GMO NI Shipper Forum Minutes
Wednesday, 19th June 2019
1st Floor, Arena Building, 85 Ormeau Road, Belfast
Attendees
Organisation Representative Electric Ireland (EI) Mark Phelan
ESB Kirsty Ingham
Firmus Energy (fe) Catherine Fisher* Lisa McCarthy* Lynda Millar* Niall Martindale*
Flogas Hazel Byrne*/**
GMO NI David McIntyre Joanne McNeill Peter Carey Stephen English Stephen O’Hare
GNI(UK) Doug O’Brien*
Go Power David Arias*
Mutual Energy (MEL) Emmet McFadden**
Phoenix Natural Gas (PNGL) Abigail McEwan* Christopher Doherty*
SSE Airtricity Andrew McCorriston*
SGN Natural Gas Mary O’Kane*
Utility Regulator (UR) Jillian Ferris *Attendance via Conference Call **In part
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Agenda Items
1. Welcome and Introductions
GMO NI welcomed everyone to the meeting.
2. Approval of Minutes from last meeting
Minutes approved.
3. Review of Actions from last meeting
Ref. Action Owner Timelines 014 Shippers to review nomination Shippers Ongoing behaviour and make any necessary changes e.g. nominating in line with DNO Forecasts and reducing the amount of mismatched and missing IP Entry nominations. Update GMO NI advised that they will be keeping the action open until there are noticeable improvements in the nomination behaviour of all Shippers. Ref. Action Owner Timelines
018 PNGL to arrange meeting with UR and PNGL Closed GMO NI to discuss their requirement for additional credit support due to the change in the capacity commodity split.
Update PNGL advised that they will set up a meeting after the busy summer period.
4. Annual Auction for Yearly IP Entry Capacity
GMO NI reminded the group that the Annual Auction for Yearly IP Entry Capacity will be held on PRISMA on at 8am on Monday 1st July and noted that they only expect one bidding round. They highlighted that this auction is the only opportunity for Shippers to book Yearly IP Entry Capacity for Gas Year 19/20.
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5. Incremental Capacity Process
GMO NI reminded the group that incremental capacity was last discussed a couple of years ago as it is a biennial process. They explained that incremental capacity refers to ‘new’ capacity which might be provided at Interconnection Points (IPs).
GMO NI went through the timeline shown on slide 10. They advised that invitations to submit Non-Binding Demand Indications (NBDI) will be issued on 1st July. GMO NI highlighted that a fee will be payable when submitting an NBDI and that this will be refundable if the economic text is later passed. The NBDI submission window will close on 26th August 2019. GMO NI explained that once the window for NBDI submissions has closed, the Transporter has 8 weeks to produce a Market Demand Assessment (MDA) Report. GMO NI stated that the process steps which follow are dependent on whether any NBDIs are received. They noted that in 2017, no NBDIs were received and the process ended following the publication of the MDA Report. PNGL asked whether GMO NI believes incremental capacity will be required, given that the recent NI Gas Capacity Statement shows shortfalls may occur. GMO NI replied that they would be surprised if there were any indications this year as sufficient capacity is available at present. They noted that should a new power station come on or storage be made available, this may trigger demand for additional capacity, however as outlined in the NI Gas Capacity Statement there is sufficient IP Entry Capacity into NI when both the Moffat and South North IPs are taken into consideration. GMO NI also clarified that a NBDI can only be submitted by an existing Shipper.
6. GY19 Credit Support Process
GMO NI reminded Shippers of the timeline (slide 13). They asked the group to make sure all information submitted is accurate as last year there was a lot of interaction between GMO NI and Shippers in an attempt to obtain the correct information.
7. Balancing Gas Contracts Tender
GMO NI informed the group that the Transporter is currently finalising the contracts and tender documentation. They noted that the pricing structures and contracts offered will be the same as last year. ESB asked when the tender documents will be published. GNI(UK) replied that the aim is to publish before the end of June with a view to responses being received in early August. GMO NI commented that Shippers will be advised once the tender is open and provided with details of where to access the tender documentation.
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8. Nomination Behaviour Update
GMO NI provided a verbal update on nomination behaviour. They advised that the same issues are still arising, and they are seeing large swings on the network on the day. They noted that yesterday (18th June) one of the power stations more than doubled their nomination within day.
