Explore this Work Programme:
Overview
Downstream Reconciliation involves reconciling volumes of gas leaving the high-pressure transmission system with volumes consumed by end-users, and appropriately attributing those volumes, plus any unaccounted-for-gas (UFG), to retailers.
Rules
The current Gas (Downstream Reconciliation) Rules 2008 (the Rules) came into effect on 1 October 2008 and were last modified on 14 September 2015.
Gas (Downstream Reconciliation) Rules 2008
Key areas for this Work Programme
This section covers the day-to-day work that occurs as a result of the Rules and how the Rules are put into operation.
This section covers the trial of a daily allocation model that arose as a result of the implementation of market-based balancing.
This section covers the original development of the Rules, along with subsequent reviews and amendments and previous consultations.
Current arrangements
The Gas (Downstream Reconciliation) Rules 2008, place ongoing obligations on several parties to effectively manage the downstream reconciliation arrangements. We are empowered to:
- appoint an Allocation Agent
- make determinations, exemptions and guidelines in respect of certain matters.
- direct audits and special allocations to be carried out, and
- recover market fees to fund the operation of the downstream reconciliation arrangements (for example the costs of the Allocation Agent).
We consult regularly with industry stakeholders when undertaking these activities. This section contains a record of consultations and decisions in all matters relating to the operation of the Downstream Reconciliation Rules.
Key areas
Appointment of Allocation Agent
The Downstream Reconciliation Rules require that Gas Industry Co appoints an Allocation Agent to perform allocations by operating the Gas Allocation System and Gas Allocation Portal.
Allocation Agent Service Provider Agreement
EMS (October 2013 agreement - go-live January 2014)
Following the completion of the initial five-year term of the Allocation Agent service provider agreement, Gas Industry Co carried out a competitive tender process for the role.
In October 2013 an agreement was reached with EMS (Energy Market Services, a business unit of Transpower NZ Limited) to assume the role of Allocation Agent for an initial term of five years, effective 1 January 2014, after a transition process from NZX.
The term of the Allocation Agent service provider agreement with EMS was extended by Gas Industry Co in 2018, and again in 2021.
In February 2023 the agreement was also amended to reflect the service provider moving the Gas Allocation System from its physically hosted environment to cloud-based hosting.
The agreement was subsequently further extended through to 31 March 2024, to enable completion of procurement processes for the appointment of the Allocation Agent beyond that time.
Amended AASPA Agreement
Re-appointment of EMS (January 2024 variation - effective 1 April 2024)
In January 2024 Gas Industry Co re-appointed EMS as the Allocation Agent for an initial period of 3 years from 1 April 2024. This was agreed by way of a Variation Agreement executed between the parties in January 2024.
Service Provider documents
Rule 8 of the Downstream Reconciliation Rules requires that Gas Industry Co publish the Allocation Agent service provider agreement. Accordingly, copies of the service provider agreement documents are available under related documents below.
The General Terms govern the Services provided by the Allocation Agent service provider.
The Services themselves are recorded in separately executed Service Descriptions, currently comprised of an Establishment Service Description and an On-Going Service Description.
The Allocation Agent Functional Specification details the requirements of the system to be developed and operated by the allocation agent for the downstream reconciliation and allocation of gas. A copy of the Allocation Agent Functional Specification can also be viewed under related documents.
Please note that the functional specification may be subject to change via the change request process.
Allocation file formats and the file naming conventions are specified in the Reconciliation File Formats Notice available here.
Related Information
Allocation Agent Monthly ReportsRelated documents
We commission event audits and performance audits of compliance with the Rules. Under rule 73, we must publish all final audit reports.
The reports published below have been commissioned under the provisions of the Rules. As required by rule 68, the auditors appointed for these audits are independent of Gas Industry Co. These reports represent the work of the individual auditors. Any conclusions reached, or opinions expressed, in the final audit reports are solely the auditors' and do not necessarily reflect the views of Gas Industry Co.
Event audits
The purpose of event audits is to ascertain the cause or causes of any particular issue or event that has arisen in relation to the allocation of gas under the Rules.
Performance audits
Under rule 65, we are required to commission performance audits of the allocation agent and allocation participants at regular intervals. These audits examine retailers' compliance with requirements in the Rules such as receiving and storing meter readings, converting meter readings to energy usage, and submitting accurate information to the allocation agent. Performance audits are also required in advance of major system changes.
Related Information
Downstream Audits - Previous (2019-2023)Downstream Audits - Previous (2016-2018)
Downstream Audits - Previous (2013-2015)
Downstream Audits - Previous (2010-2012)
Related documents
File Formats
The Rules provide for the industry body (Gas Industry Co) to give notice to allocation participants specifying one or more information exchange file formats (File Formats) that allocation participants must provide information to the allocation agent in.
