Application Martin No: gr9902 Jones Contents

Clause 18 – Forecasting, Nominating and Scheduling of Service

AGLES&M questions whether clause 18 should be in the access arrangement, as changes to this section may be needed from time to time, and the process for amending the access arrangement may be too cumbersome.³²⁸

It also suggested that in clauses 18.1(b) and (c), the words ‘user will nominate’ should be replaced by the words ‘user expects to nominate’.³²⁹ This is to reflect the fact that these are forecasts only.³³⁰

Origin submitted that FT nominations should not have to be made by 1100 hours, as required by clause 18.3(b), but 1500 hours, on the basis that users do not have sufficient information to make accurate daily nominations by 1100 hours.³³¹ If nominations must be given by 1100 hours, inaccurate nominations are likely to be given, with the result that customer demand may not be satisfied.³³²

Origin noted that FT nominations and IT nominations can be made simultaneously and suggested that IT users could be notified shortly after FT users as to whether their nominations have been successful.³³³

AGLES&M submitted that provision should be included in clause 18.3 (b) for the service provider to accept nominations well in advance, and accept changes up until the deadline.³³⁴

It also considered that the allocation methodology in clause 18.3 (c) might drive users to over-nominate at congested delivery points in order to ensure the maximum allocation.³³⁵ AGLES&M submitted that the zonal balancing arrangements allow users with multiple delivery points to do this without penalty.³³⁶ AGLES&M also submitted that the priority allocation to FT users who do not hold a PCQ at a particular delivery point appears to discriminate against IT users.³³⁷

Origin submitted that it is not necessary for users to provide a written confirmation that the producers can supply the nominated quantities, as required by clause 18.4(e) of the access arrangement. Instead, the access arrangement should provide that:

The User will, unless it has notified Epic to the contrary, be deemed to have warranted to Epic that it can supply to Epic its nominated quantities for the following day.³³⁸

Origin submitted that the consequences of not providing written confirmation contained in clause 18.4(e) are excessive.³³⁹ Origin submitted that these consequences should apply only where a user, despite having made a nomination, fails to provide gas to the receipt point.³⁴⁰

AGLES&M submitted that the requirements for formal confirmation in clauses 18.4 and 18.5 go beyond the existing arrangements, and are unreasonable and unnecessary, and suggested that an undertaking that similar nominations are made both to Epic and to the producers should be sufficient.³⁴¹

AGLES&M submitted that 18.5(f) provides incentive for users to over-nominate in cases of potential congestion.³⁴²

Potential Energy submitted that the proposed allocation of limited capacity amongst multiple IT Service users on a pro rata basis is unsatisfactory (as per clause 18.5(f)). As with FT Service users (via the queuing policy), priority should be given to earlier users relative to subsequent IT Service users.³⁴³

Origin submitted that FT users should have the right to request authorised variations not exceeding 20 per cent of their MDQ.³⁴⁴ Origin submitted that this nomination right should be capable of exercise up to 0900 hours on a day, and should prevail over the rights of IT users. Origin gives two reasons to support this claim.³⁴⁵ Firstly, IT users pay a capacity charge to reserve the capacity of the pipeline system.³⁴⁶ Secondly, IT customers are likely to be harmed less than FT customers from interruptions in capacity. This is because FT customers tend to have firm needs, whereas IT customers have interruptible needs or alternative fuel sources.³⁴⁷

Origin further submitted that Epic should only be permitted to refuse to accept authorised variations where:³⁴⁸

(a) this will prevent the service provider supplying the nominations of other FT users; or

(b) there is insufficient capacity available in the pipeline system (where the available capacity is the total capacity of the pipeline system less the requirements of FT users and Existing users but not IT users).

AGLES&M submitted that 18.7(b) might encourage initial over-nomination by holders of firm capacity to the detriment of IT users.³⁴⁹

Origin submitted that:

• 
  the words ‘adversely affect’ in clause 18.7(d) are ambiguous and without practical meaning, and give Epic an absolute discretion as to whether it accepts variations. Origin submitted that clause 18.7 should read:
  

The service provider shall be obliged to authorise an increase in the Final Nominated Receipt Quantity for a day unless, to do so, would prevent the service provider being able to deliver the quantities of Gas already scheduled for receipt from and delivery to Other users on that day.³⁵⁰

• 
  the confirmation referred to in clause 18.7(e)(ii) is unnecessary. It should be sufficient that the user confirms that the additional gas can be supplied; and
  
• 
  the effect of clause 18.7(g) is that when a user takes capacity above their MDQ, the user must pay the FT commodity charge rate and the IT commodity charge rate. In Origin’s view this is inequitable. Having paid to reserve pipeline capacity, FT users should pay FT rates only.³⁵¹
  

In response to Origin’s submission that FT users’ nominations should be made by 1500 hours, Epic submitted that the current timings are appropriate to the needs of all users and prospective users.³⁵²

In its letter of 29 August 2001, Epic proposed that FT and IT nominations could be made simultaneously, by 1100 hours.³⁵³

In response to Origin’s submission that FT users should have a right to vary nominations by 0900 hours by up to 20 per cent of MDQ, Epic submitted that:

• 
  this would affect other users and prospective users;³⁵⁴
  
• 
  Origin’s suggestion would result in a continuation of existing arrangements, and would substantially affect Epic’s ability to offer an interruptible service that was not interruptible on a day;³⁵⁵ and
  
• 
  the access arrangement already allows a user to renominate its requirements downward as of right.³⁵⁶
  

This point is probably a reference to clause 18.7(c), which does confer such a right on FT users only. Epic further submitted that the access arrangement also provides that Epic will provide additional capacity requested by users, provided that to do so would not adversely affect the scheduled quantities of other users.³⁵⁷