Overview

The Gas Distribution Contracts Oversight Scheme is a voluntary, industry-agreed scheme which assesses standard gas distribution service agreements against a set of principles.

The Gas Distribution Contracts Oversight Scheme is a voluntary, industry-agreed scheme which assesses standard gas distribution service agreements against a set of principles. It was endorsed by the Minister of Energy and Resources in September 2012 and aims to ensure that the core terms and conditions in distribution arrangements are clear and reasonable; promote market efficiency; and ultimately enhance consumer outcomes. The Scheme does not assess negotiated agreements.

The Previous Assessments section holds information on the 2013 and 2014 assessments of standard gas distribution service agreements. Going forward, assessments will be conducted on an exceptions basis (as contracts are further revised or replaced). Gas Industry Co continues to assess progress with executing new distribution contracts consistent with the Distribution Scheme principles.

The Background section holds information on the development, scope and structure of the Gas Distribution Contracts Oversight Scheme, including the recommendation to the then Minister of Energy and Resources (Hon Phil Heatley) and his subsequent endorsement of the Scheme in September 2012.

Previous Assessments

The Gas Distribution Contracts Oversight Scheme (the Scheme) is a non-regulatory gas industry governance arrangements, endorsed by the Minister of Energy and Resources in September 2012. Its purpose is to ensure that the core terms and conditions in distribution arrangements are clear and reasonable; promote market efficiency; and ultimately enhance consumer outcomes. The Scheme includes a set of Distribution Principles that cover non-price contractual (and inferred) terms, such as the obligations and rights of parties and information exchange and use, as agreed between gas distribution businesses and gas retail businesses. The Principles are not intended as a model contract for distribution services; rather they are designed to provide a high-level context for commercial negotiations between distributors and retailers.

Publicly available gas distribution arrangements are assessed and reported on against these Principles by an Independent Assessor.

The Scheme is similar to the Gas Retail Contracts Assessment Scheme. However it is based on Principles rather than more prescriptive Benchmarks, in recognition that parties to distribution service arrangements are significant commercial entities, better able to negotiate mutually acceptable terms than small consumers can with retailers.

The first assessment was conducted in February 2013, and the second in March 2014. Gas Industry Co appointed Elwood Law as the Independent Assessor for both assessments. Elwood Law is experienced in interpreting contractual arrangements, and has experience in the gas industry, including as the Independent Assessor for Gas Industry Co's Retail Gas Contracts Oversight Scheme.

Going forward, assessments will be conducted on an exceptions basis (as contracts are further revised or replaced).

Key Areas

Elwood Law was appointed to undertake a second assessment of standard gas distribution service agreements against the Principles as at 1 March 2014, and produced the Assessment Report found below. The second assessment found 'Substantial' alignment with the Scheme's Principles, and mirrored the level of alignment attained by the Retail Gas Contracts Oversight Scheme (which improves from 'moderate' alignment in 2010 and 2011, to 'Substantial' alignment with retail contract Benchmarks in 2012).

Related Documents

  • Second Assessment Report - May 2014
    464 KB Adobe Acrobat PDF file

Elwood Law was appointed to undertake the initial assessment of standard gas distribution service agreements against the Principles as at 1 February 2013, and produced the Initial Assessment Report found below.

The date of 1 February 2013 was set by Gas Industry Co as the initial assessment date, after consulting with industry on the time that would be reasonably required to update standard gas distribution contracts. However, as at 1 February 2013, none of the distributors had published a standard gas distribution contract. As a result, technically, as at the assessment date the overall alignment of published standard gas distribution contracts with the Scheme was "Nil" (under the Scheme, "Nil" means "No alignment with the intention of the Principle"). Although there were no distribution issues for gas retailers or consumers, this position confirmed the justification for the Scheme.

Each of the distributors covered by the Scheme was in the process of developing a standard gas distribution contract, which they each call a Gas Use of System Agreement (GUoSA). The review did provide a positive indication that distributors were developing GUoSAs that should broadly align with the Principles. Each distributor planned to have published its standard gas distribution contract prior to the next scheduled assessment date of 1 February 2014.

Related Documents

  • Assessment of Contracts against Gas Industry Co's Gas Distribution Contracts Oversight Scheme - June 2013
    692 KB Adobe Acrobat PDF file

Background

The Gas Distribution Contracts Oversight Scheme (the Scheme) is a non-regulatory gas industry governance arrangement, endorsed by the Minister of Energy and Resources in September 2012.