Other Determinations
The Rules provide for the industry body (Gas Industry Co) to determine and publish certain matters required for the operation of the downstream allocation and reconciliation framework. Notice of these determinations, and the analysis of submissions received through consultation on these determinations, is available by clicking on the links below:
Pursuant to rules 37.3 and 37.4, Gas Industry Co determines that the percentage of error for the accuracy of the consumption information provided for initial allocation to be applied to the consumption periods:
(a) in the gas year commencing 1 October 2008 is ±15%; and
(b) in the gas year commencing 1 October 2009 is ±12.5%; and
(c) in all subsequent gas years is ±10%
Matariki
Gas Industry Co has determined that the new public holiday acknowledging Matariki is a non-business day under gas governance rules and regulations.
The Notice of Determination of Non-Business Day by the Industry Body (Gas Industry Co) under Gas Governance Rules and Regulations can be read below.
It provides for this additional non-business day until the rules and regulations are amended to include an explicit reference to Matariki alongside New Zealand’s other statutory holidays.
Queen Elizabeth II Memorial Day
Following the passing of the Queen Elizabeth II Memorial Day Bill on 20 September 2022, Gas Industry Co determines Queen Elizabeth II Memorial Day, Monday 26 September 2022, to be a non-business day for the purpose of the Arrangements.
The Notice of Determination of Non-Business Day by the Industry Body (Gas Industry Co) under Gas Governance Rules and Regulations can be read below.
Related Information
Previous DeterminationsRelated documents
The Rules provide that Gas Industry Co may, where appropriate, exempt an allocation participant(s), the allocation agent or a gas gate from complying with all or any provisions of the Rules. Exemption applications may be either standard (under rule 19) or urgent (under rule 20).
Gas Industry Co will consult with allocation participants on exemption applications, either in advance of making a decision for standard exemptions, or retrospectively for urgent exemptions.
An exemption application form is available below in Related Documents. All exemption applications, decisions and exemption notices will be published here following consideration. Previous exemptions can be viewed on the subpage by clicking on the appropriate link.
CURRENT EXEMPTIONS
There is one exemption currently in effect. The exemption notice is available in the Related Documents section
- Standard Exemption (DR20-02: COVID-19 Lockdown) Notice 2020
EXPIRED EXEMPTIONS
The following expired exemption notice is also available in the Related Documents section
- Urgent Exemption (DR20-01: COVID-19 Lockdown) Notice 2020
Related Information
Previous ExemptionsRelated documents
Submissions
The following document provides a list of all gas gates. We last updated the list in April 2016. The list corresponds to the gas gate list used by the allocation agent and the list available for download from the gas registry. Any changes to the gas gate list should be made via the Gas Gate Change Notice form which can be viewed below.
Information on gas gate annual UFG factors, which was previously published in this section, can be found on the allocation agent's website, www.gasreconciliation.co.nz. Once on the allocation agent's website, click on downloads then select "GAR090: Annual UFG Factor" in the submission type dropdown.
Related documents
Gas Industry Co has developed the following guideline notes (see related documents) to assist allocation participants and the allocation agent in interpreting and applying the Gas (Downstream Reconciliation) Rules 2008 ("the Rules").
Related Information
Previous GuidelinesRelated documents
The Downstream Reconciliation market fees are monthly fees that cover the ongoing costs associated with allocation and/or downstream reconciliation arrangements. The ongoing allocation costs are:
- the costs payable to the Allocation Agent
- the costs of the Gas Industry Co associated with allocation and our obligations under the Reconciliation Rules.
Each month, we invoice gas retailers for a proportion of the market fees based on their market share of 'allocated' gas. This is the gas that flows through reticulated gas networks and used by their customers connected to each network.
We estimate the ongoing allocation costs before each financial year, collect market fees in monthly installments throughout the year, and then perform an end of year wash-up once the actual costs are known.
