Market Administration
Go-Live Date
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 come into force. The text of this notice is available by clicking on the link below.
Extract from the New Zealand Gazette
The presentation below was 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.
Regulations
The Gas Governance (Critical Contingency Management) Regulations 2008 (the Regulations) were 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:
- The appointment of:
- a critical contingency operator (CCO);
- an expert adviser; and
- an industry expert;
- Funding of fees to cover the critical contingency development and ongoing costs;
- The establishment of a critical contingency website;
- Processes for:
- the preparation, review, approval, publication and testing of critical contingency management plans (CCMPs) for each transmission system;
- the preparation and publication of a communications plan and information guide; and
- the declaration and termination of a critical contingency by the CCO, and the curtailment and restoration of gas consumption during a critical contingency;
- The obligations of certain parties before, during and after a critical contingency; and
- A methodology for the calculation of contingency imbalances and the determination of a critical contingency price.
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 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.
Expert Adviser
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.
The terms and conditions of the appointment are available by clicking on the link below:
Expert Adviser appointment - 27 January 2009
Industry Expert
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.
Determinations
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:
Critical Contingency Management Determinations v1.0
Contingency Modelling - Interdependency of Gas and Electricity
Date Published: May/June 2008
Authors: Vector/Contact
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.
Vector gas modelling
Covering Letter
Contingency Modelling
Contact electricity modelling
Covering Letter
Contingency Modelling
Critical Contingency Operator
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.
Transmission System Map
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 accessed by clicking on the link
below.
Draft CCMPs
Before submitting a 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 CCMP to the industry body to be published on their website.
Gas Industry Co has received draft CCMPs from Maui Development Ltd and Vector Gas Transmission, which are available to view or download by clicking on the links below. Please note that submissions on the draft plans should be made directly to the relevant TSO.
MDL Draft Critical Contingency Management Plan (submissions closed 10 February 2009)
Vector Draft Critical Contingency Management Plan (submissions closed 10 February 2009)
Proposed CCMPs
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.
Approved CCMPs
On 9 September 2009 Gas Industry Co received a recommendation from the expert adviser to approve MDL's proposed CCMP. After considering the plan, Gas Industry Co agreed that it complies with regulation 25 and gives effect to the purpose of the regulations and the CCMP was therefore approved on 16 September. The approved CCMP can be viewed by clicking on the link below. The regulations referred to as Attachment 1 can be found here
On 10 December 2009 Gas Industry Co received a recommendation from the expert adviser to approve Vector's CCMP. After considering the plan, Gas Industry Co agreed that it complies with regulation 25 and gives effect to the purpose of the regulations and the CCMP was therefore approved on 18 December 2009. The approved CCMP can be viewed by clicking on the link below.
Essential Services and Minimal Load Guidelines
These Guidelines are not required under the Regulations. Gas Industry Co intends to use the Guidelines as a means of ensuring a consistent approach to designations in respect of large consumers and in considering designation disputes from consumers generally. Although the Guidelines do not have any particular status under the Regulations, it is hoped that retailers will perceive value in the Guidelines when processing applications from their customers. In this way, classifications could be expected to be reasonably consistent across retailers. Please note these Guidelines are not legally binding and need 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.
Essential Services and Minimal Load Guidelines
Critical Contingency Ongoing Costs
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:
- payable by Gas Industry Co to the critical contingency operator in respect of that year; and
- payable to any person appointed by Gas Industry Co to carry out any obligations under the Contingency Management Regulations in respect of that year; and
- of Gas Industry Co associated with critical contingency management and its obligations under the Contingency Management Regulations during that year.
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.
