Application Martin No: gr9902 Jones Contents

Commission’s considerations

The Commission agrees with Origin’s submission that any allocation procedure agreed to by users that allocates 100 per cent of gas to users should be acceptable to Epic. The Commission accepts the allocation procedures outlined in Epic’s response to Origin’s Submission at 20.1, which is included in amendment FDA3.22.

Amendment FDA3.

For the access arrangement to be approved, the Commission requires Epic to insert a provision to provide for an alternative allocation procedure where parties taking delivery of gas at a Delivery Point agree to the allocation procedure. The parties will provide the service provider with a copy of the agreement. If an agreement is not reached, Epic is to allocate deliveries to the parties at the Delivery Point pro rata, based on their respective nominations at the Delivery Point.

Epic indicated its support for this amendment, provided that it is given a copy of any such agreement.⁴⁰⁰

Origin expressed concern regarding the disclosure of customers’ confidential metering information to Epic. The Commission considers that under amendment FDA3.22, users may agree on an allocation method that does not involve the disclosure of such metering information.

Origin has suggested that disputes between users as to allocation procedures should be resolved by an independent expert. The Commission is concerned that such a process might be costly and time consuming. The Commission considers that if users can not agree on an allocation procedure, it is reasonable for Epic to impose one.

In relation to OEP’s submission, the Commission notes that the advent of the Network Consumer Code might render obsolete the clauses in the access arrangement dealing with allocation at unmetered Delivery points. Until such a development eventuates, it is necessary that these clauses remain in the access arrangement. The Commission considers that these clauses are acceptable.

In its Draft Decision, the Commission required Epic to amend clause 22.3(a) by inserting the words ‘if any’ after the words ‘Metered Facilities’ in the parentheses. Epic has complied with the Commission’s proposed amendment.

Clause 23 Priority of Service

Origin submits that where Epic reduces a user’s nomination under clause 23, Epic should be obliged, on request, to provide to that user all details reasonably required for the user to establish that it was necessary for the user’s nomination to be reduced.⁴⁰¹

The Commission agrees with Origin’s submission. The Commission takes the view that users may incur loss on a day if they are unable to obtain their nominated quantity. Accordingly, the Commission requires Epic to comply with amendment FDA3.23.

Amendment FDA3.

For the access arrangement to be approved, the Commission requires Epic to insert a provision into the access arrangement requiring that where the Service Provider reduces a User’s nomination under clause 23, the Service Provider must provide, on a reasonable request by a User, such information as is reasonably required to justify Epic’s calculation of the reduction.

Clause 23.2 provides that Epic will notify a user in writing if it intends, in the case of a Non-Specified Service, to vary the priority and sequence in clause 23.1. The Commission considers that if Epic intends to allow a Non-Specified Service to rank above IT services, Epic should notify all users. Accordingly, the Commission requires Epic to comply with amendment FDA3.24.

Amendment FDA3.

For the access arrangement to be approved, the Commission requires Epic to replace the words ‘the User’ in clause 23.2(a) with the words ‘all Users’.

Clause 24 Curtailment and Interruption
Clause 25 Operational Flow Orders

Origin raised a number of concerns in regard to the curtailment and OFO provisions. In particular:

• 
  Clause 24 provides Epic with too much discretion. Curtailment notices and OFOs should only be issued as a last resort and only when and for as long as necessary to protect the integrity of the pipeline system. Further, curtailment notices should be reasonable and capable of being complied with.
  
• 
  Epic should have an obligation to notify Energy SA if it intends to materially curtail supplies of gas to users under FT Service or an existing transportation agreement, so that Energy SA can assess whether orders under the Gas Act should be made.
  
• 
  Epic should provide information outlining the cause of any curtailments and demonstrating that it did not curtail supplies of gas to a greater extent than was necessary as long as the request is reasonable. This is to enable a user to assess whether Epic is properly exercising its discretion.
  
• 
  There are circumstances where one hour is not enough time for users to comply with a curtailment notice. For example, where a user has a large number of customers it would not be possible for it to notify all of them that they must cease taking delivery of gas. There are also customers who can not stop taking gas immediately without substantial damage. Therefore, the access arrangement should provide that users must use reasonable endeavours to comply with a notice.
  
• 
  Default charges should not be retained by Epic because they would have an incentive to use clauses 24 and 25 to raise revenue. Default charges should be divided between non-defaulting users.
  
• 
  The indemnity in clause 25.6 should be limited. Users should not have to indemnify the service provider for loss suffered due to the acts or omissions of the service provider. Additionally, users should not have to indemnify for loss of profits, as the service provider does not have to pay loss of profits to users under the access arrangement. Finally, users should not be responsible for costs suffered by the service provider association with the user complying with an OFO, as service provider issues the OFO.
  

In response, Epic made the following comments:⁴⁰²

• 
  Curtailment notices will be used in limited circumstances as a last resort. Epic submits that it requires wide discretion to curtail users, but indicated that it would, however, review clause 25 to give users comfort that Epic would exercise it ability to issue curtailment notices reasonably.
  
• 
  It would consider requests for information regarding curtailments which are reasonable.
  
• 
  The purpose of default charges is not revenue raising. Rather, default charges are intended to act as a disincentive to enforce behaviour.