following a competitive tender process, it selected New Plymouth-based Core Group to be the next Critical Contingency Operator.
Further details of the appointment of Core Group can be viewed here.
Following the October 2011 critical contingency caused by a breach of the Maui Pipeline, Gas Industry Co completed a substantial review of the Regulations. In July 2013, Gas Industry Co recommended amendments to the Regulations, and associated amendments to the Gas Governance (Compliance) Regulations 2008, to the Minister of Energy and Resources under Part 4A of the Gas Act 1992.
Details of the amendments and the associated review can be viewed here.
Information during a critical contingency
A critical contingency is determined and declared by the Critical Contingency Operator (CCO). The CCO maintains a website to assist in keeping affected parties informed. There are two types of information posted on the CCO website:
The CCO website can be accessed by navigating to www.cco.org.nz
In this CCM Regulations tab, you will find the following:
Following the six day Maui pipeline outage in October 2011 Gas Industry Co completed a substantial review of the Gas Governance (Critical Contingency Management) Regulations 2008 (the Regulations). Changes to the Regulations were made in December 2013 and came into force on 1 March 2014. The amendments to the Regulations resulted in many improvements including:
Information about this consultation and the changes made can be viewed here
The finalised regulations can be viewed here: Gas Governance (Critical Contingency Management) Regulations 2008 (as at 1 March 2014)
Determination regarding the definition for 'publish', under Regulation 5, can be viewed here.
The Gas Governance (Critical Contingency Management) Regulations 2008 (the Regulations) were originally published in the New Zealand Gazette on 6 November 2008. Parts 1, 2 and 5 came into force on 4 December 2008 and parts 3 and 4 came into force on 21 January 2010 (the go-live date).
The purpose of the Regulations is to achieve the effective management of critical gas outages and other security of supply contingencies without compromising long-term security of supply. The Regulations provide for:
Part 1 covers general provisions for the appointment of the CCO and terms of the CCO service provider agreement, the scope of the Regulations, funding of the development and ongoing fees, and the giving and receiving of notices.
Part 2 covers the obligations of certain parties prior to the critical contingency management go-live date (Go-Live Date), in relation to CCMPs, the communications plan and information guide, and the provision of transmission system and consumer information.
Part 2A contains information surrounding designation types and the process and administrative matters around applying for a designation
Part 3 sets out the processes for the determination, declaration and termination of a critical contingency and the role and obligations of certain parties during a contingency event.
Part 4 provides for obligations after critical contingency events, including reporting requirements, and processes for the appointment of an industry expert, determination of a critical contingency price and the determination and resolution of contingency imbalances.
Part 5 provides for miscellaneous activities such as audits, the treatment of critical contingencies occurring before the Go-Live Date and the separation of roles for the CCO.
For each proposed CCMP or amendment to a CCMP, an expert adviser must be appointed by Gas Industry Co to review the proposed plan or amendment and to make a recommendation on whether Gas Industry Co should approve the proposed plan or amendment. Gas Industry Co must appoint an expert adviser within 30 business days of the commencement date in the case of a proposed plan and, for a proposed amendment, within 5 business days of receiving the amendment from the TSO.
On 27 January 2009, Gas Industry Co appointed Concept Consulting Group Limited as the Expert Adviser to review the initial critical contingency management plans proposed by Vector Gas Limited and Maui Development Limited respectively.
Gas Industry Co must appoint an independent industry expert to determine the critical contingency price within 10 business days of the termination of a critical contingency. Each TSO, interconnected party, and shipper who will be affected by the determination of a critical contingency price may nominate 1 person to be considered by Gas Industry Co when appointing the industry expert.
The Contingency Management Regulations provide for the industry body (Gas Industry Co) to determine and publish certain matters regarding the operation of the regulations. Notice of these determinations is available by clicking on the link below:
Date Published: May/June 2008
In the lead-up to the Contingency Management Regulations being made, a group was convened by Contact Energy, and its role was to work towards a better understanding of the interdependencies between the electricity and gas sectors. Membership of the group was broad, covering gas transmission, electricity generation, electricity system operation (Transpower), the Electricity Commission and Gas Industry Co. Both Vector and Contact Energy undertook modelling work which was presented to that group and the outputs from that work are provided below.
