Downstream Reconciliation

Overview

Introduction

The Gas (Downstream Reconciliation) Rules 2008 (the Rules) came into effect on 1 October 2008. The purpose of the Rules is to establish a set of uniform processes that will enable the fair, efficient, and reliable downstream allocation and reconciliation of downstream gas quantities. The Rules are available to view here.

The Rules set out the allocation methodology, the timeframes for completing allocations and provide for the appointment of the Allocation Agent, whose primary role is to receive consumption information from retailers, perform allocations and publish allocation results. Further detail on the Rules and the Allocation Agent can be found under the Market Administration tab.

Current Status

Gas Industry Co is currently undertaking a review of the Rules. Details can be found in the Rules Review tab. The first stage (Phase I) of the review was completed in 2012 and resulted in amendments to the Rules which took effect on 1 June 2013. The amended Rules require that Gas Industry Co determine and publish certain technical details, these are:

  • a list of direct connect gas gates;
  • a list of unmetered and oversized metered gas gates and criteria for the determination of global 1-month (G1M) gas gates.

Work continues on the second stage (Phase II) of the review, which is concerned with developing options for improving the accuracy of the initial allocation.

Following the completion of the initial five-year Allocation Agent contract, Gas Industry Co carried out a competitive tender process for the role. An agreement was reached in early October 2013 to appoint EMS (Energy Market Services, a subsidiary of Transpower) as the next Allocation Agent. The appointment commenced on 1 January 2014 following a period of transition from the previous incumbent, NZX.

Contact Details
Ian Dempster
Tel: 04 494 2467
Ian.Dempster[at]gasindustry.co[dot]nz

Consultation

Currently Consulting On

Consultation on rule 37 determination under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 15 September 2014

The purpose of this paper is to carry out the required consultation on the accuracy threshold in rule 37 before the annual determination of the threshold is made by Gas Industry Co.

The rule 37 determination has to take place by 30 September 2014.

Submission Template:

Make a Submission

Gas Industry Co is currently accepting submissions on this discussion paper. Submissions can be made by registering with this website and uploading your submission. All submissions will be published on this website after the closing date. All submissions remain editable up to closure date.
Submissions Close: 2014-09-26 17:00

Previously Consulted On

Consultation on rule 37 determination under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 09 September 2013

The purpose of this paper was to carry out the required consultation on the accuracy threshold in rule 37 before the annual determination of the threshold was made by Gas Industry Co. The rule 37 determination had to take place by 30 September 2013.

Submissions received

Consultation on special allocation

Date Published: 19 August 2013

This consultation paper invited submissions from allocation participants on the merits of directing special allocations under the Gas (Downstream Reconciliation) Rules 2008 for the consumption periods May 2012, June 2012 and July 2012. The consultation informed Gas Industry Co's determination of whether or not to give the necessary direction to the Allocation Agent.

Submissions were received by Monday 26 August 2013.

Submissions received

Consultation on determinations, guidelines and exemptions

Date Published: 17 April 2013

In December 2012, Gas Industry Co made a recommendation to the Minister of Energy and Resources ('the Minister') on amendments to the Gas (Downstream Reconciliation) Rules 2008 ('the Rules'). The Minister accepted the recommendation and the amended Rules were gazetted on 28 February 2013, with an effective date of 1 June 2013.

The amended Rules require that Gas Industry Co determines and publishes certain technical details, these are:

  • a list of direct connect gas gates;
  • a list of unmetered and oversized metered gas gates; and
  • criteria for the determination of global 1-month (G1M) gas gates

In addition, during policy development of the amendments, the Downstream Reconciliation Advisory Group noted that it would be beneficial for Gas Industry Co to provide guidance on a number of matters introduced in the amended Rules, in particular, correction of annual UFG factors and audits of major system changes.

This Consultation Paper included proposals on the above issues and sought feedback from participants. The Consultation Paper also covered further matters associated with the implementation of the amended Rules, including:

  • revocation of seven exemptions which will be made redundant by the amendments to the Rules;
  • variation of one exemption to align with the go-live of G1M arrangements under the Rules;
  • consideration of a new exemption application from the allocation agent associated with go-live of G1M arrangements under the Rules; and
  • updates to current determinations and guidelines on the Gas Industry Co website reflecting the amendments to the Rules and experience with operation of reconciliation arrangements over the past five years.

Submissions received

Consultation on two special allocation decisions

Date Published: 29 January 2013

This paper consided two instances of errors that had been uncovered which impacted allocation results at two different gas gates. This consultation informed Gas Industry Co's determination of whether or not to direct the Allocation Agent to perform special allocations under the Gas (Downstream Reconciliation) Rules 2008. The first issue was a correction that has been applied to the injection volumes for three months at the Westfield gas gate (part of the Greater Auckland notional gas gate). The second issue was the discovery of an incorrect pressure factor for an ICP at the Hunua gas gate, affecting the period from October 2011 to August 2012.

