Application Martin No: gr9902 Jones Contents

IT service

IT service consists of the delivery by the service provider of a quantity of a user’s gas equal to the sum of the Final nominated delivery quantities for that day to one or more delivery points, which is subject to interruption.

If IT service is to be from existing delivery facilities, it can be obtained either by entering into an existing facilities access agreement in relation to those facilities, or with Epic’s agreement.

Non-specified services

These are services other than FT service or IT service. Under clause 4.1(b) of the access arrangement, Epic is prepared to negotiate with prospective users for the provision of non-specified services. The terms under which non-specified services are provided are subject only to clauses in the access arrangement regarding application procedure and queuing policy

Priority of service

Epic proposes to make available for IT service the amount of capacity that remains after it has met its obligations to FT users, existing users and persons with contracts for non-specified services that rank in priority ahead of IT services.

Epic proposes to make 323 TJ per day available for FT service. This is referred to as the system primary capacity.

Any portion of this capacity that is not required by FT users or existing users, and any capacity in excess of 323 TJ per day will be made available to IT users.

Epic proposes to give priority firstly to quantities nominated as primary capacity quantities by FT users within their respective MDQs, and quantities nominated by existing users within their respective MDQs.

Secondly, priority goes to quantities nominated by FT users to use net available capacity within their respective MDQs. Under clause 18.3(c)(ii), FT users may nominate quantities in excess of their primary capacity quantity (PCQ) at a delivery point. These nominations may be up to the net available capacity of the delivery point, provided that total initial nominated delivery quantities do not exceed the FT user’s maximum daily quantity (MDQ). Accordingly, FT users may receive all the capacity at a particular delivery point.

Thirdly, priority goes to quantities nominated by IT users up to the maximum capacity of the relevant delivery points.

Fourthly, priority goes to authorised variation quantities nominated by FT users up to the maximum capacity of the relevant delivery points.

Fifthly, priority goes to authorised variation quantities of IT users up to the maximum capacity of the relevant delivery points.

Submissions by interested parties

Capacity of the pipeline system

Terra Gas Trader (TGT) made the following comments in its submission:

• 
  the current indicative capacity of the pipeline of 395 TJ is available to existing shippers in winter, and is reduced in summer to 377 TJ due to ambient conditions.
  
• 
  TGT queried Epic’s classification of 323 TJ of the indicative capacity of 395 TJ as system primary capacity. TGT submitted that the remaining 72 TJ is, subject to summer, available most of the time.¹⁷³
  

Origin submitted that the capacity of the pipeline under favourable conditions is 393 TJ per day, and that the aggregate of users’ MDQs should equal this figure. Origin believes that were capacity of the pipeline defined as 393 TJ per day, and were Epic required to supply this capacity unless it could demonstrate that it was unable to do so, Epic would be more likely to make capacity above 323 TJ per day available.¹⁷⁴

The South Australian Office of Energy Policy (OEP) submitted that, since firm capacity was 323 TJ per day in September 1996 when indicative capacity was 353 TJ per day, the firm capacity of the pipeline should now exceed 323 TJ per day, given that indicative capacity is currently 393 TJ per day.¹⁷⁵

Epic’s obligation to maximise capacity

Origin submitted in relation to Epic’s classification of 323 TJ of the pipeline’s capacity as system primary capacity, that Epic should be obliged to operate the MAPS so as to maximise its capacity. Origin wishes an express clause to this effect to be included in the access arrangement.¹⁷⁶

Allocation of primary capacity

TGT submitted that the Draft Decision stated incorrectly the allocation of primary capacity reserved between Origin and TGT. It considers that the correct position on firm reservations is:¹⁷⁷

	Prior to February 1999	Since February 1999
TGT	200	240
Origin	153	153
Epic		2
Indicative capacity	353	395

Origin made the following comments in relation to primary capacity:

• 
  net available capacity should be pro rated across users based on their MDQ. This is because if capacity above 323 TJ is pro rated across users based on their nominations, as proposed by Epic, a user does not know until the day before deliveries are made how much net available capacity it will have access to. Origin submitted that this system will also encourage users to over nominate to maximise their access to net available capacity;¹⁷⁸
  
• 
  the access arrangement makes it difficult for users to supply customers on a firm basis. Since on different days net available capacity may be allocated to different users, customers may be forced to purchase gas from several users;¹⁷⁹
  
• 
  given that the existing haulage agreements (EHAs) give users rights to up to 393 TJ per day, clause 2.2 should be amended to include the sentence, ‘the Existing Users under the Existing Transportation Agreements have rights to use the total capacity of the Pipeline of 393 TJ per day’.¹⁸⁰
  

Santos commented on a lack of competitiveness in access to the pipeline.¹⁸¹ Santos raised concerns that, since all capacity of the MAPS is contracted to Origin and TGT, firm capacity will not be offered to other operators before January 2006.¹⁸²