On 14 January 2010 Gas Industry Co published a notice in the New Zealand Gazette stating that it had approved critical contingency management plans covering the whole transmission system and announcing the go-live date, 21 January 2010, on which parts 3 and 4 of the regulations came into force. The text of this notice is available by clicking on the link below.
The presentation slides below were developed by Gas Industry Co and the Critical Contingency Operator to highlight the key responsibilities of industry participants and consumers under the new contingency management arrangements and to summarise the communication protocols between the parties affected by contingency events.
At the commencement of the CCM Regulations, Gas Industry Co was required to appoint the gas system operator (Vector Gas Limited) to the CCO role for a term of five years. In November 2013, following the expiry of the first five-year term of the CCO appointment and a competitive tender process, it selected Core Group to be the next Critical Contingency Operator. On 1 March 2014 the CCO was appointed by Gas Industry Co.
The November 2013 update on the appointment of Core Group can be viewed here.
The Gas Governance (Critical Contingency Management) Regulations 2008 (the Regulations) were amended in 2013 following a recommendation to the Minister of Energy and Resources from Gas Industry Co. One of the amendments was to change the arrangements relating to Regional Critical Contingencies.
In the design of the original regulations it was considered that it would be obvious to industry participants whether a critical contingency was regional or not. As a result, the CCM Regulations did not specify who would determine that status or when. Subsequent feedback showed that Transmission System Owners (TSOs) wanted the status to be clarified as soon as possible during a critical contingency and that view was shared by a number of shippers. As a result, the 2013 amendments included the following requirements:
Regulation 10(3) of the Gas Governance (Critical Contingency Management) Regulations 2008 requires that the industry body publish a map depicting the transmission system based on information supplied by transmission system owners under regulation 10(1).
The Transmission System Map, along with the accompanying pipeline schematics, is available to view or download from the publications section of the CCO's website which can be viewed here.
The CCO (Vector Gas Limited) was appointed by Gas Industry Co on 28 November 2008.
This is in line with regulation 6 which requires Gas Industry Co to appoint the person that is the system operator of all of the transmission system as the CCO for an initial term of 5 years. Regulation 8 of the Contingency Management Regulations requires that Gas Industry Co publish the CCO service provider agreement. Accordingly, a copy of the service provider agreement is available by clicking on the link below.
The following Critical Contingency Management Plans (CCMPs) were approved by Gas Industry Co in 2014 following amendments to the CCM Regulations.
Before submitting a proposed Critical Contingency Management Plan (CCMP) for approval, Transmission System Owners (TSOs) are required to consult on a draft of the proposed plan with persons representative of the interests of those likely to be affected by the CCMP.
Immediately before this consultation TSOs must provide a draft of the proposed CCMP to the industry body, which must be published on its website. Details of the draft plans and submissions thereon can be found below.
MDL Draft Critical Contingency Management Plan (submissions closed 10 February 2009)
Vector Draft Critical Contingency Management Plan (submissions closed 10 February 2009)
Proposed CCMPs were submitted to Gas Industry Co for approval in February 2009. The plans were reviewed by the expert adviser, who gave notice on 27 March 2009 that the plans should not be approved by Gas Industry Co. Following revisions in accordance with the expert adviser's notice, the TSOs resubmitted proposed CCMPs for approval on 15 April 2009. The resubmitted plans are available to view or download by clicking on the links belows.
On 18 May 2009 the expert adviser notified Gas Industry Co that the two amended plans had not been recommended for approval as they were incomplete. TSOs were therefore given 10 further business days to amend their proposed plans in line with the expert adviser's notice.
MDL resubmitted an amended proposed CCMP on 26 May 2009, and Vector submitted on 4th June. The plans can be accessed by clicking on the links below.
On 3 July 2009 the expert adviser wrote to Gas Industry Co to recommend that the proposed CCMP submitted by MDL on 26 May 2009 not be approved. MDL subsequently submitted an amended proposed CCMP which can be accessed by clicking on the link below.