Submissions received

Consultation on exemption application DR12-01-S

Date Published: 26 October 2012

This paper considered a standard exemption application enabling the allocation agent to recalculate the annual UFG factor (AUFG) for the Tawa A (TWA35610) gas gate for the 2012/2013 gas year, commencing 1 October 2012

Consultation on exemption application and special allocations

Date Published: 15 October 2012

This paper considered two issues under the Gas (Downstream Reconciliation) Rules 2008. The first was an exemption application for a new direct connect gas gate and the second was whether, and how, to address the impacts of corrected consumption information received for an ICP at the Tawa A gas gate.

Submissions received

Consultation on exemptions and rule 37 determination

Date Published: 17 September 2012

The purpose of this paper was to consult on two issues relating to the Gas (Downstream Reconciliation) Rules 2008. The first was to propose the extension of a set of exemptions under the Rules which were due to expire on 30 September 2012. The second was to carry out the required consultation on the accuracy threshold in rule 37 before the annual determination of the threshold was made by Gas Industry Co. The rule 37 determination took place before 30 September 2012

Submissions received

Consultation on Exemption under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 15 December 2011

Vector sought an exemption from rule 41 in respect of situations where:

  • metering data fails Vector's initial validation process and further enquiry reveals there is no demand-side reason for the failure; and
  • a correction to the metering data is required as part of Vector's validation process in order to accurately reflect actual flow; and
  • Vector is able to create corrected data (which may in some cases include estimated data) to submit to the allocation agent, by the required deadline, that is likely to be closer to actual injection quantities than an estimation performed by the allocation agent in accordance with the estimation process set out in the allocation agent's functional specification document.

Submissions received

Consultation on GTA Designation to add Papakura

Date Published: 20 October 2011

Proposed guideline for application of gas billing factors

Date Published: 19 August 2011
Submissions were invited on a proposed guideline note on the derivation, use, and management of gas billing factors. The paper also sought feedback on the possibility of establishing a common temperature dataset for use by all retailers. The document was published as a Word document, so that submitters could tract suggested changes directly into the proposed guideline note.

Submissions received

Consultation on Exemption under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 14 December 2010

The annual UFG (AUFG) factor for the Greater Hamilton gas gate for the 2010/11 gas year had been affected by an error in TOU consumption submissions by a retailer. When the error had been identified and quantified, the allocation agent sought an exemption to allow recalculation of that AUFG factor.

Submissions closed on 22 December 2010.

This exemption was granted on 23 December 2010, the notice can be viewed here.

Submissions received

Consultation on Exemption under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 13 December 2010

The assignment of E-Gas customer contracts from the liquidator to Nova Gas necessitated an urgent exemption from the reconciliation rules to facilitate a more accurate result for the November 2010 initial allocation. Once an urgent exemption has been granted, Gas Industry Co must consult on that exemption. Please note that, as this is only a short paper and the issues appear to be straightforward, submissions were due on Friday 17th December 2010.

Submissions received

Consultation on rule 37 percentage of error determination under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 09 September 2010

This consultation paper sought submitters' views on the appropriate percentage of error for the accuracy of consumption information provided for initial allocation, to be determined by Gas Industry Co, for the consumption periods in the gas year commencing 1 October 2010.

Determinations on the percentage of error applicable for each gas year can be viewed here

Submissions received

Consultation on proposed variations to exemptions under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 30 August 2010

Submissions were invited on a proposal to vary nine existing exemptions, all of which were to expire on 30 September 2010. The exemptions related to direct connect gas gates, global 1-month UFG methodology gas gates, oversized metered gas gates, unmetered gas gates and to injection information supplied by transmission system owners. The variations sought to extend the exemptions until 30 September 2012, thereby maintaining the status quo position whilst the major policy review of the reconciliation rules was undertaken.

Submissions received

Guideline Notes for the Gas (Downstream Reconciliation) Rules 2008

Date Published: 28 July 2010

Submissions were invited on an updated draft of the Guideline note for rules 65 to 75 and 80: the commissioning and carrying out of performance audits and event audits.

This guideline note was intended to assist allocation participants in understanding the processes that was adopted by Gas Industry Co when commissioning audits in accordance with the Rules. In particular, the updated draft included a procedure for approving auditors, as well as the timetables Gas Industry Co follows for performance audits of allocation participants.

The deadline for submissions was Wednesday, 18 August 2010.

Submissions received

Consultation on exemption application DR10-02-S under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 26 April 2010

Gas Industry Co received an application from Contact Energy (Contact) for exemption from aspects of the Gas (Downstream Reconciliation) Rules 2008 ('Reconciliation Rules') in respect of the Te Rapa Cogeneration gas gate (TRC02003).

Submissions received

Consultation on Proposed Variations to Exemptions under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 26 March 2010

Submissions were invited on two issues relating to exemptions from the Gas (Downstream Reconciliation) Rules 2008. First, an urgent direct connect gas gate exemption was granted for the Hunua 3 gas gate in February 2010 where consultation was required on whether the urgent exemption should be varied, replaced or revoked. Second, it was proposed that the unmetered gas gate exemption currently in effect be varied by removing the Waverley gas gate. A gas gate meter has now been installed at Waverley and injection information is available, making the exemption redundant for this gas gate.

