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Aurizon Network's Northern Bowen Basin System Rules

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Aurizon Network's Northern Bowen Basin System Rules Position paper Aurizon Network's Northern Bowen Basin system rules 17 September 2015 We wish to acknowledge the contribution of the following staff to this report: Clotilde Bélanger and Sean McComish © Queensland Competition Authority 2015 The Queensland Competition Authority supports and encourages the dissemination and exchange of information. However, copyright protects this document. The Queensland Competition Authority has no objection to this material being reproduced, made available online or electronically but only if it is recognised as the owner of the copyright2 and this material remains unaltered. Queensland Competition Authority Table of Contents SUBMISSIONS Closing date for submissions: 29 February 2016 This position paper is a draft only and is subject to revision. Public involvement is an important element of the decision‐making processes of the Queensland Competition Authority (QCA). Therefore submissions are invited from interested parties concerning its assessment of Aurizon Network's proposed Northern Bowen Basin system rules. The QCA will take account of all submissions received. Submissions, comments or inquiries regarding this paper should be directed to: Queensland Competition Authority GPO Box 2257 Brisbane Q 4001 Tel (07) 3222 0555 Fax (07) 3222 0599 www.qca.org.au/submissions Confidentiality In the interests of transparency and to promote informed discussion, the QCA would prefer submissions to be made publicly available wherever this is reasonable. However, if a person making a submission does not want that submission to be public, that person should claim confidentiality in respect of the document (or any part of the document). Claims for confidentiality should be clearly noted on the front page of the submission and the relevant sections of the submission should be marked as confidential, so that the remainder of the document can be made publicly available. It would also be appreciated if two copies of each version of these submissions (i.e. the complete version and another excising confidential information) could be provided. Where it is unclear why a submission has been marked 'confidential', the status of the submission will be discussed with the person making the submission. While the QCA will endeavour to identify and protect material claimed as confidential as well as exempt information and information disclosure of which would be contrary to the public interest (within the meaning of the Right to Information Act 2009 (RTI)), it cannot guarantee that submissions will not be made publicly available. Public access to submissions Subject to any confidentiality constraints, submissions will be available for public inspection at the Brisbane office, or on the website at www.qca.org.au. If you experience any difficulty gaining access to documents please contact us on (07) 3222 0555. iii Queensland Competition Authority Table of Contents Table of Contents SUBMISSIONS III Closing date for submissions: 29 February 2016 iii Confidentiality iii Public access to submissions iii EXECUTIVE SUMMARY VI Background vi Key preliminary positions vi Way forward vii THE ROLE OF THE QCA – TASK, TIMING AND CONTACTS VIII 1 INTRODUCTION 1 1.1 The Northern Bowen Basin coal system 1 1.2 Evolution of system rules 3 1.3 Structure of this position paper 5 2 LEGISLATIVE FRAMEWORK AND ASSESSMENT APPROACH 6 2.1 Approval criteria for draft system rules 6 3 PLANNING 11 3.1 Introduction 11 3.2 How the NBB differs from Capricornia 11 3.3 Intermediate Train Plan 13 3.4 Other ITP‐related issues 26 3.5 Master Train Plan 31 3.6 Possessions planning 45 3.7 Varying possessions planning 49 3.8 Transparency of system variability in capacity planning 52 4 TSE CONSUMPTION RULES AND COMMERCIAL IMPLICATIONS 54 4.1 TSE calculation formula 54 4.2 TSE consumption rules during 48‐hour lockdown period 57 4.3 Advertising and allocating available mainline train paths 60 4.4 Recovery of Aurizon Network cause undelivered TSEs 62 4.5 Penalty regime for co‐shippers 63 4.6 Updating the DTP for train performance measurement 64 5 SCHEDULING AND CONTROL 66 5.1 Scheduling GAPE cross‐system traffic on the Goonyella system 66 5.2 Transfer of paths within an access holder's portfolio 68 5.3 Aurizon Network's supply chain objectives 69 5.4 Feedback on CTPDMP outcome 73 5.5 Alteration of scheduling requests 76 iv Queensland Competition Authority Table of Contents 5.6 Scheduling of passing, crossing and dwelling times 77 5.7 Timing of lockdown of the 48‐hour schedule 78 5.8 Acceptance of the 72‐hour schedule 80 5.9 Scheduling of cross‐system trains 81 6 GENERAL AMENDMENTS AND ADMINISTRATION 84 6.1 Review period for delays and cancellations 84 6.2 Delays and cancellations cause attribution 85 6.3 Review and amendment of the NBB system rules 93 6.4 Business Execution Rules 96 6.5 Perception of vertical integration 97 6.6 Hierarchy of system rules, access undertaking and access agreements 99 GLOSSARY 101 APPENDIX A : THE NATURE OF THE MTP IN SCH. G OF