On 14 July 2009 the expert adviser wrote to Gas Industry Co to recommend that the proposed CCMP submitted by Vector on 4 June 2009 not be approved. Vector subsequently submitted an amended proposed CCMP which can be accessed by clicking on the link below.
On 17 August 2009 the expert adviser wrote to Gas Industry Co to recommend that the proposed CCMP submitted by MDL on 17 July 2009 not be approved. MDL subsequently submitted an amended proposed CCMP which can be accessed by clicking on the link below.
On 23 October 2009 the expert adviser wrote to Gas Industry Co to recommend that the proposed CCMP submitted by Vector on 23 September 2009 not be approved. Vector subsequently resubmitted an updated proposed CCMP which can be accessed by clicking on the link below.
Designations can provide a measure of priority to gas consumers who satisfy certain criteria. The existing designation categories of essential service provider and minimal load consumer have been replaced by four designations:
Click on the designation below to be taken to an application form for the respective designation. If you are wishing to apply for an Electricity Supply designation please contact Gas Industry Co directly via ccmdesignations[at]gasindustry.co[dot]nz
Gas Industry Co is responsible for approving all applications for designations, retailers are required to provide all reasonable assistance to consumers who are preparing designation applications. Please contact your retailer for more information regarding your designation.
Consumers with essential service provider or minimal load consumer designations continue to hold that designation until 1 December 2014. These consumers may apply for another designation, but must do so by 1 June 2014 if they wish their application to be determined before the existing designation expires. Successful applicants will receive a new designation; any unsuccessful applicants will continue to hold their existing designations until 1 December 2014.
Gas Industry Co published Guidelines as a means of ensuring a consistent approach to designations in respect of large consumers and in considering designation disputes from consumers generally. It was intended that retailers would refer to the Guidelines when processing applications from their customers. In this way, classifications could be expected to be reasonably consistent across retailers. The Guidelines were not legally binding and were to be read in conjunction with the Regulations. The general approach set out in these Guidelines in no way reduces the requirement upon participants to know and comply with their obligations under the Regulations.
Regulations 17 through 19 of the Contingency Management Regulations provide for ongoing fees to be paid by wholesale purchasers of gas on a monthly basis to meet the critical contingency ongoing costs. The critical contingency ongoing costs are the costs:
Gas Industry Co has determined that the Critical Contingency Ongoing Costs should exclude any overhead costs or policy work resulting from operational activities under the Contingency Management Regulations. Any such work is to be funded from the Gas Industry Co Levy. The Critical Contingency Ongoing Costs therefore only relate to other direct external costs in connection with Gas Industry Co administering the Contingency Management Regulations.
For each year following the first year or part year of operation, Gas Industry Co must estimate and publish a breakdown of the estimated Critical Contingency Ongoing Costs for that year.
|Cost categories||Estimated cost|
|Service provider fees||$418,800|
|Industry expert costs||$20,000|
|Expert adviser costs||$10,000|
|Other external advice||$20,000|
|Total ongoing costs||
|Invoice month||for gas consumed in||CC ongoing cost ($/GJ)|
|July 2014||May 2014||$0.0024867795|
|August 2014||June 2014||$0.0026749802|
|Cost categories||Estimated cost|
|Service provider fees||$522,000|
|Industry expert costs||$20,000|
|Expert adviser costs||$10,000|
|Total ongoing costs||$623,000|
|Invoice month||for gas consumed in||CC ongoing cost ($/GJ)|
|July 2013||May 2013||$0.0032794584|
|August 2013||June 2013||$0.0034736812|
|September 2013||July 2013||$0.0032756354|
|October 2013||August 2013||$0.0031984312|
|November 2013||September 2013||$0.0035911155|
|December 2013||October 2013||$0.0036986924|
|January 2014||November 2013||$0.0038615544|
