Transmission Pipeline Capacity

Overview

Status: In Progress
Introduction
In recent years various aspects of pipeline capacity have caused concern. In Gas Industry Co's 2006 Transmission Access Issues Review paper we identified access to short-term capacity on the Vector pipeline as an issue. More recently, in 2009, the capacity constraint in Vector's North Pipeline has caught some pipeline users by surprise. It now seems unlikely that additional capacity will be available on the North Pipeline until system reinforcement is built. Since the North Pipeline supplies a wide range of residential, commercial, industrial and power generation customers in and around Hamilton, Auckland, and Whangarei, this could be a constraint to gas market growth in these areas.
Summary of Status: Short- term
Certain features of the commercial arrangements between Vector and it's shippers have reduced retail competition on the constrained pipeline. End users wishing to obtain bids for their gas supply find it is often only the incumbent supplier who can make an unconditional offer. Other retailers must make offers 'subject to the availability of transmission capacity'. This issue has been of great concern to Gas Industry Co.

The Bridge Commitments

Key members of the gas industry have put in place a package of measures to address the short-term issues large end users on the constrained North Pipeline are facing. Gas Industry Co assessed this package known as 'the Bridge Commitments' and considers that they should help ensure existing large end users on the constrained North Pipeline have an effective choice of supplier in the short term.
For more information on the Bridge Commitments and to view Gas Industry Co's assessment, please see the 'The Bridge Commitments' under the 'Short-term' tab.

Summary of Status: Long-term
Gas Transmission Investment Programme
Gas Industry Co has consulted on a project proposal for the Gas Transmission Investment Programme aimed at addressing issues with pipeline access and investment.
To view the proposal and industry submissions, please visit the 'Long-term' tab.

Short- term

Workshops

Retail Competition Workshop - April 2011

Some submissions on Gas Industry Co's November 2010 Retail Competition and Transmission Capacity: Statement of Proposal expressed a strong preference for a non-regulated approach to improving competition in the retail market supplied by Vector's North Pipeline.

On 14 April Gas Industry Co held a workshop to explore ways to improve competition without regulation.

Background material:

Retail Competition and Transmission Capacity Statement of Proposal: Submissions Analysis and Next Steps

Draft Gas Governance (Constrained Transmission Pipeline) Rules

Agenda:

Agenda for 14 April Retail Competition Workshop

Workshop presentations:

Gas Industry Co presentation

Creative Energy presentation

Feedback following the Workshop:

Mighty River Power

Capacity Workshop - September 2010

On 15 September 2010 Gas Industry Co held a workshop with a small group of participants to consider design options for addressing the current competition issue.

The agenda and presentation slides from the workshop are available below

15 September Vector Capacity Workshop Agenda

Gas Industry Co Introductory Presentation

Creative Energy Presentation on Evaluation Objectives and Options

Gas Industry Co Presentation on Next Steps

Note on Capacity Meeting and additional Gas Industry Co Work

Capacity Questions for participants

Gas Industry Co invited feedback on several questions regarding several points discussed at the workshop. The questions and a summary of the responses to those questions are available below:

Capacity questions for participants

Summary of participants responses to Gas Industry Co questions

Consultation

Retail Competition and Transmission Capacity Statement of Proposal: Submissions Analysis and Next Steps

In this paper Gas Industry Co presented an analysis of submissions on the Retail Competition and Transmission Capacity Statement of Proposal released for consultation in November 2010.

This paper presented further analysis of the extent of the reduction in competition and the associated economic costs. Submitters on the Statement of Proposal thought these were matters requiring more evidence and we therefore obtained an independent assessment of them. This assessment was completed by Covec Limited and is included in Appendix A of the paper.

Retail Competition and Transmission Capacity: Statement of Proposal

Date Published: 12 November 2010

In the paper Retail Competition and Transmission Capacity: Statement of Proposal, Gas Industry Co proposed introducing the Gas Governance (Constrained Transmission Pipeline) Rules.

The Rules are Gas Industry Co's preferred option for ensuring there are no unintended effects on competition arising from a TSO's commercial arrangements for transporting gas on constrained transmission pipeline.

The Bridge Commitments

The Bridge Commitments are a series of commitments made by the majority of shippers aimed at addressing short term concerns about competition on the North Pipeline. They have been in place since August 2011

Following the April 2011 Retail Competition workshop, key members of the gas industry put in place a package of measures to address the short-term issues large end users on the constrained North Pipeline were facing. The 'Bridge Commitments' comprise seven commitments. Notably each signatory supplier agreed that, where it supplies an end user, and that end user tenders its gas supply, it will make pipeline capacity available to competing suppliers.