Submissions received

Exemption Application DR09-13-S under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 13 January 2010

Submissions were invited on an exemption application in respect of the Gas (Downstream Reconciliation) Rules 2008. The application sought to exempt the newly commissioned Kupe gas gate from certain provisions of the Rules in a similar manner to the existing direct connect gas gate exemptions.

Submissions received

Consultation on Proposed Variation to an Exemption under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 12 November 2009

Proposal to adddress the unmetered Papakura No.3 and Waverley gas gates.

Consultation Paper: Revocation/variation of exemptions under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 21 September 2009

Submissions were invited in respect of Gas Industry Co's proposal to revoke or vary certain existing exemptions, which are now redundant as a consequence of the minor amendments to the Gas (Downstream Reconciliation) Rules 2008 (in force from 2 October 2009).

Submissions received

Consultation on proposed accuracy determination under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 27 August 2009

Submissions were invited on a consultation paper relating to the accuracy percentage to be determined under rule 37 of the Gas (Downstream Reconciliation) Rules 2008.

Prior to the beginning of each gas year, Gas Industry Co must determine and publish a percentage of error for the accuracy of the consumption information for allocation groups 3 to 6 provided for initial allocation (when compared against consumption information provided for final allocation).

Submissions received

Exemption Application DR09-12-U under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 17 August 2009

Submissions were invited on an exemption application in respect of the Gas (Downstream Reconciliation) Rules 2008. The application sought to exempt Nova Gas' bypass networks from the allocation and reconciliation processes set out in the Rules.

Submissions received

Exemption Applications DR09-09-S, DR09-10-T and DR09-11-S under the Gas (Downstream Reconciliation) Rules

Date Published: 10 June 2009

Submissions were invited on a package of three exemption applications in respect of the Gas (Downstream Reconciliation) Rules 2008. The applications related to the requirements for transmissions system owners to provide gas gate injection information in accordance with rules 41 and 42.

Submissions received

Draft report on exemptions granted in respect of rules 41 and 42 of the Gas (Downstream Reconciliation) Rules 2008

Date Published: 03 April 2009

In September and November 2008, exemptions were granted exempting transmission system owners from some of the requirements of rule 41 and 42 regarding the provision of gas gate injection information. The exemptions expired on 30 April 2009 and prior to that date Gas Industry Co was required to provide a report on what actions should be taken in respect to the period from 1 May 2009 onward.

Gas Industry Co issued a draft report and consulted with allocation participants on some of the issues and possible outcomes discussed in the draft report - which can be downloaded below.

Submissions received

Exemption Applications DR09-06-T, DR09-07-T and DR09-08-T under the Gas (Downstream Reconciliation) Rules

Date Published: 03 April 2009

Author: Bas Walker, Tristan Meo and Phillip Beardmore (Strata Consulting)

Submissions were invited on a package of three exemption applications in respect of the Gas (Downstream Reconciliation) Rules 2008.

Submissions received

Application of Gas Governance Arangements to Private Networks

Date Published: 06 March 2009

The existing rules (2009) for reconciliation and switching make no distinction between open-access and private networks.

Gas Industry Co commissioned a paper by Dr Geoff Bertram to discuss how gas governance arrangements should be applied to private networks. Submissions were sought on the paper in April 2009, prior to which a workshop was held on 31 March (click here to view the presentation slides). The paper and industry participants submissions in response are set out below.

Gas Industry Co also prepared an analysis of submissions that discusses the conclusions of Dr Bertram's report and considers the responses of submitters. The analysis of submissions can be viewed at the link set out below.

Submissions received

Consultation Paper: Exemption Applications under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 22 January 2009

Author: Tristan Meo and Phillip Beardmore (Strata Consulting)

Submissions were invited on a package of five exemption applications in respect of the Gas (Downstream Reconciliation) Rules 2008.

Submissions received

Consultation Paper: Proposed Guideline Notes for the Gas (Downstream Reconciliation) Rules 2008

Date Published: 16 December 2008

Author: Bas Walker, Tristan Meo, and Phillip Beardmore (Strata Consulting)

Submissions were invited on a package of six proposed guideline notes in respect of the Gas (Downstream Reconciliation) Rules 2008.

The proposed guideline notes were developed to assist allocation participants and the allocation agent in interpreting and applying the Rules and understanding Gas Industry Co's expectations for related downstream allocation and reconciliation processes.

Submissions received

Consultation Paper: Proposed Transitional Exemption DR08-28-T under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 14 November 2008

Author: Bas Walker

Submissions were invited on a proposed transitional exemption application under the Gas (Downstream Reconciliation) Rules 2008. A consultation paper on this application can be viewed or downloaded here:

Submissions received

Consultation Paper: Three Exemption Applications under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 15 October 2008

Author: Bas Walker

Gas Industry Co received three additional exemptions under the Gas (Downstream Reconciliation) Rules 2008. This notice published and sought submissions on these exemption applications.
A consultation paper on these applications can be viewed or downloaded here:

Submissions received

Consultation Paper: Exemption Application DR08-24-U under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 30 September 2008

Author: Bas Walker

Gas Industry Co received an additional exemption application under the Gas (Downstream Reconciliation) Rules 2008 to apply the Global 1-Month UFG methodology to the Kiwitahi 2 gas gate KIW34202. This consultation paper published the exemption application, outlined some additional information and sought submissions in response.