|February 2014||December 2013||$0.0035815374|
|March 2014||January 2014||$0.0035421148|
|April 2014||February 2014||$0.0043514762|
|May 2014||March 2014||$0.0030207459|
|June 2014||April 2014||$0.0032170671|
|Cost categories||Estimated cost||Actual Cost|
|Service provider (establishment and base fees)||$358,872||$298,773|
|Service provider (event fee)||$71,000||-|
|Industry expert costs||$23,000||-|
|Expert adviser costs||$10,000||$7,599|
|Total ongoing costs||$462,872||$306,372|
|Invoice month||for gas consumed in||Estimated cost ($/GJ)||Actual cost ($/GJ)|
|July 2012||May 2012||$0.0027544186||$0.0018231344|
|August 2012||June 2012||$0.0028934490||$0.0019151568|
|September 2012||July 2012||$0.0025417437||$0.0016823651|
|October 2012||August 2012||$0.0024667746||$0.0016327444|
|November 2012||September 2012||$0.0025219509||$0.0016692648|
|December 2012||October 2012||$0.0028970302||$0.0018906753|
|January 2013||November 2012||$0.0029997012||$0.0020367667|
|February 2013||December 2012||$0.0030743533||$0.0020345720|
|March 2013||January 2013||$0.0028703370||$0.0018998596|
|April 2013||February 2013||$0.0032900215||$0.0021776469|
|May 2013||March 2013||$0.0025960549||$0.0017183143|
|June 2013||April 2013||$0.0025977328||$0.0017194244|
Can be found here
Notices published by the Critical Contingency Operator (CCO) during a Critical Contingency Event are available on the CCO's website click here
Following the termination of a Critical Contingency, the CCO is required to publish the following reports:
In the case of a Non-Regional Critical Contingency, regulations 67-81 provide for a process for setting contingency imbalances.
Answers to some common questions about Critical Contingency events and gas user obligations can be found here.
A Critical Contingency incident on the Gas Transmission System caused by an unplanned outage at the Pohokura Poduction station was declared at 12.48pm on Saturday 3 March 2012, and terminated at 11.39pm on the same day. The event resulted in a requirement for reduced consumption by large gas users. The Critical Contingency Operator (CCO) issued an Incident Report and Performance Report. Documents and other information relating to this event are available at the CCO Information Exchange at www.oatis.co.nz
Under regulations 67 to 72, Gas Industry Co is required to engage an industry expert to determine a Critical Contingency price that will be applied to contingency imbalances sustained by interconnected parties and shippers during the event. Tim Denne of Covec was engaged for this work and his final price report is available below.
A Critical Contingency incident on the Gas Transmission System caused by a gas escape from the Maui pipeline was declared at 1.25am on 25 October 2011, and terminated at midday on 30 October 2011. Documents and communications relating to this event are available below.
Review of Gas Critical Contingency Management
Gas Industry Co engaged Concept Consulting Group to review the effectiveness of the Critical Contingency Management processes and governance arrangements during the Maui outage. For more information click here.
Post Maui Pipeline Outage Review - Update 7 May 2012
Work in capturing lessons from the five-day Maui outage in October last year is well advanced.
A Critical Contingency was declared at 19:36 on 13 July 2010 and was
terminated at 22:34 on 13 July 2010.
Under the Gas Governance (Critical Contingency Management) Regulations 2008, a number of reports have been published in respect of this event:
The Gas Governance (Critical Contingency Management) Regulations 2008 (CCM Regulations) were amended in 2013 following a recommendation to the Minister of Energy and Resources from Gas Industry Co. One of the amendments changes the arrangements relating to regional critical contingencies to ensure the status of an event (regional or otherwise) be determined as soon as possible during a critical contingency. As a result, the 2013 amendments included the following requirements:
Before Gas Industry Co can publish guidelines it is required to:
Accordingly, Gas Industry Co has released a brief document containing draft guidelines for consultation and sought stakeholder feedback on those draft guidelines.
Submissions closed Wednesday, 26 February.
The original set of Guidelines were issued in February 2009, with the aim of providing clarity and consistency in the designation process for ESPs and MLCs.