THE 2010 AU 104 APPENDIX B : CONTESTED TRAIN PATH DECISION‐MAKING PROCESS 107 REFERENCES 109 LIST OF SUBMISSIONS 110 v Queensland Competition Authority Executive Summary EXECUTIVE SUMMARY Our preliminary position is that we would refuse to approve Aurizon Network's proposed Northern Bowen Basin (NBB) system rules, for the reasons detailed in chapters 3 to 6 of this position paper. We consider Aurizon Network has further work to do in developing a set of system rules which: fully explain how the mechanisms for planning, scheduling and controlling in the NBB will operate, and are consistent with the Approval Criteria set out in Chapter 2 of this position paper. In this position paper we suggest changes to the draft NBB system rules which we consider will better: promote the economically efficient operation and use of the rail infrastructure, and balance the legitimate business interests of Aurizon Network with the interests of access holders and seekers. Background System rules specify the way Aurizon Network plans, schedules and controls the operation of train services on one or a group of coal systems. On 5 August 2013, Aurizon Network submitted the draft NBB system rules. To date, we have published Aurizon Network's proposal along with nine submissions and a consultant's report. Our assessment of the draft system rules in this paper reflects the Approval Criteria in the relevant legislation. Key preliminary positions In its draft NBB system rules, Aurizon Network has proposed a number of processes that will help improve the operation of the network, for example: 72‐ and 48‐hour schedules providing intermediate information in the scheduling process beyond what is required in the network management principles a three‐week lock down of planned maintenance, and greater flexibility in transferring train paths within an access holder’s portfolio. Where these met the Approval Criteria, we have accepted the processes Aurizon Network has put forth in its system rules proposal. These issues are not the focus of this position paper. Instead, we have focused on other aspects of Aurizon Network's proposal, addressing issues with an aim to: tailor the processes to suit the characteristics of the NBB supply chains balance the legitimate business interests of Aurizon Network with the interests of access holders and seekers. Two key issues in this position paper are related to planning: The nature of the Intermediate Train Plan (ITP)—stakeholders would prefer more flexibility in train ordering, rather than the static seven‐day ITP proposed by Aurizon Network, where train paths get 'locked in' as early as 11 days prior to the day of operation. We consider that Aurizon Network's proposal includes a Sunday night 'cut‐off' which can impact on access holder's monthly train service entitlements (TSEs). We are proposing greater flexibility via a 10‐day rolling ITP and running the vi Queensland Competition Authority Executive Summary Contested Train Path Decision‐Making Process only 72 hours before the day of operation. We consider this will address stakeholders' concerns and better suit the needs of the Goonyella system. The nature of the Master Train Plan (MTP)—Aurizon Network's proposal and stakeholders' submissions indicate there are conflicting perceptions on the precise nature of the MTP, what it should achieve and what information it should include. We propose to clearly set out that the MTP is a theoretical train plan demonstrating that Aurizon Network can deliver all access holders' TSEs in a given month. We propose that Aurizon Network should seek permission to disclose the NBB contracted volumes to each access holder through a complete and transparent MTP. We consider this will provide valuable information to access holders and has the potential to improve the operation of the NBB system, including fostering coordination. In addition, we are suggesting some amendments which are consistent with our final decision on the Capricornia system rules. This is because Aurizon Network submitted the draft NBB system rules prior to our final decision on the Capricornia system rules. Draft decision on Final decision on Capricornia Capricornia April 2013 February 2014 Submission of NBB Position paper on to QCA NBB August 2013 September 2015 Way forward We are seeking stakeholder comments by 29 February 2016. This is an extended stakeholder consultation period as we do not anticipate publishing a final decision under the 2010 access undertaking, which is due to terminate on 29 February 2016. Instead, when UT4 commences, Aurizon Network will be required to submit system rules that take into account this position paper and stakeholders’ submissions. The time we take to review and approve the resubmitted system rules will depend on their contents and the timeframes in the 2014 undertaking. vii Queensland Competition Authority The Role of the QCA – Task, Timing and Contacts THE ROLE OF THE QCA – TASK, TIMING AND CONTACTS The Queensland Competition Authority (QCA) is an independent statutory authority to promote competition as the basis for enhancing efficiency and growth in the Queensland economy.
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