MINUTES – GWCF

MEETING: Gas Wholesale Consultative Forum DATE: Tuesday, 11 November 2014 TIME: 10am – 12.30pm LOCATION: Melbourne, Sydney, Adelaide, MEETING #: 4 ATTENDEES: COMPANY COMPANY AEMC Gas Trading AEMO GDF SUEZ AER Hydro Tasmania AGL Jemena APA Lumo M2 Energy COVA U Pty Ltd Major Energy Users Association Energy Australia Origin Epic Energy SEAGas

1. Apologies Apologies noted were from participants at Jemena.

2. Confirm agenda The agenda was confirmed with no amendments.

3. Minutes of previous meeting The GWCF and STTM confirmed the minutes of meeting number 3 held on 12 August 2014 with no amendments. Origin noted that action item 3.4 – Gas Market Prudentials – AEMO to present a draft plan of work – was moving slowly. AEMO responded that this was due to resourcing issues and that a timeline of work will be presented to the forum early in the New Year. APA noted that action item 1.2 – Directional Flow Point Constraint Pricing – provide further work examples and scenarios - is still pending. AEMO responded that this is to go on the forward plan pending on the Application of Constraints in the DWGM issue.

4. Items for discussion or Noting 4.1 AEMO spoke to the forum regarding the Victorian gas industry emergency activation that occurred on 5 November 2014. This was due to the activation of the slam shut valves at the Wollert city gate during the pigging of the Wollert to Keon Park Pipeline. A contingency plan that was put in place with AusNet Services (who were on standby) to reopen a network valve was activated. Envestra were also on standby to open the North Melbourne valve in case of high demand, but this was not necessary. Due to the issues launching the pig, the operation extended past the evening peak. The pig stopped moving between 9pm and 10pm AEDT when it was close to the pig receiver at Keon Park. AEMO determined that this was not a threat to system security and that the pig would most likely move into the receiver during the morning peak, which occurred.

No threat to system security was declared and APA confirmed that they have sufficient data from the pig run so it does not have to be performed again. This was work was initially scheduled for May and June 2014 but AEMO requested it be deferred due to the risk of supply if there were any issues. In the last week of October a cleaning and gauging peak run was completed. During these runs it was determined that there would not be sufficient velocity to run the heavier intelligent pig that measures the thickness of the pipeline. A revised plan that included the closure of an AusNet Services network valve was developed. AGL asked what the purpose of the line is. AEMO responded that the pipeline supplies Melbourne’s northern suburbs during winter and it also supplies the Somerton Power Station. During the summer supply through the Wollert city gas is usually closed, but during high import flows from New South Wales via Culcairn this line has been required to supply this gas into Melbourne. Jemena asked that when gas incident notices are sent, can any further detail go in to the subject heading, or can they be rated on level of emergency. AEMO responded that they would look in to this with AEMO’s Emergency Services. Action – AEMO to look into providing further detail on gas incident notices.

4.2 Application of Constraints in the DWGM

AEMO spoke to the forum in regards to the Application of Constraints in the DWGM. In addition to this being discussed at the August 2014 GWCF, a second workshop was held in October to discuss the proposed solution that APA would provide AEMO with the injection withdrawal capacities at Culcairn. There has been 2 emails from participants received in response to the proposed solution. Since the workshop AEMO have developed some next steps which AEMO are planning to have implemented prior to winter 2015. AGL stated that experience to date is that ancillary payments have been associated with LNG injections at Dandenong, and would like some examples of ancillary payments that don’t involve Dandenong – how and where these can be generated. AEMO responded that they would contact AGL separately to clarify specifics. Jemena asked how APA did their modelling to which APA responded that they looked at physical constraints on the Moomba Sydney Pipeline (MSP), rather than the Declared Transmission System (DTS). APA asked if AEMO can share the difference between injection capacities of the facilities connected to the southwest, and would like to see this information in context to this issue. Actions - • Follow up with stakeholders regarding specific training, education and scenarios. • Provide a forward plan of dates that includes training, pre-winter strategy and consultation on the gas scheduling procedures • Provide information outlining the difference between injection capacities of the facilities connected to the southwest in context to the issue.

4.3 Gas Fee Methodology Review AEMO spoke to the forum in regards to the Gas Fee Methodology review. Submissions closed on 17 October and 5 were received that are on the AEMO website. Based on the submission there does not seem to be a large appetite for substantial change at present in the DWGM and STTM.