Submissions received

Consultation Paper on Exemption Applications under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 01 September 2008

Author: Bas Walker

Introduction

Subsequent to the release of its initial exemptions consultation paper on 21 August 2008 ("Initial exemptions under the Gas (Downstream Reconciliation) Rules 2008"), Gas Industry Co received additional exemption applications under the Gas (Downstream Reconciliation) Rules 2008.
This notice published and sought submissions on those additional applications for consultation purposes. Submissions received helped to inform Gas Industry Co's consideration of the exemptions sought and ensured that all relevant factors were taken into account.
Gas Industry Co notes that the applications generally relate to issues that have already been the subject of earlier consultation, albeit in respect of different gas gates or allocation participants. As such, a relatively compressed period of consultation was allowed.

Summary of applications and links to previous applications

The applications received are summarised in the table below. The table also sets out the connection with previous applications. Those previous applications can be located in the initial exemptions consultation paper of 21 August 2008. The following submissions were received:

Applicant and application Code

Summary of exemption sought

Connection with previous applications

Nova Gas Ltd DR08-20-S

Exemption from application of the allocation and reconciliation provisions of the Rules for five single retailer (bypass) gas gates/one direct consumer gas gate

See previous applications on this issue from Genesis Energy DR08-06-S, Contact Energy DR08-06-S, On Gas DR08-10-S and Mighty River Power DR08-11-S

Nova Gas Ltd DR08-21-S

Exemption of five single retailer (bypass) gas gates/one direct consumer gas gate from the allocation of ongoing fees

See previous applications on this issue from Genesis Energy DR08-07-U, Contact Energy DR08-08-U, On Gas DR08-09-U and Mighty River Power DR08-12-U.

Powerco Ltd DR08-22-S

Exemption of the unmetered Matapu and Pungarehu No. 2 gas gates from the requirement for accurate metering

See the previous Gas Industry Co proposed exemption DR08014-T on this issue

Bay of Plenty Energy DR08-23-T

Exemption from applying seasonal daily shape values for a specified period of time.

See previous application from Nova Gas DR08-03-T on this issue.

Submissions received

Consultation Paper on the Initial Package of Exemption Applications under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 21 August 2008

Author: Bas Walker and Tristan Meo

The Gas (Downstream Reconciliation) Rules 2008 went into full operation (go-live) on 1 October 2008. These Rules provide for participants or the allocation agent to apply for exemptions from the rules, and these applications can be standard, urgent or transitional.
Exemption applications were invited in late July so that they could be processed before go-live. Including two transitional applications from Gas Industry Co itself, a total of 18 applications were received. It was decided to consult participants on all of these applications, so that we could be sure that the interests of all participants would be appropriately recognised and taken into account. Exemption applications also formed a very useful part of the information-sharing process leading up to go-live.
The consultation paper can be viewed or downloaded form here:

Submissions received

Consultation Paper: Proposed Determinations and Other Matters under the Gas (Downstream Reconciliation) Rules 2008 - Second submissions

Date Published: 13 June 2008

The consultation paper on Proposed Determinations and Other Matters under the Gas (Downstream Reconciliation) Rules 2008 covered two groups of matters, and there was two different closing date for submissions. The submissions with the closing date of 11 July 2008 can be viewed or downloaded form here:

Submissions received

Consultation Paper: Proposed Determinations and Other Matters under the Gas (Downstream Reconciliation) Rules 2008

Date Published: 13 June 2008

Author: Bas Walker and Lucy Elwood

A consultation paper on proposed determinations and other matters under the Gas (Downstream Reconciliation) Rules 2008 was released by Gas Industry Co on 13 June 2008. Submissions were sought from interested parties. The consultation paper covered two groups of matters, and there was a different closing date for submissions for the two groups, as follows:

  • with a closing date of Friday 27 June 2008, proposed information exchange file formats
  • with a closing date of Friday 11 July 2008, proposed information requirements from transmission system owners, proposed percentage of accuracy, proposed groupings of gas gates, additional information exchanges, provision of reports and information by the allocation agent to allocation participants, notifications to the allocation agent, and issues around gas measurement systems and the definition of gas gate.

Consultation was formally limited to prospective allocation participants, rather than more widely. However, the consultation paper was published on the Gas Industry Co website for general information.

Submissions received

Discussion Paper - Reconciliation of Downstream Gas Quantities

Date Published: 11 January 2007

Author: Lucy Elwood

This discussion paper builds on the feedback received from stakeholders on a previous reconciliation discussion paper released in June 2006. It focuses on downstream reconciliation and details Gas Industry Co's preferred approach for addressing areas where current downstream reconciliation practices are failing to deliver Government's policy aims or appropriately meet industry's requirements. The preferred approach could potentially be implemented under either a pan-industry agreement or a regulatory arrangement. The analysis suggests that a regulatory arrangement is most appropriate, but Gas Industry Co intends to perform a cost-benefit analysis and consider further feedback from stakeholders before ruling out a pan-industry agreement. Attached to the discussion paper as Appendix D is a high-level summary of the possible structure of a regulatory arrangement and attached as Appendix E is a framework cost-benefit analysis paper prepared by NZIER.

