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Gas Transmission Security and Reliablity Issues Paper - April 2016

The Submissions Analysis on the Gas Transmission Security and Reliability Issues Paper (Submissions Analysis Paper) was released in April 2016.

Against a background of increasing stakeholder concerns about the security and reliability (S&R) of gas transmission, Gas Industry Co had published an Issues Paper in April 2016. The eight submissions received can be found below.

Submissions tended to support the analysis of the Issues Paper, which could indicate an acceptance that S&R is generally headed in the right direction, assisted by information disclosed under the Commerce Commission’s price-quality determinations. The First Gas submission noted its willingness to discuss the issues raised in the paper, and to look for further improvement.

Accordingly, the Submissions Analysis Paper restates the conclusions and suggested action points of the Issues Paper, with a few additions to reflect submitter suggestions.  Given the constructive submission from First Gas, Gas Industry Co believes the best contribution it can make towards S&R improvements at this stage is to keep monitoring and reporting the industry’s progress on those actions.

The Submissions Analysis Paper, the Issues Paper, and workshop presentations by Gas Industry Co, Maui Development Limited and the Commerce Commission can be found below.

 

BACKGROUND

Consumers seek a secure and reliable gas supply at a reasonable cost. All links in the physical supply chain contribute to this, and a recent study has found that the New Zealand gas supply system ‘has a high degree of resilience and existing industry operating standards and market structures pose no undue threat to security of supply’.

It is more than four years since the last significant interruption to transmission services (the October 2011 interruption to the Maui Pipeline). The S&R of transmission pipelines is a matter of importance to gas users, given that transmission outages have the potential to cause significant supply interruptions.  The 2011 event caused pipeline owners and operators to re-assess risks, increase monitoring, and invest in additional preventative maintenance at high risk sites.

In earlier years, information about transmission S&R has generally been private to the Gas Transmission Businesses (GTBs), and the arrangements supporting S&R were not generally well known or understood. Recent legislative changes, including the introduction of a price-quality regime and associated information disclosure requirements under the Commerce Act, have changed this. In particular, the publication by GTBs of their Asset Management Plans (AMPs) has greatly improved transparency. However, Information about S&R on the transmission pipelines, and arrangements influencing S&R can be difficult to bring together and interpret. Accordingly,  stakeholder concerns remain, so it is timely to review the new landscape.

The Issues Paper focuses on security and reliability (S&R). It: 

  • introduces key gas transmission S&R concepts;
  • reviews available security and reliability information for each transmission system, and makes some observations;
  • discusses current commercial and regulatory arrangements for gas transmission that support S&R;
  • analyses what is required to achieve effective gas transmission S&R, and considers whether all of those elements are present in current New Zealand arrangements; and
  • draws some conclusions from the preceding analysis, makes recommendations, and sets out next steps.
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Level 8, The Todd Building
95 Customhouse Quay
PO Box 10-646
Wellington 6143

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