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The fee structure for the NSW FRC market is different to the fee structures for the Victorian, Queensland and South Australian FRC markets. The key issue to be resolved is whether the fee structures for all FRC gas markets should be consistent. AEMO will be seeking further input on this issue via individual discussion and via feedback on the draft determination. Next steps include: • Draft determination published on 15 December 2014 with feedback being sought until 20 January 2015 • Final determination published 31 March, effective from 1 July 2015. For any further questions on the Gas Fee Methodology Review please contact Jack Fitcher – [email protected] , 03 9609 8506 or Sandra Chui – [email protected] , 03 9609 8603.

4.4 Energy Consumers Australia Fee Collection Methodology AEMO spoke to the forum in regards to the Energy Consumers Australia (ECA) Fee Collection Methodology. The ECA gas funds are currently recovered from retailers on a dollar per metre charge. Submissions on the consultation paper closed on 24 October and AEMO are not proposing to make any changes to how fees are charged to recover the ECA gas funds. The annual budget is not determined by AEMO and AEMO are yet to be advised of the budget for the remainder of 2014-15 by the ECA . AER asked what a compressed consultation is. AEMO responded that there was smaller time frame for this consultation, which went for 2 weeks. Origin commented that AEMO did not have to consult on this and asked what the changes are on the electricity side. AEMO responded that under the current Consumer Advocacy Panel, fees are charged on a dollar per MW basis, and a dollar per connection point basis is currently being proposed. For any further questions on the Energy Consumers Australia Fee Collection Methodology please contact Jack Fitcher – [email protected] , 03 9609 8506 or Sandra Chui – [email protected] , 03 9609 8603.

4.5 VoLL/CPT settings for the STTM AEMO spoke to the forum about a potential review of the Short Term Trading Market (STTM) market parameters. At this stage AEMO does not have sufficient information to determine whether a review of market parameters is needed at this time. AEMO stated that it would therefore seek professional advice to assist its determination. Based on this advice, and in response to Lumo’s concern for the setting of VoLL in the DWGM, AEMO stated that it would jointly consider the settings for DWGM VoLL and the STTM market settings. Origin sought clarification on whether AEMO is just looking at the STTM parameters, or the wider market. AEMO responded that the professional advice will give insight into how spot price risk could change in all of the gas markets, and whether a review of parameters is needed or not. If there is a material change in the nature of pricing risk in the STTM, it is likely to effect the Victorian Gas Market as well. A review of price settings would be a large scale exercise and could result in a rule change proposal. AEMO expressed that AEMC should establish a clear methodology to be used to review VoLL settings, for both electricity and gas. AER asked about the adequacy of feedback received to date. AEMO responded that the initial feedback was based on opinion rather than fact, and this was not sufficient to work out the potential

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risks. Major Energy Users Association commented that because there were only 2 responses initially received it can not necessarily be assumed the issue is not worthy of further investigation. AGL commented that it would be problematic to use the cost of AGL’s investment in an LNG facility at Newcastle as an indication for the setting for VoLL in the DWGM as the industry context and operational use of the facility would be different. AGL commented that the Newcastle storage facility cannot be looked at in isolation as it is intimately linked with AGL’s proposal to develop a coal seam methane (CSM) processing facility at Gloucester. Further, because of the flat profile of a CSM facility, there needs to be a storage facility to manage gas flows that might be surplus to AGL’s requirements in the summer months. In any event, the two VoLLs are not comparable as they apply for different periods. stated that a rational investor would only provide capital for a LNG facility in NSW on the condition that it was able to recover the costs of its investment with the Market Price Cap (MPC) set at $400 GJ.

4.6 Gas Bulletin Board Redevelopment – Phase 1 roll out AEMO spoke to the forum in regards to the Gas Bulletin Board Redevelopment phase 1 roll out planned for 11 December 2014. AER asked if, in regards to what data/file flows were changing, if this work was just implementing the AEMC rule changes. AEMO responded yes, which includes the 3 – 7 day rule change and the medium term capacity. Some reports have also been removed and a static emergency page will remain there. GDF SUEZ asked what the complications for the existing data flows are. AEMO responded that a Build Pack has been sent to IT departments of organisations that provide these. In general there is not a great deal that is changing – the 3 day capacity outlook will change to 7 days. Existing data flows will still be there and there should not be significant impact. AGL asked if the IP address will be changing due to the change of server. AEMO responded that information on URLs and IP addresses is in the Build Pack. AER asked when participants are required to implement the 7 day and medium capacity. AEMO replied that this is required at the beginning of January. Jemena commented that whilst the changes are relatively small, they do have an impact on resourcing around the Christmas period. Energy Australia endorsed the timing concern. AEMO acknowledged the concern and said that in this circumstance a strict and close timetable was set by COAG that AEMO are required to meet. For any participants interest in getting a pre-production log-in please contact Anthony Alizzi [email protected]

4.7 Minor Publications Review AEMO ran through a presentation on the Minor Publications Review. AEMO is reviewing all external facing publications with the objective to improve them by engaging stakeholders about how and if they are used, and how they can be enhanced. AGL commented that some of them might have a regulatory aspect attached to them. AEMO acknowledged that part of the process was to identify this. The Major Energy Users Association asked if it was practical in some cases that by rewriting sections of one report, meant that some other reports can be retired. AEMO responded that this would be the case with some of the minor reports. AGL asked if in most cases they were manual reports. AEMO responded yes and these were predominantly being focused on. APA asked if there are a list of all papers AEMO were reviewing.