Submissions received

Options Paper: Options for Amending Allocation and Reconciliation Arrangements

Date Published: 27 June 2006

This consultation paper describes the allocation and reconciliation arrangements (2006) in the gas industry and reviewed options for developing these.

Submissions received

Working Group

Downstream Reconciliation Advisory Group

The Downstream Reconciliation Advisory Group (DRAG), comprising members appointed for their expertise in reconciliation and allocation processes, assisted Gas Industry Co in reviewing the Gas (Downstream Reconciliation) Rules 2008 ('the Rules'). The DRAG members were as follows:
  • Anna Carrick (nominated by Vector Limited)
  • Rod Crone (nominated by Contact Energy)
  • Andrew Maseyk (nominated by Genesis Energy)
  • Jim Raybould (nominated by Mighty River Power)
  • Katherine Shufflebotham (nominated by Vector Limited)
  • Martha Tjan (nominated by Powerco)
The review began with the publishing of the Downstream Reconciliation Options Paper ('Options Paper') which outlined options for different issues that have been identified with the Rules by Gas Industry Co or industry participants.
The DRAG Terms of Reference can be viewed here:
Meetings
#
Meeting Date
Meeting material
1
Friday 30 March 2012
2 Thursday 12 April 2012

12 April DRAG Meeting material

Minutes

3 Friday 27 April 2012

27 April DRAG Meeting material

Minutes

4 Thursday 31 May 2012

31 May DRAG Meeting Material

Minutes

5 Tuesday 26 June 2012 No DRAG meeting. Meeting replaced with RGGF
6 Thursday 13 September 2012

13 September DRAG Meeting material

Minutes

The DRAG process led to the publishing of a Statement of Proposal in June 2012 and finally a Recommendation to the Minister in December 2012.

Statement of Proposal

Previously Consulted On

Statement of Proposal: Downstream Reconciliation Rules Review

Date Published: 26 July 2012

Following publication of the Downstream Reconciliation Options Paper in December 2011 and based on the submissions received on the Options Paper, Gas Industry Co decided to split the Options Paper issues into two separate Statements of Proposal. This Statement of Proposal has been prepared with input from the Downstream Reconciliation Advisory Group.

Submissions received

Statement of Proposal: Minor Amendments to the Gas (Downstream Reconciliation) Rules 2008

Date Published: 29 June 2009

Since the Gas (Downstream Reconciliation) Rules 2008 (the "Rules") took full effect on 1 October 2008, a number of minor and technical changes to the rules were identified that would improve their operation and, in some instances, reduce the need for exemptions.

For consultation, Gas Industry Co developed a statement of proposal proposing amendments to the Rules which are considered of a minor and technical nature.

Submissions received

Updated Proposal: Downstream Reconciliation and Allocation

Date Published: 29 June 2009

Date published: 20 December 2008 Author: Bas Walker, Tristan Meo and Lucy Elwood (Elwood Consulting)

Following consultation on a Statement of Proposal containing proposed rules for downstream reconciliation and allocation, an Updated Proposal was prepared by Gas Industry Co.

Statement of Proposal - Allocation and Reconciliation of Downstream Gas Quantities

Date Published: 29 June 2009

Date Published: 4 September 2007 Author: Mark Soper and Nicole MacFarlane

Efficient arrangements for the accurate allocation and reconciliation of gas quantities are a key component of an efficient gas market. In response to:

  • the Government's desire in the 2004 Government Policy Statement on Gas Governance for, amongst other things, the development of protocols and standards applying to balancing and reconciliation; and
  • requests by industry participants;

Gas Industry Co developed a proposal to recommend to the Minister of Energy rules for allocation and reconciliation of downstream gas quantities

Submissions received

Recommendation

Recommendation to the Minister of Energy and Resources on Review of the Gas (Downstream Reconciliation) Rules 2008

Date Published: 28 January 2013

Since the Gas (Downstream Reconciliation) Rules 2008 (the "Rules") took full effect on 1 October 2008, a number of issues were identified which created some unnecessary compliance burdens and inefficiencies. Gas Industry Co commenced a review of the Rules, starting with an Options Paper published in December 2011, which aimed to reduce those inefficiencies. The Recommendation below is the culmination of that review which benefitted from the input of an industry group - the Downstream Reconciliation Advisory Group.

The Minister Gazetted the amended Rules on 21 February 2013. The new rules are now in effect (as from 1 June 2013). The marked-up Rules and a clean version of the Rules are available under the Market Administration tab.

Recommendation to Minister: Downstream Reconciliation Rules Review 2012

Recommendation to the Minister of Energy on minor amendments to the Gas (Downstream Reconciliation) Rules 2008

Date Published: 31 July 2009 Author: Ian Dempster and Tristan Meo

Since the Gas (Downstream Reconciliation) Rules 2008 (the "Rules") took full effect on 1 October 2008, a number of minor and technical changes to the rules were identified that would improve their operation and, in some instances, reduce the need for exemptions. The purpose of this recommendation is to recommend a number of rule changes to enhance the operation and efficiency of the allocation and reconciliation of downstream gas quantities. The changes are all minor and non-controversial and, therefore, have been dealt with in accordance with the simplified approach for amendments of this nature, as provided for by the Gas Act 1992.