Ongoing costs for FY2025 (1 July 2024 to 30 June 2025)
|
Cost category |
Estimated costs |
|
Allocation agent – base fee |
$356,000 |
|
External advice/system development |
$320,000 |
|
Allocation agent - contract negotiations |
$10,000 |
|
Allocation agent - D+1 monthly fee |
$55,350 |
|
Total ongoing costs |
$741,350 |
Ongoing costs for FY2024 (1 July 2023 to 30 June 2024)
|
Cost category |
Estimated costs |
|
Service provider – Base fee |
$400,000 |
|
External advice/system development |
$150,000 |
|
Allocation agent appointment |
$50,000 |
|
Total ongoing costs |
$600,000 |
Previous years
|
Year |
Estimated ongoing costs |
Actual ongoing costs |
|
FY2023 |
$760,350 |
$713,419 |
|
FY2022 |
$565,000 |
$529,860 |
|
FY2021 |
$565,000 |
$517,580 |
|
FY2020 |
$565,000 |
$539,872 |
|
FY2019 |
$565,000 |
$516,744 |
Related Information
Previous Market FeesFrom time to time, errors are discovered in the consumption information or injection information that is submitted to the allocation agent and consideration is given as to whether it is necessary to correct allocation results. The Gas (Downstream Reconciliation) Rules 2008 ('the Rules') allow for various types of corrections to be made:
- Rule 44 sets out the processes for the notification of errors in consumption information submitted to the allocation agent and, where such errors would have resulted in a materially different allocation, allows the allocation agent to amend results (if time permits) or requires Gas Industry Co to consider whether to direct a special allocation.
- Rule 46A allows an annual UFG factor (AUFG) to be recalculated and republished if an error is discovered which Gas Industry Co considers may have, or have had, a sufficiently unfair impact on allocation results.
- Rule 51 sets out when Gas Industry Co may require the allocation agent to perform a special allocation, either in addition to, or replacing, the allocation results from the previous allocation of gas quantities.
Before we can direct the allocation agent to perform either an AUFG correction or a special allocation, we must consider the unfairness of the error. For an AUFG correction, we must be of the opinion that the current AUFG may have, or have had, a sufficiently unfair impact on allocation results. For a special allocation, we must be of the opinion that the current allocation information or allocation results are sufficiently unfair, and we must balance the unfairness of the current allocation information or allocation results against any commercial reasons for retaining the current allocation results.
Consultations on AUFG corrections and special allocations help us determine the unfairness of errors.
Previous and current consultations can be found in this section.
Related Information
Consultation on correcting submission errors at RAM15201Consultation on monthly read requirements for allocation group 4 ICPs
Consultation on correcting injection errors at TAU07001
Consultation on correcting submission errors at GTA03610
Consultation on resolving the financial impact of consumption and injection errors
Consultation on correcting metering errors at GTA03610 and WAG21501
Consultation on options to address three TOU submission errors in May and June 2019 and May 2020
Consultation on correcting a TOU metering error at GMM08801
Consultation on a special allocation and corrections to AUFG factors - October 2018
Consultation on correcting AUFG factors - March 2017
Consultation on special allocations and correcting annual UFG factors - December 2016
Consultation on three special allocations - December 2015
Consultation on Special Allocation
Consultation on two special allocation decisions
Consultation on exemption application and special allocations
Consultation on Correcting Injection Errors TAU07001
The following Excel document provides a list of temperature data for all allocated gas gates. The data was created by NIWA and provides a 30-year average of ground temperature at 30-cm depth. The data is presented in degrees Celsius and there is one number per month for each gas gate.
The temperature information is designed to be used by industry participants in their data conversion calculations if they wish. The Gas (Downstream Reconciliation) Rules 2008 (the DR rules) require that the data used in the conversion of volume to energy must comply with NZS 5259. Average ground temperature at 30-cm depth is provided as an option under NZS 5259.
Currently the use of this information is voluntary, however it is our intent the DR rules would be changed to incorporate this dataset in the future. If we were to do this then we would consult with industry on our Statement of Proposal and participants would have the opportunity to submit on whether they think this dataset is appropriate and whether they think it should be mandatory or voluntary to use.
Related documents
D+1
D+1 is a process that allocates gas to retailers at downstream networks the day following gas flow. We are trialling D+1 allocation as a way of providing more timely information to retailers about their customers’ gas usage.
D+1 Options Paper
Since we started the D+1 pilot in 2015, we have always intended to review its performance. If the trial proved successful, we would then make amendments to the Gas (Downstream Reconciliation) Rules 2008 (the Rules) to incorporate daily allocations.
With this goal in mind, we worked with the Daily Allocation Working Group (DAWG) on rule change proposals in 2021. We planned to release a Statement of Proposal to amend the Rules in 2022.
While the DAWG had a good degree of consensus on the rule changes, we have since recognised we need to further explore non-regulatory solutions to meet our obligations under the Gas Act.
You can view our D+1 Options Paper released in December 2022 and the 5 submissions we received below.
Key areas
The current purpose of the daily allocation working group (DAWG) is to help us review the Gas (Downstream Reconciliation) Rules 2008 (the Rules) to consider changes relating to D+1, specifically to:
- discuss what issues need to be considered in a review of the Rules to formalise D+1
- evaluate what the options are to address the issues in relation to the Gas Act objectives
- provide feedback on any issues that arise during the build and implementation of the D+1 system.