Estimated ongoing costs for FY2013 (1 July 2012 to 30 June 2013)
| Cost categories | Estimated cost |
| Service provider (establishment and base fees) | $358,872 |
| Service provider (event fee) | $71,000 |
| Industry expert costs | $23,000 |
| Expert adviser costs | $10,000 |
| Total ongoing costs | $462,872 |
Estimated ongoing costs for FY2012 (1 July 2011 to 30 June 2012)
| Cost categories |
Estimated cost |
| Service provider (establishment and base fees) | $436,000 |
| Service provider (event fee) | $71,000 |
| Industry expert costs | $40,000 |
| Expert adviser costs | $5,000 |
| Total ongoing costs | $552,000 |
| Invoice month |
for gas consumed in |
CC ongoing cost ($/GJ) |
| July 2011 | May 2011 | $0.0037349951 |
| August 2011 | June 2011 | $0.0037271165 |
| September 2011 | July 2011 | $0.0032252889 |
| October 2011 | August 2011 | $0.0030797146 |
| November 2011 | September 2011 | $0.0032191022 |
| December 2011 | October 2011 | $0.0036823987 |
| January 2012 | November 2011 | $0.0038646880 |
| February 2012 | December 2011 | $0.0041389326 |
| March 2012 | January 2012 | $0.0040885232 |
| April 2012 | February 2012 | $0.0038239020 |
| May 2012 | March 2012 | $0.0041785727 |
Ongoing costs for FY2011 (1 July 2010 to 30 June 2011)
| Cost categories |
Estimated | Actual |
| Service provider (establishment and base fees) | $442,000 | $431,319 |
| Service provider (event fee) | $71,000 | $20,400 |
| Industry expert costs | $75,000 | $22,959 |
| Expert adviser costs | $5,000 | $0 |
| Total ongoing costs | $593,000 | $474,678 |
| Recovered | $592,909 | |
| Over recovery | $118,231 |
| Invoice month |
for gas consumed in |
Estimated ($/GJ) | Actual ($/GJ) |
| July 2010 | May 2010 | $0.0035627345 | $0.0028518612 |
| August 2010 | June 2010 | $0.0033662262 | $0.0026945612 |
| September 2010 | July 2010 | $0.0032837221 | $0.0026285192 |
| October 2010 | August 2010 | $0.0032979606 | $0.0025882519 |
| November 2010 | September 2010 | $0.0036254356 | $0.0029020504 |
| December 2010 | October 2010 | $0.0036223565 | $0.0028995851 |
| January 2011 | November 2010 | $0.0039059013 | $0.0031265546 |
| February 2011 | December 2010 | $0.0039927039 | $0.0031960375 |
| March 2011 | January 2011 | $0.0048231807 | $0.0038608088 |
| April 2011 | February 2011 | $0.0053293236 | $0.0042659598 |
| May 2011 | March 2011 | $0.0042432472 | $0.0033965897 |
| June 2011 | April 2011 | $0.0042115282 | $0.0033711997 |
Critical Contingency Events
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:
- Incident Report (regulation 64), which outlines the cause and duration of the event, actions taken by the CCO and transmission system owner, the level of general compliance by retailers and consumers with directions issued during the event, and another other matters the CCO considers appropriate. The Incident Report must be issued as soon as reasonably practicable, but no later than five business days after the critical contingency is terminated.
- Performance Report (regulation 65), which assesses the effectiveness of the critical contingency arrangements during the event, and identifies areas where those arrangements could be improved. This report must be issued no later than 20 business days following the termination of the critical contingency, or as otherwise agreed between the CCO and Gas Industry Co as the industry body.
In the case of a non-regional critical contingency, regulations 67-81 provide for a process for setting contingency imbalances.
Critical Contingency Management FAQs
Answers to some common questions about critical contingency events and gas user obligations.
3 March 2012 - Pohokura Production Station Outage
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) has 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.
25 October 2011 - Maui Pipeline Outage
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.
Post Maui Pipeline Outage Review - Update
Work in capturing learnings from the five-day Maui outage in October last year is well advanced.
CCO Reports
Incident Report Performance Report Feedback Form
Compliance
Media Advisories
25 Oct - Gas Industry Co Media Release: Gas Curtailment ordered following gas pipeline leak
26 Oct - Vector Media Advisory: Chain of Events
26 Oct - Vector Media Advisory: 1.00pm Update
26 Oct - Vector Media Advisory: 7.30pm Update
27 Oct - Vector Media Advisory: 1.00pm Update
28 Oct - Vector Media Advisory: 9.30am Update
28 Oct - Vector: Pipe Repair Photo
28 Oct - Vector Media Advisory: 5.00pm Update
29 Oct - Vector Media Advisory: 10.00am Update
29 Oct - Vector Media Advisory: 2.00pm Update
30 Oct - Vector Media Advisory: 7.00am Update
3 Nov - Gas Industry Co Media Release: Maui Pipeline Outage Review
13 July 2010
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:
- Critical Contingency Incident Report, prepared by the critical contingency operator under regulation 64. This report outlines the events that occurred that day and the actions taken by the critical contingency operator and the transmission system owner.
- Critical Contingency Operator Performance Report, prepared under regulation 65. The purpose of this report is to assess the effectiveness of the critical contingency arrangements during the event and identify areas where those arrangements could be improved.
- 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 on a critical contingency day. Dr John Small of Covec has been engaged for this work.