The text of this recommendation is available at the link below, and a separate document of the recommended marked-up amendment to the Rules is also provided:

Recommendation to the Minister of Energy on minor amendments to the Gas (Downstream Reconciliation) Rules 2008

Recommended amendments to the Gas (Downstream Reconciliation) Rules 2008 in track-change format

Recommendation to the Minister of Energy on Arrangements for the Allocation and Reconciliation of Downstream Gas Quantities

Date Published: 12 March 2008 Author: Bas Walker, Tristan Meo and Lucy Elwood

Gas Industry Co recommended the making of rules to improve the allocation and reconciliation of downstream gas quantities (the 'Rules').

Gas Industry Co identified a number of problems with the design of the existing downstream reconciliation arrangements, including especially a lack of specificity in the arrangements, a lack of proper governance and no workable means of enforcing compliance. Improved arrangements, in the form of rules to be approved under the Gas Act, were developed over the period since 2006 through the operation of an industry group (GART), and the release of two discussion papers, a Statement of Proposal, an Updated Proposal and a further Industry Workshop. Through these mechanisms the issues have been extensively canvassed with the industry. In particular, improved downstream allocation and reconciliation arrangements ensure that UFG is more equitably allocated to retailers, thereby enhancing the competitiveness of the retail market. Improved arrangements also benefit consumers through a reduction in industry participants' operational costs and an increase in the potential for retail competition leading to greater productive, allocative and dynamic efficiency.

Recommendation to the Minister of Energy on Arrangements for the Allocation and Reconciliation of Downstream Gas Quantities

Recommendation to the Minister of Energy on Downstream Reconciliation Amendments to Gas Compliance Regulations

Date Published: 12 March 2008 Author: Tristan Meo

On 12 March 2008, Gas Industry Co made a recommendation to the Minister of Energy for amendments to the Gas Governance (Compliance) Regulations 2008 for compliance with, and enforcement of, the rules relating to the allocation and reconciliation of downstream gas quantities. Text of this recommendation, including the assessment under section 43N of the Act, is available below.

Recommendation to the Minister of Energy on Amendment to Gas Compliance Regulations

Market Administration

Gas (Downstream Reconciliation) Rules 2008

The Gas (Downstream Reconciliation) Rules 2008 (the Rules) came into effect on 1 October 2008. The purpose of the Rules is to establish a set of uniform processes that will enable the fair, efficient, and reliable downstream allocation and reconciliation of downstream gas quantities. The Rules are available by clicking the link below

Gas (Downstream Reconciliation) Rules 2008.

The Rules were amended on 1 June 2013 in accordance with Phase 1 of the review discussed below; a summary of the most significant changes is available here.

Framework of the Gas (Downstream Reconciliation) Rules 2008

The Rules provide for:

  • The appointment of an Allocation Agent;

  • Processes for the:

    • provision of gas injection and consumption information;
    • allocation by the allocation agent of daily gas quantities for each calendar month to retailers at gas gates;
    • reconciliation of downstream gas quantities;
  • Mandatory information disclosure and reporting by the allocation agent, allocation participants, and the industry body; and

  • Ancillary matters related to the process of allocation and reconciliation such as funding by industry participants, exemptions, approval and registration of deemed profiles for gas consumption information, and the performance of audits.

Data on monthly allocation results may be downloaded from the allocation agent website.

Allocation Agent

Following the completion of the initial five year term of the service provider agreement, Gas Industry Co carried out a competitive tender process for the role. On 4 October 2013, an agreement was reached with EMS (Energy Market Services, a business unit of Transpower NZ Limited) to take over the appointment as Allocation Agent. This appointment took effect on January 2014, after a transition process from NZX to EMS.

EMS selected as Allocation Agent (Press Release) - 7 October 2013

Rule 8 of the Rules requires that Gas Industry Co publish the allocation agent service provider agreement. Accordingly, copies of the service provider agreement documents are available by clicking on the links below.

Allocation Agent Service Provider Agreement:

The Allocation Agent Functional Specification details the requirements of the system to be developed and operated by the allocation agent for the downstream reconciliation and allocation of gas. A copy of the Allocation Agent Functional Specification can be viewed below. Please note that the functional specification may be subject to change via the change request process.

Allocation Agent Functional Specification

Review of the Gas (Dowstream Reconciliation) Rules 2008

In December 2012, Gas Industry Co recommended to the Minister of Energy and Resources a number of changes to the Rules that were the culmination of a review which began with the publishing of the Downstream Reconciliation Options Paper in December 2011. An advisory group was established for the review and all relevant meeting papers are available on Gas Industry Co's website. The rule amendments were gazetted by the Minister on 28 February 2013 and were effective from 1 June 2013.

Copies of the amended Rules are available by clicking the links below:

A summary of the most significant changes is available here.