The DAWG comprises representatives from the following organisations:
- Contact
- EMS
- Firstgas
- Gas Industry Co
- Genesis
- Mercury
- Nova
- Vector Metering.
All meeting papers, minutes and other information can be found below.
Related Information
DAWG Meetings (2021)DAWG Meetings (2015-2019)
Review of D+1 Allocation Options - August 2017
This section contains system documentation, file formats, and the D+1 business rules which govern how participants interact with the system and how it operates.
Related Information
D+1 Process Audit - April 2016Related documents
This section contains previous consultations relating to the operation of D+1.
Consultation on D+1 Special Allocations (September 2015)
This consultation invited submissions from allocation participants on the merits of replacing the initial allocation results produced by the allocation agent under the Gas (Downstream Reconciliation) Rules 2008 (the Rules) with D+1 allocation results we produced for the duration of the D+1 trial.
The consultation paper, a Summary of Submissions, and submissions received are available on the consultation page:
Consultation on D+1 Special Allocations - September 2015
Consultation on Modifications to D+1 Business Rules (September 2016)
This paper invited submissions from D+1 participants on proposed modifications to the D+1 business rules to improve the operation of the D+1 allocation process. The consultation paper, a summary of submissions and the submissions received are available on the consultation page:
Consultation on Modifications to D+1 Business Rules - September 2016
In March 2015, we held a workshop with retailers to present a D+1 model developed by Concept Consulting. This model uses regression analysis to allocate the previous day's gas consumption to shippers based on past consumption patterns.
We proposed to use this model as the basis for a trial of D+1 allocation. The trial was a low-cost way of determining whether D+1 was worthwhile to implement as part of the Reconciliation Rules. If it was worthwhile, then we would refine the methodology and processes used.
Related documents
Related documents
Developing
This section contains consultations and developments on the existing downstream reconciliation arrangements.
Developments relating to D+1 can be found in the D+1 section.
Once consultations are completed, the consultation paper and any submissions can be found under the Current Arrangements section, under the Key area it relates to. For example, our recent consultation on monthly read requirements has now moved to Special Allocations.
Background
Governed by the Gas (Downstream Reconciliation) Rules 2008 (the Rules), downstream reconciliation is concerned with reconciling volumes of gas leaving the high pressure transmission system with volumes consumed by end users, and appropriately attributing them to retailers. The difference between the gas volume that retailers estimate their customers have used and the volume leaving the transmission system is UFG, which is allocated, and charged, to retailers in proportion with their consumption submissions.
This page contains information on the development, scope and structure of the Rules. The Rules came into effect on 1 October 2008 and were amended on 1 June 2013 in accordance with Phase I of the Rules Review discussed below. Phase II of the Rules Review is currently underway.
One minor amendment to the Rules was made in September 2015, following the work undertaken by Gas Industry Co on addressing retailer insolvency. The amendment is a new provision which clarifies the ongoing obligations for retailers who are no longer trading.
Key areas
The purpose of the Rules is to establish a set of uniform processes that will enable the fair, efficient, and reliable downstream allocation and reconciliation of downstream gas quantities. The Rules provide for:
- The appointment of an Allocation Agent who operates the allocation system and allocation portal. More information on the Allocation Agent can be found on the Downstream Reconciliation Operations Page.
- Processes for the:
- provision of gas injection and consumption information
- the allocation agent allocating daily gas quantities for each calendar month to retailers at allocated gas gates
- reconciliation of downstream gas quantities against quantities billed to customers.
- Mandatory information disclosure and reporting by the allocation agent, allocation participants, and the industry body.
- Ancillary matters related to the process of allocation and reconciliation such as funding by industry participants, exemptions, approval and registration of deemed profiles for gas consumption information, and the performance of audits.
Related documents
Gas Industry Co is currently undertaking the second phase (Phase II) of a policy review of the Rules which began in 2010. Phase II is concerned with identifying options to either improve the accuracy of the initial allocation or replace it with an alternative. Options currently under investigation (which will form the basis of an options paper in due course) are:
- D+1: a system which would provide shippers with daily allocated quantities, at a transmission pipeline level, on the day after gas has flowed.
- An alternative allocation algorithm: no change to the timing of allocations, but the Allocation Agent would use a different allocation methodology, for example, a top-down algorithm or the removal of the application of the annual UFG factor at interim and final stages.
- Balancing and Peaking Pool (BPP) wash-ups: BPP charges are revisited when interim and/or final allocation results are published.
