Gas Market Leaders Group Bulletin Board Business

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Gas Market Leaders GroupBulletin BoardBusiness
Data RequirementsConsultation
ForumMelbourne 18 June 2007Sydney 19 June
2007Brisbane 20 June 2007Perth 21 June
2007Adelaide 22 June 2007
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Todays Agenda

• Background/context
• MCE energy market reform
• Gas Market Leaders Group (GMLG)
• Overview of key work streams
• Bulletin Board
• Short Term Trading Market (STTM)
• Bulletin Board Business and Data Requirements
• Discussion
• Next Steps

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MCE Gas Market Reform

• MCE agreed in April 2004 to accelerate the
  development of a national natural gas market
• Principles for Gas Market Development (Dec 2004)
• Allen Consulting Report (June 2005)
• options for national gas market development
• Gas Market Leaders Group established (Nov 2005)

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Gas Market Leaders Group (GMLG)

• Established November 2005 to develop a wholesale
  gas market development plan
• Independent Chair
• Representative Members drawn from
• Gas producers (x2)
• Transmission pipeline owners/operators (x2)
• Distribution network owners/operators (x1)
• Retailers/shippers (x2)
• Market operators (x3)
• End users (x3)
• Market Options WG developed proposals
• Independent cost-benefit analysis undertaken by
  MMA
• Wider consultation undertaken in April 2006
• National Gas Market Development Plan developed
  June 2006

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GMLGsNational Gas Market Development Plan

• Presented to MCE by GMLG in June 2006
• Key Recommendations
• Bulletin Board to be established
• Short Term Trading Market (STTM) design to be
  further progressed and implemented (subject to
  meeting agreed Principles)
• Establishment of a single National Gas Market
  Operator

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GMLG Current Status

• GMLG reconvened by MCE in December 2006 to
  progress
• implementation of the Bulletin Board
• design/implementation of STTM
• Governments have approved funding
• 500k for Bulletin Board establishment
• 700k to develop Functional Spec for STTM
• Industry making significant contribution through
  people/time
• BB and STTM Working Groups established (Jan07)
• COAG has agreed to establish a National Energy
  Market Operator
• GMLG contributing to MCE development of
  governance model

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GMLG Governance
MCE
Commonwealth

SCO

EMRWG

Project Officer


GMLG

BB/STTM Steering Committee

Contractors VENCorp

GMC



STTM
W
G

Legal W
G

BB

WG


Phase 1 Resolve Key Design Issues, Policies and
Procedures for STTM Decision to implement
Phase 1 Define Business Requirements for BB

• Phase 2
• Functional/ technical spec.
• IT design/build/ test implement
• Development/ approval of rules

Phase 2 Complete design, policies and
procedures Implement



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STTM Project Status
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STTM Objectives

• Hubs to be defined
• A mandatory price-based balancing mechanism at
  each hub
• replacing existing compulsory balancing
  mechanisms.
• Facilitate gas trading using market-driven short
  term (daily) prices.
• Pricing signals to facilitate secondary trading
  and greater demand side response, particularly in
  times of supply constraints
• Bilateral contracts to remain primary trading
  mechanism
• Designed to have no impact on existing
  transportation contracts.
• Will allow short term gas purchases without
  contracting for delivery.
• Smooth, low cost transition from current market
  arrangements.
• STTM to operate initially in SA, NSW and then
  elsewhere where there is a cost benefit.
• Victoria already has spot market (no change
  proposed)

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Key Issues

• Hub definition
• What physical and/or commercial constraints must
  be accounted for?
• System Security
• Does STTM create pipeline and sub-network
  system security issues?
• Sydney Gas Network allocation arrangements
• Can the STTM provide allocation of deliveries
  that are consistent with the Sydney gas network
  access arrangement and contractual requirements?
• Shipper/Pipeline competitive neutrality
• Does STTM discriminate against either of the
  pipelines when a hub is supplied by a flow
  controlled and a pressure controlled pipeline?
• Timing of STTM bids and market clearance v
  contract nominations
• Opportunities for gaming and/or unintended market
  incentives

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STTM WG Status/Process

• Unable as yet to resolve all key issues
• Conflicts between some market principles and
  outcomes
• Strawman Functional Description developed based
  on current concepts
• but does not reflect an agreed proposal
• not yet ready for wider consultation
• Next step is to seek expert consultant advice
• Can STTM deliver desired outcomes and meet market
  principles?
• If not, what outcomes or principles would need to
  change?
• Industry consultation (August/September 2007?)
• Decision to Proceed (October 2007?)

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Bulletin BoardBusiness and Data Requirements
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BB Objectives

• To include all States and Jurisdictions
• To facilitate trade, through the provision of
  system and market information that is readily
  available to all interested parties
• Valuable in advising market of forced or planned
  plant outages, changed system conditions and
  supply constraints
• To support NGERAC in management of major gas
  supply emergencies
• The BB does not provide pricing signals or
  mandatory trading of imbalances
• Provision of data to be mandatory through NGL/NGR

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What pipelines/facilities are to be included?