Minor amendments to the Gas (Downstream Reconciliation) Rules 2008

On 31 July 2009, Gas Industry Co recommended to the Minister a number of minor technical rule changes to enhance the operation and efficiency of the allocation and reconciliation of downstream gas quantities. The amendments sought to enhance the operation of the Rules and, in some instances, reduce the need for exemptions. The rule amendments were gazetted by the Minister on 3 September 2009 and came into force on 2 October 2009.

Copies of the amended Rules (in clean and track change formats) and the Rules that applied prior to 2 October 2009 are available by clicking on the links below:

Reports from the allocation agent and auditors

Allocation agent reports

Rules 12 and 13 require that the allocation agent conduct a monthly self-review on its performance and provide a written report to Gas Industry Co on the results of this review. In addition to details of the allocation agent's compliance with the rules and terms of the service provider agreement, the report must also contain details of any area where an amendment to the rules may need to be considered and any other matter that Gas Industry Co reasonably requests. Gas Industry Co is required under rule 13.3 to publish the allocation agent reports, which are available by clicking on the links below.

January 2014 January 2013 January 2012 January 2011 January 2010 January 2009
February 2014 February 2013 February 2012 February 2011 February 2010 February 2009
March 2014 March 2013 March 2012 March 2011 March 2010 March 2009
April 2014 April 2013 April 2012 April 2011 April 2010 April 2009
May 2014 May 2013 May 2012 May 2011 May 2010 May 2009
June 2014 June 2013 June 2012 June 2011 June 2010 June 2009
July 2014 July 2013 July 2012 July 2011 July 2010 July 2009
August 2014 August 2013 August 2012 August 2011 August 2010 August 2009
September 2013 September 2012 September 2011 September 2010 September 2009
October 2013 October 2012 October 2011 October 2010 October 2009
November 2013 November 2012 November 2011 November 2010 November 2009
December 2013 December 2012 December 2011 December 2010 December 2009

Audit reports

Gas Industry Co commissions event audits and performance audits of compliance with the Rules. Under rule 73, Gas Industry Co must publish all final audit reports.

The reports published below have been commissioned under the provisions of the Rules. As required by rule 68, the auditors appointed for these audits are independent of Gas Industry Co. These reports represent the work of the individual auditors. Any conclusions reached, or opinions expressed, in the final audit reports are solely the auditors' and do not necessarily reflect the views of Gas Industry Co.

Event audits

The purpose of event audits is to ascertain the cause or causes of any particular issue or event that has arisen in relation to the allocation of gas under the Rules.

Palmerston North Event Audit May 2011

Greater Hamilton Event Audit March 2011

Event audit for Greater Auckland gas gate covering consumption periods May-June 2009

Event audit for Tawa A gas gate covering consumption periods May-June 2009

Performance audits

Under rule 65, Gas Industry Co is required to commission performance audits of the allocation agent and allocation participants at regular intervals. These audits examine retailers' compliance with requirements in the Rules such as receiving and storing meter readings, converting meter readings to energy usage, and submitting accurate information to the allocation agent. Performance audits are also required in advance of major system changes.

The terms of reference for the performance audits can be viewed here (for audits prior to 2013) and here (for audits since 2013).

OnGas Performance Audit Final Report June 2014

Contact Energy Major Change Audit Report May 2014 (terms of reference)

Allocation Agent Audit Final Report February 2012

Energy Online Performance Audit Final Report August 2011

Greymouth Gas Performance Audit Final Report July 2011

Nova Energy Performance Audit Final Report July 2011

Energy Direct Performance Audit Final Report July 2011

OnGas Performance Audit Final Report June 2011

Mighty River Power Performance Audit Final Report April 2011

Genesis Energy Performance Audit Final Report April 2011

Contact Energy Performance Audit Final Report September 2010

EGAS and EGLT Performance Audit - Final Version August 2010

Allocation Participant Register

Under the Gas (Downstream Reconciliation) Rules 2008, allocation participants are retailers, distributor, meter owners or transmission system owners under the Rules. Gas Industry Co has established an Allocation Participant Register for recording the contact details of all allocation participants. The Allocation Participant Register can be viewed at the link below:

Allocation Participant Register

Although the Register has no formal status under the Rules, it is used by both Gas Industry Co and the allocation agent for the issuing of formal notifications, providing material for allocation participant consultation and notifying determinations made under the Rules. It is important that the allocation participant register is complete and up to date, and all interested parties are expected to maintain the register and provide a new or replacement notification if appropriate. Any company that considers itself to be an allocation participant is invited to notify Gas Industry Co accordingly using the notification form, which can be downloaded from the following page:

Notification of Participant Details for Gas Allocation and Registry Participants

Gas Gates

The following document provides a list of all gas gates. The list was last updated on 10 October 2013 and corresponds to the gas gate list used by the allocation agent and the list available for download from the gas registry. Any changes to the gas gate list should be made via the Gas Gate Change Notice form which can be viewed here.

Gas gate list as at 8 September 2014

Annual UFG Factors

Rule 46 requires that for each gas year the allocation agent determine and publish the annual UFG (AUFG) factor for each gas gate, based on the ratio of aggregated injection and consumption information from the 12 months up to and including February of the previous gas year. For the transitional period ending on 30 September 2010, special provisions applied as detailed in rule 79, including a cap and floor on the maximum and minimum values for the AUFG (1.035 and 0.985 respectively). AUFG factors for each gas gate and each gas year where the Rules have been in operation can be accessed by clicking on the links below.