The purpose of this revision of the Guidelines was to reflect experience to date on the designation process, and particularly arising from the Maui Pipeline outage in October 2011. Gas Industry Co undertook a comprehensive review of the Gas Governance (Critical Contingency Management) Regulations 2008, and it may be that this review will lead to changes in how ESPs and MLCs are defined and designated. It can, however, be a lengthy process to make changes to regulations, and industry participants have indicated a desire for an interim measure. As such, Gas Industry Co considers it appropriate to provide greater clarity to industry participants through a revision of the current Guidelines, so that lessons from recent experiences are implemented in a timely fashion and as far as possible within the scope of the regulations as they are currently drafted.
Please note that the proposed revisions to the Guidelines relate only to ESPs, not MLCs. Also, future changes to the regulations may require a further revision of the Guidelines or may negate the need for them.
The latest Guidelines can be found here
Gas Industry Co engaged Concept Consulting Group to review the effectiveness of the critical contingency management processes and governance arrangements during the Maui outage.
Their discussion paper, 'Review of Gas Critical Contingency Management: Post Maui Pipeline Outage' and subsequent submissions, can be accessed below.
Gas Industry Co then analysed the submissions received on the Concept Consulting Group discussion paper, 'Review of Gas Critical Contingency Management: Post Maui Pipeline Outage', which can be found in the Submissions Analysis document.
While submitters supported most of the recommendations in the Review Report, the Submissions Analysis noted that there was more work to be done in the areas of:
Gas Industry Co prepared a Statement of Proposal, which is the formal description of proposed amendments to the CCM Regulations.
It can be viewed here.
These presentation slides from an industry workshop in May 2007 contain an updated and revised approach to emergency management based on submission analysis from the July 2006 discussion paper. The proposal given at the workshop is a combination of a mandatory framework based on regulations together with industry arrangements that provide the details. The presentation slides also highlight key design issues and explores how the proposed hybrid approach would interact with MPOC mechanisms and processes.
This discussion paper reviewed arrangements for dealing with gas outages and contingencies, recommended mandatory arrangements be put in place, and highlighted issues and design decisions that needed to be addressed. Gas Industry Co took into account feedback received on the paper when undertaking the detailed design of gas emergency arrangements.
This report, prepared for Gas Industry Co by Farrier Swier Consulting in association with Johnson Winter & Slattery, advised on the commercial issues involved in updating the National Gas Outage Contingency Plan (NGOCP). The overall objective was to develop a soundly based policy for pricing under outage and contingency situations. The report set out detailed background information and analysis to enable stakeholders to provide informed input as a basis for a decision by Gas Industry Co on the most appropriate approach.
Second draft Amended Regulations (marked-up version compared against Original CCM Regs). This draft endeavours to reflect the proposals of the Statement of Proposal and the drafting changes suggested at the first drafting workshop held 13 March 2013. It shows all the changes to the original CCM regulations and was provided for discussion at the second drafting workshop. This document has not been subject to a full legal review. Participants should also note that the Parliamentary Counsel Office determines the final wording of any draft regulations recommended to Cabinet.
Second draft Amended Regulations (marked-up version compared against Initial draft CCM Regs). This draft endeavours to reflect the proposals of the Statement of Proposal and the drafting changes suggested at the first drafting workshop held 13 March 2013. It shows the changes since the Initial draft was circulated and was provided for discussion at the second drafting workshop. This document has not been subject to a full legal review. Participants should also note that the Parliamentary Counsel Office determines the final wording of any draft regulations recommended to Cabinet.
Initial draft Amended Regulations (marked-up version). In this draft we have endeavoured to reflect the proposals set out in the Statement of Proposal, as modified by the Analysis of Submissions. It addresses predominantly the operational matters canvassed in the consultation process and was provided for discussion at the first drafting workshop. This document has not been subject to a full legal review. Participants should also note that the Parliamentary Counsel Office determines the final wording of any draft regulations recommended to Cabinet.
Following the six day Maui pipeline outage in October 2011, Gas Industry Co and the Critical Contingency Operator (CCO) set out to capture critical contingency management lessons arising from the event. The CCO produced post-event Incident and Performance Reports, and made 19 recommendations for improvements. Many of these related to processes that have been addressed directly by the CCO and transmission system owners under existing provisions in the Gas (Critical Contingency Management) Regulations 2008 (CCM Regulations). Other recommendations involved potential changes to the CCM Regulations, and were referred to Gas Industry Co for consideration.
