Overview
Introduction
In recognition of industry dissatisfaction with previous voluntary arrangements, and in line with the GPS requirement for sound arrangements for the management of critical gas contingencies, Gas Industry Co developed regulations for critical contingency management. 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 call for a regulatory approach to contingency management came with the understanding that gas outages of a sufficient magnitude, if left unchecked, could cause significant costs in both time and resources for both industry and customers. Where the market cannot self-manage such situations it was deemed necessary to put in place arrangements that enforce an obligatory curtailment and contingency pricing regime.
Specific objectives in establishing the regulatory solution were the appointment of a critical contingency operator, the preparation and publication of critical contingency management plans, and the development of a methodology for the determination and resolution of critical contingency imbalances. The regulations went live in January 2010 following Gas Industry Co's approval of the transmission system owners' critical contingency management plans.
Summary of Status
A review of gas emergency arrangements was carried out in July 2006 which concluded with a recommendation that mandatory arrangements should be put in place. A statement of proposal was issued in August 2007 which outlined a replacement to existing arrangements in the form of regulations under the Gas Act. Gas Industry Co released two further consultation papers in December 2007 and May 2008 which discussed further refinements to the proposed regulations. A recommendation to the Minister of Energy was made in June 2008 to approve the Gas Governance (Critical Contingency Management) Regulations 2008 and associated amendments to the Gas Governance (Compliance) Regulations 2008. The regulations were gazetted on 6 November 2008.
On 28 November 2008, Gas Industry Co appointed Vector Gas Ltd as critical contingency operator for an inital five-year term beginning on the commencement date, 4 December 2008. Gas Industry Co also appointed an expert adviser (Concept Consulting Group Ltd) to review the first set of critical contingency management plans. The MDL and Vector plans were approved by Gas Industry Co in September 2009 and December 2009 respectively. Gas Industry Co subsequently published a notice in the New Zealand Gazette announcing the approval of the plans and the go-live date, 21 January 2010.
Contact Details
gasindustry [dot] co [dot] nz