Interconnection
Introduction
Overview
Owner: Ian Wilson
Introduction
The Gas Act 1992 (the Gas Act) provides for regulations to be made for the purpose of ‘prescribing reasonable terms and conditions for access to transmission or distribution pipelines’. Gas Industry Co’s 2006 review of transmission access issues identified a number of concerns relating to interconnection with transmission pipelines. Subsequent discussions between Gas Industry Co and interconnecting parties suggest that: interconnection processes are poorly defined; technical requirements for interconnection equipment have been changed during the course of projects; roles and responsibilities have been confusing; and liability/insurance matters have not been addressed until late in the process.
The objective of this Interconnection work programme is to ensure that the arrangements for interconnection with transmission pipelines are reasonable. If necessary, as the industry body under the Gas Act, Gas Industry Co may recommend the introduction of rules or regulations to achieve the objectives of the Gas Act and Government Policy Statement on Gas Governance (GPS).
Summary of Status
Gas Industry Co has developed Interconnection Guidelines that set out its view on the features of good interconnection practice. Although these guidelines have no legal standing, Gas Industry Co intends that transmission system owners (TSOs) should use them to develop their interconnection services. It is also intended that parties seeking interconnection use them as a guide to the principles, processes, documentation, and dispute arrangements that might apply.
Gas Industry Co will monitor the interconnection services provided by pipeline owners. If these services do not meet the requirements of the Gas Act and GPS, Gas Industry Co will consider other options for improvement, including recommending rules or regulations to the Associate Minister of Energy and Resources (Associate Minister).
In September 2009, and initial review was conducted on the interconnection arrangements of both Maui Development Limited (MDL) and Vector against the Guidelines.
A further review was conducted in June 2010. At this review we assessed whether the interconnection services offered by both TSOs meet the Gas Act and GPS objectives. Gas Industry Co is currently analysing the results of this review.
Guidelines
In February 2009, Gas Industry Co issued the Transmission Pipeline Interconnection Guidelines (the Guidelines). The Guidelines set out its view on the features of good interconnection practice.
The objectives of the Guidelines are to:
• describe what a TSO’s interconnection policy should address;
• describe the phases of interconnection, what should happen in each phase, and the key decision points;
• establish principles that should apply to the overall provision of an interconnection service, and to each phase of interconnection;
• encourage TSOs to adopt consistent interconnection documentation;
• establish clear responsibilities; and
• minimise barriers to entry by promoting transparency and efficiency.
Guidelines on Interconnection with Transmission Pipelines (February 2009)
Updated Guidelines
In September 2009, a review was conducted on the interconnection arrangements of both MDL and Vector against the Guidelines. As a result of the review and discussions held with the TSOs, some amendments to the Guidelines were considered necessary. These amendments and the reasons for them are noted in the table below.
Guidelines on Interconnection with Transmission Pipelines (November 2009)
Amendments to Guidelines on Interconnection with Transmission Pipelines
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Amendment |
Reason |
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3.2 Interconnection Policy Each TSO should publish an interconnection policy that includes: ‘the TSO’s general policies relating to interconnection matters;’
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An overarching interconnection policy would provide greater clarity to an interconnecting party (IP). A policy would provide a clear process for both parties in respect of information requirements, timelines, and responsibilities. It would also provide the principles for issues such as the near-by existing interconnection points.
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5.2 Equipment Responsibilities Ownership The TSO and IP should agree the ownership and demarcation points of the interconnection equipment. In particular, they need to consider who will own TSO specified assets (noting that regardless of ownership, all TSO specified assetsshould be designed, constructed, operated, maintained and tested in accordance with the TSO’s standards).
For a delivery interconnection point (see Figure 3): · ownership of the equipment downstream of the primary isolation valve should be agreed between the parties. The TSO should not be obliged to own or provide this equipment. The TSO should give the IP an option to own this equipment permanently, or to transfer ownership to the TSO once constructed; and…
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The objective of the Guidelines is to provide flexibility to an IP in respect of ownership and the means of cost recovery. By allowing an IP to own the station, it can choose how it funds the capital expenditure and be assured of a competitive cost.
As MDL does not fully address the requirements of a delivery interconnection, an interconnection policy should provide guidance in respect of delivery point interconnections. The delivery interconnection point is amended so that an interconnecting party (or a third party appointed by the IP) can construct the station and then transfer ownership to the TSO, enabling the IP a similar degree of financing flexibility. |
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Appendix A Documentation Interconnection Policy An interconnection policy should include: Relevant policies and standards:
h) general policies relating to interconnection matters, including: I the use of existing interconnection points; ii equipment ownership and ownership transfer; and iii other relevant policy matters;
i) links to other policies and technical standards relevant to interconnection, including: i pricing policy; ii list of TSO-specified assets; and iii technical standards;
Technical review principles: l) a description of the process and principles that will be used to assess the technical acceptability of an interconnection application.
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Neither has a specific interconnection policy; however, many aspects of the policy are addressed by each TSO in various documents. An overarching interconnection policy would provide greater clarity to an interconnecting party (IP). A policy would provide a clear process for both parties in respect of information requirements, timelines, and responsibilities.
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Review
A further review will be conducted in June 2010. At this later review we will assess whether the interconnection services offered by both TSOs meet the Gas Act and GPS objectives and, if not, consider other options for improvement, including recommending rules or regulations to the Minister of Energy and Resources.
Advice
In February 2010, the Associate Minister of Energy and Resources (the Associate Minister) requested advice on the desirability of applying some of the best practice arrangements outlined in Gas Industry Co’s Guidelines on Interconnection with Transmission Pipelines (the Guidelines) to private pipelines in the Taranaki region.
Gas Industry Co’s advice to the Associate Minister is that the application of the voluntary Guidelines to private pipelines is unlikely to improve access to private pipelines. In particular:
• the Guidelines were designed for open access pipelines and only relate to interconnection arrangements; and
• to improve access to private pipelines, the Guidelines would need to address the issues arising from the carriage of non-specification gas.
Gas Industry Co does, however, find merit in formalising a protocol for the collection and assessment of information regarding access disputes and related matters between the Ministry of Economic Development (MED) and Gas Industry Co. This protocol will assist Gas Industry Co and MED in monitoring access disputes and ultimately forming a judgement on whether further investigation or regulatory reform is warranted.