• All major natural gas pipelines, and connected
  production and storage facilities, that
  interconnect and/or supply major demand centres
• Exclusions
• Pipelines or facilities with capacitylt20TJ/day
  (?)
• Dedicated laterals and spurs
• Gathering lines
• Other criteria??
• Views sought on criteria for inclusion/exclusion

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BB Data Requirements

• NGERAC Standing Data
• Production and pipeline nameplate capacity
  ratings - updated as material changes occur
• Annual peak demand forecasts
• Operational Outlook
• Capacity and demand outlook for next few days
• Actual Data??
• Consideration being given to publishing actual
  demand, production and pipeline delivery
  quantities - comments sought on value of this
  information

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BB Data Production Storage

• Provided by facility operator
• Production MDQ nameplate rating updated
  when change occurs
• Storage Holding Capacity, Refill Capacity
  nameplate, updated when change occurs
• 3 day Capacity outlook updated as changes occur
  due maintenance, plant outages etc
• Views sought on desirability/potential value of
  publishing actual production/supply for previous
  gas day by facility and/or possibly aggregated to
  supply hub

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BB Data Pipeline Capacity LOR

• Provided by pipeline operator
• Pipeline capacity nameplate rating
• 3 day pipeline capacity outlook
• Loss of Reserve (Pipeline)
• Green Business as usual
• Amber Voluntary (interruptible) load shedding
  likely/happening
• (Victoria LNG scheduled to support min
  pressures)
• Red Involuntary (firm) load shedding
  likely/happening
• (Victoria LNG at high, non-firm rate,
  involuntary load shedding
  likely/happening)

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BB Data Demand

• Forecast Summer and Winter Peak Days
  (with without Gas Fired
  Generation)
• provided annually via Jurisdictions
• Aggregate delivery noms for next gas day
• Provided by each pipeline operator
• Published as aggregate for Hub or Jurisdiction
• Aggregate forward (daily delivery) noms
  e.g. up to 7 days - as per
  contract/market obligations
• Provided by each pipeline operator
• Published as aggregate for Hub or Jurisdiction
• Views sought on desirability/potential value of
  publishing
• Aggregate delivery noms for next day by
  individual pipeline and
• Actual Daily Pipeline Deliveries for previous gas
  day - either as aggregate Hub/Jurisdiction, or by
  individual pipeline

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BB Data Capacity/Supply Offers

• Voluntary posting of Buy/Sell Offers for
  supply/capacity at demand or supply Hubs
• Capacity invitation to treat from shippers, users
  or pipeliners
• Supply invitation to treat from shippers, users
  or producers
• Optional data includes applicable dates,
  quantity, price, description, Hub, open/closed
  status, contact details.

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BB Data Other

• NGERAC Convened
• status set by BB operator on advice from NGERAC
• BB Participant contact details
• Provides for multiple entries for different
  functions
• NGERAC - Emergency status or updates?

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When Updated?

• Much of the data is static, requires updating
  only when significant changes occur
• e.g. forced or planned maintenance outages
• significant change greater of 10 or 30TJ
• Demand data to be updated daily
• If actual production quantities to be published
  after the event, then these would also be updated
  daily.

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Data Validation

• Basic range sense checks, eg
• Aggregate pipeline nominated demand
• gt30 AND lt 110 Pipeline Capacity Name Plate
  Rating (NPR)
• Production capacity (incl Storage)
• gt 30 AND lt 110 Facility Capacity Name Plate
  Rating (NPR)
• Pipeline Capacity
• gt50 AND lt 110 Pipeline Capacity NPR
• Ranges may change based on operational
  experience/advice (comments welcome)
• Flags for out of range or incomplete data
• BB Operator to monitor quality

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BB Use in Emergencies

• More frequent posting of updated supply/demand
  data
• with free text commentary
• would assist NGERAC
• helpful or a distraction to industry?
• and/or
• Regular status updates posted by BB Operator
• as agreed with pipeline operator/Jurisdiction/NGER
  AC
• May need to restrict access to this data to
  industry/ Jurisdictions/NGERAC until situation
  stabilises?
• to avoid unnecessary public and media
  confusion/panic
• information is dynamic and possibly unreliable
• Some relaxation of other data provision
  requirements?
• e.g. daily delivery nominations, depending on
  circumstances

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NGERAC/Jurisdictional Emergency Information
Requirements

• Yet to be defined (comments welcome)
• Could include standing templates on BB for
  population by participants upon notification, and
  at regular intervals thereafter
• e.g. NGERAC Communication Protocols require
  following details of an incident
• Location
• Time of occurrence
• Likely effect on gas supplies/deliveries
• Assessment (if possible) of likely impacts on gas
  reserves
• Estimated time to restore normal supplies
• Access limited to NGERAC/jurisdictions?

