Application Martin No: gr9902 Jones Contents

IT service

In relation to IT service, Potential Energy made the following submissions:

• 
  allocation of IT nominations under clause 18.5(f) should not be on a pro rata basis, but rather, priority should be given to earlier users over subsequent IT service users;²⁰²
  
• 
  charges to apply for the IT service should not be a disincentive to the development of projects on the basis of an interruptible gas supply; ²⁰³ and
  
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  IT service tariffs should be set with reference to the FT commodity charge rate rather than with reference to the sum of the capacity charge rate and the FT commodity charge rate.²⁰⁴
  

TGT made the following submissions:

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  Epic’s proposed IT commodity charge rate is inappropriate where total revenue is recovered from the FT service. This is because the FT capacity charge rate for FT service has already ensured the full recovery of capital;
  
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  in such circumstances, the appropriate formula is:
  IT commodity charge rate = FT commodity CR appropriate profit margin; and
  
• 
  alternatively, the IT commodity charge rate could include a capital component, but in these circumstances the total revenue less the likely revenue from IT services should be recovered from FT services.²⁰⁵
  

Availability of delivery points

Clause 4.2(a)(iii) of the access arrangement provides that FT service will not be available at delivery points the subject of the existing haulage agreements. AGL questioned whether delivery points nominated in existing transportation agreements should be excluded from consideration for FT service agreements. AGL believes that access may become available during the term of the access arrangement.

AGLES&M also noted in relation to this issue:

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  the exclusion of delivery points which are the subject of existing transportation agreements from availability for FT services constitutes an exclusivity right;
  
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  the commercial rationale for such a provision could be realised if an obligation were placed on Epic to rebate revenue from third parties to the existing users;
  
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  while other rights may constrain Epic’s ability to offer services to other users in the context of existing capacity of the pipeline system, these other constraints are likely to be less restrictive with regard to future capacity;
  
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  in relation to the condition in clause 4.3(c)(ii) that IT services will only be available where the IT user has entered into an existing facilities access agreement, AGLES&M acknowledges that new users need to reach agreement with existing users as to the allocation of metered flows through a delivery point, but submitted that this should be resolved through the service provider;
  
• 
  clause 4.3(c)(ii) should be discarded, and that existing users’ commercial interests could be restored through a rebate of revenue by Epic; and
  
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  requirements of this nature should not feature in relation to new FT contracts.²⁰⁶
  

The Minister for Minerals and Energy submitted in relation to existing contractual rights and the possibility that some of these might constitute exclusivity rights, that the South Australian Government honours the principle of sanctity of contracts. The Minister stated that Origin and TGT would be adversely affected if their rights to nominate for capacity under the EHAs were amended.²⁰⁷

Information to be provided by Epic

Origin requests that a clause be inserted into the access arrangement requiring Epic to provide to any user, on reasonable request, information as necessary to show how Epic has calculated the capacity of the pipeline system in respect of a day.²⁰⁸ Origin submitted that this is required for users to ascertain whether Epic is maximising the capacity of the MAPS.

Origin would also like Epic to be required to post on the electronic bulletin board (EBB) a seven-day forecast of the net available capacity of the pipeline system, and also be required to update this forecast daily.²⁰⁹

Epic’s response to submissions

Epic has provided responses to some of the issues raised by interested parties.

Capacity of the pipeline system

Epic made the following comments in relation to submissions received by the Commission:

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  there is a low probability that indicative capacity can be achieved on a day. To achieve indicative capacity, each of the 15 compressor units must operate simultaneously;
  
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  furthermore, at each of the seven compressor stations on the main trunk pipeline, the two units at each station must be operating in series to eliminate redundancy in the system;²¹⁰
  
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  if 98 per cent of individual compressor units are available, there is only a 74 per cent probability of indicative capacity being achieved. If only 90 per cent of units are available, the probability of achieving indicative capacity slips to 21 per cent;²¹¹ and
  
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  the proposed FT service is to be available 365 days of the year, subject only to force majeure.²¹² This is a different service to that offered under the existing transportation agreements.²¹³
  

Epic’s obligation to maximise capacity

Epic submitted in relation to this issue:

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  there should not be inserted in the access arrangement an obligation on Epic to maximise the available capacity of the pipeline;
  
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  the prospect of selling rebateable services provides Epic with the necessary incentive to maximise capacity;²¹⁴
  
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  furthermore, any requirement for Epic to maximise capacity must be balanced against its obligation to minimise its consumption of system use gas;²¹⁵ and
  
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  a clause requiring Epic to maximise capacity would lead to inefficiency were Epic required to do so even on days when users did not require it.²¹⁶