This section holds information on the early development, scope and structure of the Gas Distribution Contracts Oversight Scheme. To summarise: 

  • In September 2012, the Minister of Energy and Resources endorsed Gas Industry Co's Recommendation for a voluntary, industry agreed, Gas Distribution Contracts Oversight Scheme.
  • In March 2012 the Distribution Contract Principles: proposed design of the assessment framework  was released containing both the proposed Principles, guiding the content of distribution arrangements, and a draft assessment framework to measure the alignment of arrangements with those Principles.
  • In June 2011, The Draft Principles for Arrangements on Gas Distribution Systems which proposed a set of Draft Principles and the next steps for developing them was released. The Principles aimed to improve the contractual arrangements a distributor offers to a retailer under a network services agreement. 
  • In September 2010, Gas Industry Co released the Gas Governance Issues in Distribution: Issues Paper  following consultation on an initial draft. The Paper proposed a regulatory objective and considered legislative and contracted arrangements relevant to gas distribution. 

Further information associated with each stage above can be found in the left-hand navigation of this page.

 

Key Areas

On 3 September 2012 the Minister of Energy and Resources wrote to Gas Industry Company endorsing the Recommendation for a voluntary, industry agreed, Gas Distribution Contracts Oversight Scheme. 
The Recommendation and Endorsement can be found below.

Related Documents

  • Endorsement from the Minister - September 2012
    55 KB Adobe Acrobat PDF file
  • Recommendation to the Minister - June 2012
    425 KB Adobe Acrobat PDF file

Gas Industry Co progressed the development of the Distribution contracts assessment framework with the completion of the proposed design for assessing the Principles for Arrangements on Gas Distribution Systems.

The Distribution Contract Principles: proposed design of the assessment framework  (Distribution Contract Principles) aimed to improve the contractual arrangements a distributor offers to a retailer under a network services agreement.

The Distribution Contract Principles and feedback received from the industry can be found below.

 

 

Related Documents

  • Distribution Contract Principles - March 2012
    421 KB Adobe Acrobat PDF file

Submissions

  • Gas Industry Company
    Contact Energy 132 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Genesis Energy 141 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Mighty River Power 186 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Powerco 96 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Consultation on the proposed design of the assessment framework for the Distribution Contracts Principles 29 March 2012 Vector Limited 233 KB Adobe Acrobat PDF file

A set of draft Principles for Arrangements on Gas Distribution Systems was proposed in the June 2011 Consultation Paper. The principles aimed to improve the contractual arrangements a distributor offers to a retailer under a network services agreement.

The Consultation paper, submissions received and an Analysis of Submissions can be found below.

Related Documents

  • Consultation Paper: Draft Principles for Arrangements on Gas Distribution Systems - June 2011
    431 KB Adobe Acrobat PDF file
  • Analysis of Submissions - October 2011
    449 KB Adobe Acrobat PDF file

Submissions

  • Gas Industry Company
    Contact Energy 45 KB Adobe Acrobat PDF file
  • Gas Industry Company
    GasNet 216 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Genesis Energy 57 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Mighty River Power 136 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Powerco 254 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Consultation on the Draft Distribution Principles Vector Limited 310 KB Adobe Acrobat PDF file

In September 2010, following discussion of the initial Draft Principles for Arrangements on Gas Distribution Systems at a workshop in February 2010, Gas Industry Co considered whether any issues associated with the distribution of natural gas warrant development of gas governance arrangements in the Gas Governance Issues in Gas Distribution: Issues Paper

Following an Analysis of Submissions Gas Industry Co advised the Minister on its work related to distribution in December 2010.

The Issues Paper and submissions received, an Analysis of these submissions and the Advice to the Minister can be found below.

 

Related Documents

  • Gas Governance Issues in Distribution: Issues Paper - September 2010
    382 KB Adobe Acrobat PDF file
  • Initial Draft Principles for Arrangements on Gas Distribution Systems - February 2010
    78 KB Adobe Acrobat PDF file
  • Advice to the Minister - December 2010
    567 KB Adobe Acrobat PDF file
  • Analysis of Submissions - December 2010
    490 KB Adobe Acrobat PDF file

Submissions

  • Gas Industry Company
    GasNet 211 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Genesis Energy 47 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Greymouth Gas NZ 130 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Mighty River Power Cover Letter 64 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Mighty River Power 168 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Nova Energy 77 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Powerco 75 KB Adobe Acrobat PDF file
  • Gas Industry Company
    Vector Limited 237 KB Adobe Acrobat PDF file
  • Gas Industry Company
    GIC distribution issues CEN 181010 98 KB Adobe Acrobat PDF file

Stay in touch

Keep up to date with our latest news and analysis by subscribing to our regular newsletter