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Background

Balancing arrangements have been under review since the inception of the Maui Pipeline Operating Code in 2005. Transmission Pipeline Balancing has been the subject of extensive industry discussion since then and some improved arrangements have been introduced. Key features of the evolution of balancing arrangements are:

In 2007, Vector introduced the Vector Transmission Code (VTC) containing balancing and peaking pool (BPP) arrangements designed to pass Maui pipeline balancing costs through to Vector shippers.

In 2008 the transitional “legacy gas” provisions of the Maui Pipeline Operating Code (MPOC) were removed, exposing pipeline users to more cost-reflective balancing charges.

In 2009, Gas Industry Co led a comprehensive and concentrated industry initiative known as the Industry Code Development (ICD) process which ultimately failed to agree on how to reform the MPOC and VTC. As a result, also in 2009, Gas Industry Co proposed to introduce regulations to achieve a unified balancing regime over both the Maui and Vector pipelines. However, after consulting with the Ministry of Economic Development, Gas Industry Co agreed to an industry request to defer that regulatory proposal to give opportunity for the industry to develop a code-based option. On 17 December 2009, MDL submitted an MPOC change request which proposed extensive revisions to the MPOC including balancing improvements. MDL also introduced a Balancing Gas Exchange (BGX) – an online platform to facilitate the trading of balancing gas on the Maui pipeline.

Between 2009 and 2014, MDL refined its balancing proposal through a number of MPOC change requests. Vector also made provisional changes to the VTC to allow the proposal to be effected. However, the proposal was never implemented.

A fuller explanation of these early developments can be found below.

In 2014, MDL changed tack and introduced a new balancing proposal, based on a concept it termed Market Based Balancing (MBB). MDL set out the rationale for this change in its 10 October 2014 Market Based Balancing Change Request (MBBCR). The MBBCR was supported by Gas Industry Co and the changes came into effect on 1 October 2015.

Gas Industry Co will review the effectiveness of MBB after a year of operation.

Page last saved: December 20, 2016
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PO Box 10-646
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