Having consulted widely, including commissioning a report by Concept Consulting and taking account of submissions on that report, Gas Industry Co issued a Statement of Proposal (SoP) setting out proposed changes to the CCM Regulations.
The Statement of Proposal can be found below.
Also below are the NZIER Report - Value added associated with gas demand and the Lowe Environmental Impact Report - Review of Methods for and Impacts of Raw Milk Disposal, both of which are referred to in the Statement of Proposal.
This presentation on the draft outage and contingency management regulations
introduced changes in terminology, proposed a framework and timetable for
implementation and gave a breakdown of the draft regulations and supporting
This paper builds on the previous Statement of Proposal (August 2007) and Supplementary Consultation Paper (December 2007) and focuses on changes to the proposed regulations since the December 2007 paper. These changes were mainly in response to comments received from MED and PCO. The paper also outlined the role of the Contingency Management Implementation Group (CMIG), reports on the service provider contract to appoint Vector as the CCO, and provided further opportunity for comment on the draft regulations before a recommendation was made to the Minister.
This paper provided an analysis of the submissions in response to questions included in the supplementary consultation paper of December 2007. Next steps suggested in this paper include establishing an industry implementation group to help co-ordinate the preparation work for the new arrangements, and developing terms of reference for the critical contingency operator (CCO) service provider agreement.
The supplementary consultation paper focuses on a number of issues that were raised in response to the statement of proposal issued in August 2007. Gas Industry Co proposed ways of addressing the issues raised and sought feedback on these. There were some additional issues that have been identified separately from the submissions process and these are also discussed together with solutions being presented. The paper includes a revised set of draft regulations.
The purpose of the workshop was to review and discuss a number of proposed changes to the statement of proposal which was issued in August 2007. The agenda included:
A statement of proposal was released in August 2007 which put forward
arrangements for the replacement of the NGOCP. The proposed hybrid approach is
a combination of regulations under the Gas Act and industry-developed
arrangements to meet the requirements of those regulations. Submissions were
sought on the proposal and have been collated and analysed. This document sets
out the submissions analysis, a summary of changes to the regulations in light
of submissions and the next steps which include an industry workshop and
further consultation on the revised draft regulations.
Industry members requested Gas Industry Co develop mandatory arrangements to
replace the voluntary National Gas Outage Contingency Plan (NGOCP). This
Statement of Proposal puts forward replacement arrangements which are a
combination of regulations under the Gas Act and industry-developed
arrangements to meet the requirements of those regulations.
Recommendation to the Minister of Energy and Resources to amend the Critical Contingency Management Regulations
Gas Industry Co recommended amendments to the Gas Governance (Critical Contingency Management) Regulations. The Recommendation sought to implement lessons from the October 2011 outage of the Maui Pipeline. While the Maui outage showed that the CCM Regulations generally worked well, a number of areas were identified in which improvements could be made, most notably in the areas of deferred curtailment (customers who are given priority access to gas) and stakeholder communications. In developing the Recommendation, Gas Industry Co took into account industry stakeholder input on the Statement of Proposal and at a number of workshops.
Recommendation to the Minister of Energy on Critical Contingency Amendments to Gas Compliance Regulations
Date Published: June 2008
Gas Industry Co recommended regulations providing for the effective management of critical gas contingencies, called the Gas Governance (Critical Contingency Management) Regulations. The proposed regulations include mandatory processes for the management of critical contingencies, including compliance with curtailment instructions. An effective compliance regime is crucial to ensuring that the proposed regulations achieve their purpose. In a statement of proposal on critical contingency management arrangements issued in August 2007, Gas Industry Co proposed that the existing compliance regulations be amended to apply to the proposed contingency management regulations. This paper sets out the proposed amendments.
Recommendation to the Minister of Energy on Arrangements for the Effective Management of Critical Contingencies
Date Published: June 2008
This document recommends regulations to ensure effective and efficient management of a situation when gas is in short supply (whether due to a short-term production outage or physical problems with a transmission system) and the market proves unable to manage that situation through normal commercial operations.