Application Martin No: gr9902 Jones Contents

Information to be provided by Epic

In its proposed amendment A3.2 of the Draft Decision, the Commission required that Epic post on the EBB each day:

1. 
   forecast maximum capacity for each delivery point, based on the gas specification and the conditions prevailing on the previous day; and
   
2. 
   the forecast net available capacity, based on monthly forecasts that are provided by the FT users (under clause 18.1(c)).
   

Epic has complied with proposed amendment A3.2(2) by the insertion of clauses 18.5(c) and 18.5(d) into the access arrangement.

Origin suggested that Epic be required to provide information to users to demonstrate how it has calculated the capacity of the pipeline system in respect of a day. The Commission considers that this would be onerous. It is, however, reasonable to require Epic to show its reasonable and prudent estimate of the capacity for any day on the EBB. Epic should also provide information as to the availability of compressor units at any time. This will allow users to forecast with greater certainty how much capacity will be available.

The Commission accepts Origin’s submission that Epic should post on the EBB a seven-day forecast of the net available capacity of the pipeline system and update this forecast daily. This will allow users to effectively plan downstream deliveries.

Epic considered that such forecasts would be of limited value because the accuracy of the forecasts would be subject to volatility in each of the variables used to calculate net available capacity and would be subject to the accuracy of the users own forward forecasts. Epic indicated that it would be prepared to provide the requested information if it was subject to a similar proviso that exists in 18.5(c).²⁵²

Accordingly, the Commission requires Epic to comply with amendment FDA3.4.

Amendment FDA3.

For the access arrangement to be approved, the Commission requires that the access arrangement be amended such that Epic is required to post its reasonable and prudent estimate of the following information on the EBB each day subject to a similar proviso to that in clause 18.5(c):

• 
  daily forecast for following month of number of compressor units likely to be available on the MAPS; and
  
• 
  daily forecast for following seven days of Net Available Capacity of the pipeline system.
  

Release of unused capacity

The Draft Decision required, in proposed amendment A3.4:

For the access arrangement to be approved, the Commission requires that it be amended to make provision for the service provider to require that capacity be transferred in specified circumstances. The circumstances are where:

• 
  in consequence of losing a customer to another supplier, an existing user no longer requires the volume of capacity attributable to that customer; and
  
• 
  the capacity is not released by the existing user;
  

it must be transferred to the other supplier.

Any such provision should be subject to the provisions of the relevant existing haulage agreement other than any exclusivity rights that arose on or after 30 March 1995.

Epic declined to make this amendment on the basis that it would be a breach of the Code to require Epic to amend its access arrangement in a manner inconsistent with existing contractual rights.²⁵³

Further analysis of this issue has been carried out be the Commission. In the light of this and subsequent legal advice, the Commission considers that the insertion of this amendment may effectively deprive a shipper of contractual rights existing under the EHAs. Accordingly, the Commission will not require Epic to make this amendment.

Available capacity and spare capacity

In its proposed amendment A3.3, the Commission required that the access arrangement be amended to provide that capacity that is released or surrendered by a user be dealt with as proposed by Epic in its letter dated 15 June 2000, to the effect that:

capacity that is released by a user:

(a) otherwise than under the trading policy clause 26.2,

(b) for reason that a consumer or aggregator has changed suppliers

may be contracted by another user, or a prospective user:

(i) who is (directly or indirectly) supplying that consumer (or aggregator); and

(ii) without following the queuing process set out in clause 10.

Epic complied with proposed amendment A3.3 by inserting clause 26.7 into the access arrangement.

AGLES&M’s stated that Epic’s definitions of ‘Available Capacity’ and ‘Spare Capacity’ in clause 43.1 of the access arrangement are inconsistent with section 10.8 of the Code. The Commission notes that Epic has failed to amend its definitions of ‘Spare Capacity’ and ‘Available Capacity’ to reflect section 10.8 of the Code, in accordance with the second requirement of the Draft Decision’s proposed amendment A3.1. Its definitions of both of these concepts fail to take into account the difference between contracted capacity and contracted capacity that is being used.

The Commission considers that this oversight is of minimal significance because IT service is not defined in terms of either spare capacity or available capacity. In clause 4.3(b), capacity available for IT service is defined in terms of ‘Capacity’. ‘Capacity’ is defined in clause 43.1 as:

The Capacity of the Pipeline System or (if the context requires) a part of the Pipeline System to deliver or (if the context requires) to receive, Gas;

This definition allows IT service to be obtained in respect of Pipeline capacity above 323 TJ per day.

Accordingly, the Commission considers that the incentive mechanism contained in clause 5.3 of the access arrangement will be successful in providing an incentive to users to release this capacity.

Origin submitted that priority for IT capacity referenced in clause 4.3(b) of the access arrangement should be cross referenced to clause 23. The Commission’s view is that clause 23 does not explicitly state the circumstances in which persons with contracts for non-specified service rank in priority ahead of IT service. Clause 23.2 (b) provides that non-specified services will not rank ahead of FT services, but is silent as to when non-specified services rank ahead of IT services. Accordingly, the Commission does not propose to explicitly cross reference clause 4.3(b) to clause 23.

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 proposed amendment FDA3.30.