Gas Industry Co assessed the Bridge Commitments and considered that they should:

  • ensure existing large end users on the constrained North Pipeline have an effective choice of supplier in the short term;
  • help to facilitate development of longer term access arrangements and investment; and
  • materially change the market.
  • As a result of these conclusions, Gas Industry Co determined that intervention by way of Rules was not justified at this time.

Gas Industry Co will continuously monitor the effectiveness of the Bridge Commitments and update industry if anything occurs that may change its assessment.

In the mean time Gas Industry Co continues to work with the industry on the Gas Transmission Investment Programme. For more information on this work please refer to the 'Long-term' tab.

A detailed assessment of the Bridge Commitments in the context of short-term capacity work, issued in August 2011, can be viewed here:

Update on the Retail Competition and Transmission Capacity Workstream

Gas Industry Co's news release on this work can be viewed here: News release

Vector Update

In September 2011, Vector Limited sent a letter to Shippers updating them on progress made under the Bridge Commitments.

A copy of the letter can be viewed here: Vector letter to Shippers

Gas Industry Co Progress Report

Gas Industry Co's progress reports on the Bridge Commitments is available below

Bridge Commitments: Progress Report December 2013

Bridge Commitments: Progress Report September 2013

Bridge Commitments: Progress Report June 2013

Bridge Commitments: Progress Report March 2013

Bridge Commitments: Progress Report December 2012

Bridge Commitments: Progress Report September 2012

Bridge Commitments: Progress Report June 2012

Bridge Commitments: Progress Report May 2012

Bridge Commitments: Progress Report Feb 2012

Workshops

Workshops

Proposed Gas Transmission Investment Project

Following the 14 April workshop Gas Industry Co developed a proposal for a Gas Transmission Investment Project.

Proposed Gas Transmission Investment Project

Feedback on the proposal

Carter Holt Harvey

Commerce Commission

Contact Energy

Greymouth Gas New Zealand

Maui Development Limited

Major Gas Users Group

Mighty River Power Limited

New Zealand Refining Company Ltd

OI Glass

Shell Exploration New Zealand

Vector

Investment and Access Workshop

Individual industry participants say that the need for new investment is a significant issue for the industry, possibly even the most pressing and important issue. Yet there is no forum in which key stakeholders are frankly discussing the issue.

On April 14, Gas Industry Co held a workshop to consider whether, how and when investment in additional North Pipeline capacity should occur, and what associated commercial access arrangements should be.

Background Material for the workshop:

Investment and Access Workshop Note

Agenda:

Agenda for 14 April Investment and Access Workshop

Workhop presentations:

Gas Industry Co presentation

Creative Energy presentation

Transpower presentation

Capacity Workshop- August 2010

Gas Industry Co held a workshop on capacity on Wednesday 18 August 2010. The presentation slides from the workshop are available below.

Gas Industry Co capacity presentation

Analysis of Submissions on Options for Vector Transmission Capacity Paper

Short term Options for Vector Capacity Arrangements

Vector's Transmission Capacity Regime Options

Notes on Vectors Transmission Capacity Regime Options

Capacity Workshop- June 2010

Gas Industry Co held a workshop on the Capacity Options paper on Wednesday 9 June 2010. To view the workshop presentation slides, please click here.

Consultation

Options for Vector Transmission Capacity

Date Published: 27 May 2010

Date Published: Thu, 27/05/2010- 15:53 Author Ian Wilson

In December 2009, the Associate Minister of Energy and Resources requested that Gas Industry Co complete a paper exploring transmission capacity issues and options. The Options for Vector Transmission Capacity paper considers Vector's options for changing its commercial arrangements for transporting gas on its transmission pipelines.

Submissions received

Capacity Information

Capacity Information

2010-11 Queue for Reserved Capacity: North Pipeline

Request Day

Receipt Point

Delivery Point

Capacity Requested GJ/Day

19 Oct 2010 Rotowaro Wellsford 1
19 Oct 2010 Rotowaro Greater Auckland 274
4 Apr 2011 Rotowaro Greater Auckland 308
31 May 2011 Rotowaro Greater Auckland 835
24 Jun 2011 Rotowaro Greater Auckland 210
24 Jun 2011 Rotowaro Whangarei 3
Total 1631