AUFG factors for 2014/15 gas year

AUFG factors for all years (2008/09 to 2014/15)

Determinations

File Formats

The Rules provide for the industry body (Gas Industry Co) to give notice to allocation participants specifying one or more information exchange file formats (File Formats) that allocation participants must provide information to the allocation agent in.

Reconciliation File Formats Notice v1.2 dated 3 November 2008

Other determinations

The Rules provide for the industry body (Gas Industry Co) to determine and publish certain matters required for the operation of the downstream allocation and reconciliation framework. Notice of these determinations, and the analysis of submissions received through consultation on these determinations, is available by clicking on the links below:

Reconciliation Determinations v2.4 dated 8 September 2014

Pursuant to rules 37.3 and 37.4, Gas Industry Co determines that the percentage of error for the accuracy of the consumption information provided for initial allocation to be applied to the consumption periods:

(a) in the gas year commencing 1 October 2008 is ±15%; and

(b) in the gas year commencing 1 October 2009 is ±12.5%; and

(c) in all subsequent gas years up to 1 October 2014 is ±10%

Archived determinations

Previous determinations and analysis of submissions received through consultation on these determinations can be viewed here

Guideline notes

Gas Industry Co has developed the following guideline notes to assist allocation participants and the allocation agent in interpreting and applying the Gas (Downstream Reconciliation) Rules 2008 ("the Rules"):

Market Administrator guideline notes

The Market Administrator has issued the following guideline notes to show how it will apply the factors to be taken into account when determining the materiality of breaches under the Gas Governance (Compliance) Regulations 2008

Archived guideline notes:

Exemptions

The Gas (Downstream Reconciliation) Rules 2008 provide that the industry body (Gas Industry Co) may, where appropriate, exempt an allocation participant(s), the allocation agent or a gas gate from complying with all or any provisions of the Rules. Exemption applications may be either standard (under rule 19) or urgent (under rule 20).

A general information paper on the exemptions process and criteria has been issued by Gas Industry Co and can be viewed or downloaded by clicking the link below.

Information Paper - Dealing with Exemptions under the Downstream Reconciliation and Switching Rules

The table below sets out exemption applications received, the status of those applications and gives notice of any exemptions granted by Gas Industry Co. The status descriptions are as follows:

  • Pending - application received and under consideration (including any required consultation)
  • Granted - an exemption (partial or full) has been granted in respect of the application
  • Declined - application has been declined
Application Status Notice
DR10-04 Gas Industry Co Granted Exemption (DR10-04-S: Global 1-Month UFG Methodology) Notice 2013
DR13-01 Allocation Agent Granted Exemption (DR13-01-S: Calculation of SADSV) Notice 2013

Applying for an exemption

The form for an exemption application is set out at the link below. Gas Industry Co recommends that you follow the format to ensure that all the necessary information is provided and to avoid delays caused by an incomplete application.

Exemption Application Form

Your application can be made by email to Gas Industry Co at: info[at]gasindustry.co[dot]nz. A hard copy of your application should also be forwarded.

Previous exemptions

Exemption applications received, and notices granted, between September 2008 and September 2010 can be viewed here

Archived exemption applications

Ongoing Allocation Costs

Rules 15 to 18 of the Reconciliation Rules provide for ongoing fees to be paid by allocation participants to Gas Industry Co on a monthly basis to meet the ongoing allocation costs. The ongoing allocation costs include the costs:

  • payable by Gas Industry Co to the allocation agent for the services provided under Parts 1, 2 and 5 of the Reconciliation Rules in respect of that gas year; and
  • of Gas Industry Co associated with allocation and its role under the Reconciliation Rules during that gas year.

Gas Industry Co has determined that its costs should exclude overhead costs and policy work resulting from operational activities under the Reconciliation Rules.

Estimated ongoing costs for FY2015 (1 July 2014 to 30 June 2015)

The estimated costs for the financial year commencing 1 July 2014 are provided below.

Cost categories Estimated annual cost
Service provider base fee $515,000
External advice $75,000
Total ongoing costs $590,000

Estimated ongoing costs for the part year 1 October 2013 to 30 June 2014

The estimated costs for the gas year commencing 1 October 2013 are provided below. Due to a change in payment year from gas year to financial year, this (part) year comprises nine months only, ending on 30 June 2014.

Cost categories Estimated annual cost Estimated part-year cost
Service provider base fee $680,000 $510,000
External advice $20,000 $15,000
Total ongoing costs $700,000 $525,000

Ongoing costs for the 2012/13 gas year

The estimated costs for the gas year commencing 1 October 2012 include an allowance for modifying the allocation system in line with the rule changes discussed in the 2012 Statement of Proposal. The estimated and actual costs are provided below.

Cost categories Estimated Actual
Service provider base fee $680,000 $683,325
External advice $20,000 $62,505
System modifications $200,000 $139,126
Total ongoing costs $900,000 $884,956
Recovered $866,665
Under-recovered $18,291

Previous Ongoing Costs

Can be viewed here