MEL commented that over the past 6 weeks – 8 weeks there has been a substantial amount of gas taken from the system, which has been triggering balancing actions. MEL stated that it appears to be the power stations causing this issue. ESB commented that they are meeting GMO NI next week (25th June) to discuss nomination behaviour. They explained that since the start of I–SEM they have been receiving late indications from SONI and noted that GNI has been engaging with the electricity industry on this matter. ESB stated that because the gas and electricity days do not align it is impossible to predict changes in demand and therefore large swings occur. MEL commented that the prices they are paying for balancing gas are inefficient and Shippers will have to pay for this inefficiency. GMO NI noted that during May there were 11 balancing buys costing around £250,000. MEL commented that these issues should have resolved themselves during the first few months of I-SEM and things should have settled by now. MEL further commented that there is clearly a requirement for the gas and electricity industries to meet and discuss these issues. They asked whether this could be arranged. UR commented that they would discuss this internally and provide an update at the next meeting.
Ref. Action Owner Timelines
019 UR to discuss holding electricity and gas UR 21/08/2019 industry meeting internally and provide an update at the next Shipper Forum meeting.
ESB asked whether UR would like them to provide any statistics/information to help with preparing for such a meeting. UR replied that this would be helpful, and they are interested to hear the outcome of ESB’s meeting with GMO NI.
GMO NI commented that based on the number of calls received recently it is obvious staff are not being trained on use of Delphi and the information required is not being shared internally with those who enter nominations. They advised that GMO NI are always happy to provide training and stated that they plan to send out training material again regarding the status codes on Delphi.
GMO NI proceeded to discuss recent developments regarding Code modifications aimed at targeting poor nomination behaviour. They advised that the matter is currently being discussed internally and that the development of full modifications will require approval from the GMO NI Governing Committee. If granted, GMO NI may be in a position to provide more detail at the August Shipper Forum. GMO NI also advised that the matter requires discussion with UR as any financial penalties imposed would need to be allowed under the TSO licences. Flogas noted that GMO
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NI mentioned breach of Supply licence at the last Shipper Forum and asked whether there is one particular Shipper in breach of their licence obligations. GMO NI stated that the TSOs prioritise their licence compliance and that their comments regarding breach of licence was merely a suggestion aimed at encouraging Shippers to ensure that they are compliant with licence provisions. GMO NI also stated that they have no role in monitoring Shipper’s licence compliance. UR commented that they would prefer Shippers to ensure they are compliant with Code obligations before licence breaches are considered. Flogas asked whether Code modifications are the only available path. UR replied that licence enforcement still remains an option, but this will not be taken lightly, and Shippers must first ensure that are complying with the Code. Flogas commented that work on this matter is slow and expressed their desire for it to be addressed before winter begins and there is more uncertainty. GMO NI emphasised that any Code modification/s being considered are complex and it will take time to ensure that any measure proposed does not result in unintended consequences. fe commented that they agree with Flogas and progress on the matter is slow. They expressed their frustration at the costs incurred by their company because of other Shipper’s poor nomination behaviour. GMO NI stated that there have been improvements in nomination behaviour in recent months and reminded the group that the differences in nominations compared to forecasts is not large, providing the example of the Belfast Exit Point, where most differences account for less than 1% of the total allocation. They also noted that issues are largely created by one particular Shipper therefore is not widespread. fe stated that this issue needs to be policed by licence rules. GMO NI agreed and stated that whilst the Code must be complied with, the licences are important as well. PNGL asked if there is a timeline regarding the action on UR to set up a meeting between the gas and electricity sector to discuss the issues surrounding I-SEM. UR confirmed that they will discuss the matter internally and there is no timeline as of yet. PNGL also asked whether any Code modification/s would address issues with both distribution and power generation. GMO NI confirmed that any Code modification/s would aim at dealing with the issue across both sectors.
9. Tolerance Review
GMO NI provided the group with an update regarding their review of tolerances. They explained that the aim of the review is to assess the suitability of the current imbalance tolerance arrangements and the existence of any indicators to lower the tolerances across any or all load categories. GMO NI advised that the report will be published within the next few weeks and Shippers can provide a response to the consultation questions within the report. They noted that tolerances have not been altered since inception and commented that they must be low enough to strongly incentivise Shippers to balance their portfolios and yet be large enough to provide relief from inherent imbalance risk. GMO NI proceeded to talk the group through the graphs and information within the slides (slides 21-38). ESB commented that the figures shown on slide 21 do not show the whole picture. GMO NI replied that the figures are intended to show the direction in which tolerances should ultimately go –
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eventually ending up at 0%. They emphasised that there is no intention to immediately strip away tolerances.