- Early publication of SADSV: retailers use the residual profile values for the consumption period to profile customer's read-to-read volumes into consumption submissions.
D+1: Allocation the day after gas flow
In March 2015, Gas Industry Co held a workshop with retailers to present a D+1 model developed by Concept Consulting. This model uses regression analysis to allocate the previous day's gas consumption to shippers based on past consumption patterns. Gas Industry Co proposes to use this model as the basis for a trial of D+1 allocation. The trial would be a low-cost way of determining whether D+1 would be worthwhile to implement as part of the Rules; and, if so, of refining the methodology and processes used.
After the Rules had been operating for a number of years, Gas Industry Co began a policy review to build on operational experience, remove unnecessary compliance burdens and inefficiencies, and look for general improvements in the Rules and downstream reconciliation arrangements.
An Options Paper was released in December 2011 which sought feedback on a number of proposals to improve the Rules. Following feedback on the Options Paper it was decided to split the review into two parts: Phase I would address the proposals that had a good level of support in the Options Paper or were considered to be minor or technical changes, while Phase II would address options to improve the accuracy of the initial allocation. A working group, the Downstream Reconciliation Advisory Group (DRAG), was appointed to provide expert industry advice on the issues under review.
In December 2012, Gas Industry Co recommended to the Minister of Energy and Resources a number of changes to the Rules that were the culmination of Phase I of the review. The rule amendments were gazetted by the Minister on 28 February 2013 and took effect from 1 June 2013.
Related Information
Downstream Reconciliation Advisory Group (DRAG)Statement of Proposal (July 2012)
Options Paper (December 2011)
Strata Report: Review of Estimation Methodologies (May 2009)
Related documents
Since the Rules took full effect in October 2008, a number of minor and technical changes were identified that would improve their operation and, in some instances, reduce the need for exemptions. These issues were addressed in a Statement of Proposal published in June 2009.
Consequently, in June 2009, Gas Industry Co made a recommendation to the Minister proposing a number of rule changes to enhance the operation and efficiency of the allocation and reconciliation of downstream gas quantities. The changes were all minor and non-controversial and, therefore, were dealt with in accordance with the simplified approach for amendments of this nature, as provided for by the Gas Act 1992.
Related Information
Statement of Proposal (June 2009)Related documents
The existing Rules for reconciliation and switching make no distinction between open-access and private networks.
Gas Industry Co commissioned a paper by Dr. Geoff Bertram to discuss how gas governance arrangements should be applied to private networks. Submissions were sought on the paper in April 2009, prior to which a workshop was held on 31 March. The paper and industry participants' submissions in response are set out below.
Gas Industry Co also prepared an analysis of submissions that discusses the conclusions of Dr Bertrams's report and considers the responses of submitters.
Related documents
Submissions
In March 2008, Gas Industry Co made two recommendations to the Minister: the first recommended the making of the rules to improve the allocation and reconciliation of downstream gas quantities; the second recommended associated amendments to the Gas Governance (Compliance) Regulations 2008 to promote compliance with, and enforcement of, the Rules.
Gas Industry Co had identified a number of problems with the design of the existing downstream reconciliation arrangements (under the Reconciliation Code), including a lack of specificity in the arrangements, a lack of proper governance and no workable means of enforcing compliance.
Improved arrangements, in the form of the rules to approved under the Gas Act, were developed over the period since 2006 through the operation of an industry working group (the GART), the release of several consultation papers, two consultant reports, and a further industry workshop.
Through these mechanisms the issues were extensively canvassed with the industry. In particular, improved downstream allocation and reconciliation arrangements ensure that UFG is more equitably allocated to its retailers, thereby enhancing the competitiveness of the retail market. Improved arrangements also benefit consumers through a reduction in industry participants' operational costs and an increase in the potential for retail competition leading to greater productive, allocative and dynamic efficiency.
Related Information
Statement of Proposal (September 2007)Maunsell Report (June 2007)
Discussion Paper (January 2007)
Options Paper (June 2006)
Related documents
Statement of Proposal
The deployment of smart gas meters, the evolution of the D+1 pilot and the potential injection of renewable gases into downstream networks require changes to gas governance arrangements so that they remain fit for purpose.
The Statement of Proposal presents a coordinated set of changes to the Gas (Downstream Reconciliation) Rules 2008, the Gas (Switching Arrangements) Rules 2008 and associated industry IT systems. The proposals respond to market-led initiatives, such as the rollout of advanced gas metering, and have been informed by industry discussions and working groups.
The consultation closed on Friday 23 February 2024. Six submissions were received, which can be viewed below.