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Action - AEMO to produce a list of phase one reports that are being reviewed that distinguishes between electricity and gas reports, and short summary of what they cover.

4.8 Portfolio Rights Trading (PRT) Rule Change AEMO spoke to the forum in regards to the proposed Portfolio Rights Trading rule change and participant feedback that has been received to date. PRT would allow transfers of tariff D and V AMDQ and AMDQ Credit Certificates between parties for the benefits of uplift hedges and injection tie-breaking rights without affecting the ownership of the underlying curtailment rights. Currently, tariff V AMDQ cannot be transferred. Due to the further analysis into scope, costs and proposed benefits of PRT the date for the AEMC’s final determination has been extended to 27 November.

4.9 Authorised Maximum Interval Quantity (AMIQ) Profile Review AEMO spoke to the forum in regards to the AMIQ profile limits that Lumo Energy submitted a request to be reviewed. AEMO acknowledged that the AMIQ profile has not been reviewed since the last market start and will provide a paper setting out what the profile is, how accurate it is and what AEMO are proposing to do. APA raised that this agenda item, including others from the GWCF seem relevant to the AEMC work on Capacity and Risk Management. Terms of Reference have not been received on this, but the AEMC stated that one of the first steps will be to prepare an issues paper where a large amount of engagement from participants will be sought. Action – AEMO to invite a member of the Victorian Government to speak at the forum about the work being done on Capacity and Risk Management. Action – AEMO to provide a paper outlining what the profile is and how accurate it is. Next steps that AEMO are proposing to take.

4.10 Contingency Gas Evidentiary Rule Change – STTM Procedures AEMO spoke to the forum in regards to the Contingency Gas Evidentiary Rule Change – STTM Procedures. Between September and December 2012 AEMO consulted on settlement related matters with the STTM-CF. These were not completed and AEMO have identified gaps which require finalisation. AEMO will put together an issues paper with background on what was decided, gaps identified and actions that need to be taken. A workshop will be set up in December to brief participants on any implications of these gaps. AEMO noted that the AEMC has started its initial consultation on the rule change proposal. Submissions are due 4 December. If possible participants would appreciate information about the gaps identified before the 4 December as this may inform their submissions on the rule change proposal. Actions • Prepare an issues paper and circulate to participants before 4 December. • Arrange a meeting/workshop to discuss the issues.

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5. Other Business

• AEMO raised that they are currently putting together a consultations monitor to supplement the Rule Change Bulletin that has recently been provided externally. AEMO will seek further participant input. • AEMO spoke to the forum regarding a review in Real Time Operations on system wide notices for constraints for the Declared Wholesale Gas Market (DWGM). Work will include looking at notices that are needed, used and improvements that could be made. AGL asked if there would still be a constraint on the number of characters that can be included in the notices. AEMO responded that this was unlikely to change. • AEMO spoke to the forum in regards to preparation work being done for STTM contingency gas exercises. These are going to be run early next year with the idea of then implementing the process of contingency gas. • APA informed the forum that Envestra have a proposal before the GRCF for how unaccounted for gas (UAFG) is treated in QLD to align with the VIC model. • Actions o System wide notices for constraints - Communications to be sent to participants including further information on the review of system wide notices, and request for feedback. o STTM Contingency Gas exercises – Communications to be sent to participants with findings from last year’s exercises lessons learnt, and asking for input for 2015 from participants.

