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 Click Energy 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. GWCF NOVEMBER 2014 - MINUTES PAGE 2 OF 9 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 GWCF NOVEMBER 2014 - MINUTES PAGE 3 OF 9 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.