GMO NI noted that Trading Shippers are excluded from the analysis, along with Daily Metered forecasting. PNGL asked why Daily Metered forecasting is excluded. GMO NI explained that Daily Metered forecasting is a requirement under the respective DNO Codes and that there is a section within the Tolerance Review on following forecasts.
GMO NI highlighted the graph shown on slide 26 and noted that it shows Distribution Shippers find it easier to stay within tolerance than Power Generation. ESB asked over what time period the figures are taken. GMO NI replied that all figured within the report are taken from the time period between October 2017 to March 2019.
GMO NI also highlighted slide 29 and commented that not all Shippers nominate to forecast but if they did, huge improvements would be made and in fact the graphs show that 2 Shippers would no longer be in breach of their tolerance.
fe asked GMO NI to explain the graph on slide 34. GMO NI explained that Exit allocations at the Ten Towns Exit Point are calculated using the Pro-Rata to nominations methodology on D+1 however when the figures are reallocated at the end of the month using the figures provided by firmus energy, this change can lead to significantly different imbalance quantities once they are recalculated. The chart illustrates the level of changes.
GMO NI proceeded to discuss the conclusions of the Review and stated that reductions to tolerances will be made in two phases, with Phase 1 starting as soon as possible in GY19/20 and Phase 2 being implemented in GY20/21. fe asked whether it would be more beneficial to carry out any reduction in tolerances after the issues with nomination behaviour are addressed. GMO NI replied that the Phase 1 of the tolerance reduction can be carried out without the nomination behaviour issues being addressed. fe also asked whether the huge swings caused by Power Generation will influence the tolerance reduction. GMO NI stated that this will be taken into consideration. They also stated recent communications with ACER and ENTSOG the EC have produced feedback that tolerances in Northern Ireland should be reduced. ESB commented that despite the push from those parties to reduce tolerances, it must be noted that there is still a lack of liquidity within NI. GMO NI stated that they had highlighted the limitations within NI, but despite doing so, it was made clear for compliance with the Balancing Regulation that tolerances should be reduced. They commented that they are keen for Shippers to provide their feedback through the consultation when it is issued. PNGL asked whether issues with Citygate data being received by the DNO would be considered as 18 % of the days in 2017/2018 were affected for PNGL as highlighted in the NDM Accuracy of Forecasting Report. GMO NI explained that these days have already been included in the Tolerance Review analysis. Finally, fe stated that they support GMO NI in the aims of their Tolerance Review but reiterated that nomination behaviour also needs to be addressed.
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10. 2020 Meetings
GMO NI advised that due to the suggestion at the May GMOG meeting that meetings should be reduced to a bimonthly basis. They explained that they have discussed this matter with UR and see merit in continuing to coordinate GMOG and the Shipper Forum. GMO NI stated that it therefore proposes moving to bimonthly meetings, with an option to hold extraordinary teleconferences or meetings should anything important need to be discussed in the months when meetings are not held. They noted that 6 meetings will be scheduled for 2020, with no meeting in July or early mid/late December. 2019 meetings will remain as scheduled and highlighted that should GMOG be cancelled, this does not mean that the Shipper Forum will be as well. GMO NI commented that they are keen to hear industry views on the matter.
11. AOB
GMO NI advised that Gas to the West commissioning is due to take place at the end of the week or beginning of the week commencing 24th June. They advised that the group will be updated on the project at an upcoming Shipper Forum.
Next Meeting: 10:00am, Wednesday, 21st August 2019
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Summary of Actions
Ref. Action Owner Timelines
014 Shippers to review nomination Shippers Ongoing behaviour and make any necessary changes e.g. nominating in line with DNO Forecasts and reducing the amount of mismatched and missing IP Entry nominations.
018 PNGL to arrange meeting with UR and PNGL Closed GMO NI to discuss their requirement for additional credit support due to the change in the capacity commodity split. 019 UR to discuss holding electricity and gas UR 21/08/2019 industry meeting internally and provide an update at the next Shipper Forum meeting.
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