6. Meeting Critique No feedback was given.

7. Next meeting The next GWCF meeting is scheduled for 10 February 2015.

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New action items raised at meeting 4

Item Topic Action required Responsible By 4.1 Emergency Incident AEMO February 2015 Notices / Conference • AEMO to look into providing further detail on gas incident notices. call invitations 4.2 Application of AEMO Before Constraints in the • Follow up with stakeholders regarding specific training, education Christmas 2014 DWGM and scenarios. • Provide a forward plan of dates that includes training, pre-winter strategy and consultation on the gas scheduling procedures. • Provide information outlining the difference between injection capacities of the facilities connected to the southwest in context to the issue. 4.3 Minor Publications AEMO End of January Review • Produce a list of phase one reports that are being reviewed that 2015 for distinguishes between electricity and gas reports, and short February 2015 summary of what they cover. forum

4.4 Capacity and Risk • Invite a member of the Victorian Government to speak at the AEMO Aiming for Management forum about the work being done on Capacity and Risk February 2015 Management. 4.5 Contingency Gas AEMO Workshop 9 Evidentiary Rule • Prepare an issues paper and circulate to participants before 4 December 2014 Change – STTM December. (TBC). Paper Procedures • Arrange a meeting / workshop to discuss the issues. sent prior to this. 4.6 System Wide Notices AEMO December 2014 • Communications to be sent to participants including further / Present at information on the review of system wide notices, and request for February 2015 feedback. forum 4.7 STTM Contingency AEMO Before Gas exercises • Communications to be sent to participants with findings from last Christmas 2014 year’s exercises lessons learnt, and asking for input for 2015 from participants.

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4.8 Authorised Maximum AEMO Paper to be Interval Quantity • Provide a paper outlining what the profile is and how accurate it is. presented in (AMIQ) Profile Review Next steps that AEMO are proposing to take. April 2015

Items raised prior to meeting 4

Item Topic Action required Responsible By 3.1 Application of AEMO September 2014 Closed – see action 4.1 AEMO to reschedule the workshop and Constraints in the / October 2014 provide, in advance, a simple paper explaining the non-compliance DWGM and subsequently a more detailed paper outlining the issues to be discussed at the workshop. Findings from the workshop to be presented to the October GWCF.

3.2 VoLL/CPT settings for Closed - AEMO to provide an update on feedback received at the AEMO October 2014 the STTM October forum and to assess the scope of work from that. 3.3 Elizabeth Network Pending - APA to give an update in February 2015 APA February 2015 Isolation Valve 3.4 Gas Market Prudentials Pending - AEMO to present a draft plan of work Update – Timeline of AEMO October 2014 work to be presented in the New Year 2.1 MOS Implementation Closed - Participants to send they preferred contact details to Sandra Participants ASAP McLaren for AEMO and / or PWC to contact.

2.2 STTM Deviation and Closed - AEMO to produce a simplified document to accompany the AEMO July 2014 Settlement surplus and current Proposed Procedure Change (PPC) document. shortfall procedures 2.3 STTM Capacity AER August 2014 Closed - AER to seek feedback from other pipeline facilities for their Submissions interpretation. Complete – review in quarterly compliance report.

2.4 National Gas Forecast AEMO ASAP Closed - AEMO to send list of participants involved in the consultation Report (NGFR) Consultation to the forum, and also the list of independent peer review consultants. participants list Interested forum participants to email Clare Greenwood if they would Completed like to receive future information on this. Friday 13 June

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Gas Wholesale 1.1 Closed - AEMO to produce forward plan that can be circulated to AEMO June 2014 Consultative Forum participants. This will be sent out with the minutes after each forum. Proposal – Forward plan Directional Flow Point 1.2 Pending - Provide further work examples and scenarios. AEMO to set AEMO August 2014 Constraint Pricing up a separate workshop (DWGM)

Pre-winter strategy 1.3 Complete - Provide a paper on changes in exports and increased AEMO June 2014 growth

35.1 Elizabeth Network Closed - APA to send the report to AEMO at the end of March for APA March 2014 STTM isolation distribution to the STTM CF.

35.2 Elizabeth Network Closed - Provide a summary of possible scenarios that could occur for APA June 2014 isolation the valve to be closed, notice periods, and closure scenarios and STTM guidelines. Closed - Seek official confirmation from Stanwell that Swanbank will 35.3 2014/15 STTM Budget AEMO April 2014 be closing. STTM AEMO confirmed this with Stanwell. Closed - Send confirmation to Industry that both reports are on the AEMO March 2014 35.4 2014/14 STTM Budget website. STTM AEMO April 2014 183.1 14-002-01 Single Closed - AEMO to prepare a formal proposal that will outline the GWCF Proposal details and structure of the meeting going forward, including the terms GWCF of reference and guidelines relating to the agenda. Agenda item 3.1 at GWCF #1 AEMO ASAP 183.2 AEMO Market Closed - AEMO to circulate the revised structure to Participants, along Development Changes with contact details of team members. GWCF AEMO April 2014 182.5 System Point Flow Closed - AEMO to draft scoping paper on SPFDCP. Direction Constraint GWCF Agenda item 3.6 at GWCF #1 Prices (SPFDCP)

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