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Initial BB Development/Operation

• COAG target for NEMO establishment Jun09
• Bulletin Board could be operational by June 2008
• GMLG has agreed that VENCorp should develop and
  operate the BB prior to NEMO, as VENCorp
• has developed, maintains and operates existing
  MIBB
• has in-house IT resources involved in BB
  development and 24x7 production support
• has existing IT interfaces with most key gas
  retailers/traders
• provides services on a transparent, cost recovery
  basis
• able to enter contract with Commonwealth Govt for
  development/operation of BB with GMLG oversight

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BB IT System

• Preferred Option Basic system using FTP and
  email and public website accessible via internet
• FTP used for more frequent updates such as demand
  noms, actual demand/production, 3 day capacity
  outlook.
• Polling period short enough to provide response
  in useful timeframe eg hourly
• A GUI system would be more interactive, with
  advantages for subsequent STTM, but at
  significantly higher cost and not considered
  justified at this stage
• Really an addition to FTP rather than an
  alternative
• Can be added later, as required

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BB IT System Issues

• FTP/email vs GUI - data synchronicity
• Data handling and constraints
• Invalid/missing data
• Time zones
• Access to BB current data
• Access to historical BB published data
• and several more, addressed in detail in
  consultation paper

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Legal Framework

• BB unlikely to be viable on a voluntary or
  contractual basis
• need to impose obligations to provide data
• need to provide protections from liability
• Enabling legislation is required for BB to
  operate
• MCE has agreed to include in NGL package to be
  enacted by first half 2008
• Detailed rules and procedures to be developed
  through GMLG Working Group processes
• will involve further industry/public consultation
• will form part of National Gas Rules
• Subsequent rule changes to be developed by BB
  Operator (NEMO), with industry/public
  consultation, and subject to amended AEMC rule
  change process.

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Liability Issues

• GMLG intent is that parties providing information
  for BB on a bona fide basis should be protected
  from liability
• As per advice for NEM, compliance with
  obligations under statutory rules cannot
  constitute breach of Part IV of TPA
• BB Operator to be protected from liability by a
  provision in NGL similar to that in NEL for
  NEMMCO
• Rules to provide protection from liability for
  information providers acting in good faith and
  exercising due diligence
• BB to incorporate click-wrap waivers and
  exclusions to be accepted by all users

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Proposed Enabling Legislation

• To be included in NGL package currently being
  prepared
• Will include Heads of Power for establishment and
  enactment of Rules (as part of NGR) to govern
  operation of the BB
• NGL will provide for imposition of obligations
  on
• BB Operator to operate and maintain the BB in
  accordance with the Rules
• Relevant parties to provide information and
  otherwise comply with the Rules
• Will provide protections from liability for the
  BB Operator
• Will provide that duty of confidence does not
  absolve compliance with rules, and that
  compliance with rules does not create liability
  for breach of confidence or contract.

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Rule Making Heads of Power

• Commencement and application of rules
• Definition and registration of participants
• Roles, powers and obligations of BB operator
• Obligations to provide information to BB operator
• who, what, when, how, etc.
• Publication of information on BB
• what, when, confidentiality, procedures
• BB access
• Cost recovery
• Exclusions/limitations on liability of BB
  operator and information providers
• Compliance/enforcement
• Rule change procedure
• Development, approval and implementation of
  procedures

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BB Funding

• Governments are funding BB implementation, with
  currently approved budget of 500k
• Ongoing operational costs will be funded by BB
  operator with costs recovered through fees
• Participants meet own costs for meeting BB
  obligations and access to BB
• Pipeline operators may charge for BB services
  e.g. provision of aggregate delivery noms on
  behalf of shippers
• May be negotiated with BB operator, with costs
  recovered through BB operator fees.

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Project Plan Milestones

• Project Plan Jun 2007
• Market consultation Jun 2007
• Business Requirements Jul 2007
• Functional Specification Dec 2007
• System Built and Tested Mar 2007
• User Acc Testing Apr 2008
• Industry Testing Certific. May 2008
• Rules Approved by May 2008
• Legislation Enacted by May 2008
• Go Live May/Jun 2008

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Next Steps

• Written submissions invited, by Friday 6 July
  2007 to john.savage_at_vencorp.vic.gov.au
• Taking account of submissions, BBWG to develop
  BB Business Requirements recommendation to GMLG
  (late July)
• IT project to commence July/August
• BBWG/Legal Group to
• provide input to NGL legislative drafting
• develop detailed BB Rules (with Commonwealth Govt
  legal assistance)
• Further consultation on Rules prior to
  finalisation