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Overview
Interconnection ensures that arrangements for third party connections to gas transmission pipelines are reasonable.
Interconnections involve facilities for injecting gas into, or extracting gas from, the transmission pipelines.
This work programme is aimed at fulfilling:
- an objective of the Gas Act 1992 (Gas Act) for the facilitation and promotion of the ongoing supply of gas to meet New Zealand's energy needs by providing access to essential infrastructure and competitive markets and
- an outcome of the April 2008 Government Policy Statement of Gas Governance (GPS), that industry participants and new entrants can access transmission pipelines on reasonable terms and conditions.
Our approach
To date, we have taken a non-regulated governance approach to interconnections via a set of Interconnection Guidelines published in 2009. These guidelines set out our view on the features of good interconnection processes.
We may in future recommend rules or regulations to achieve these policy objectives.
Since becoming sole owner of the transmission pipelines, Firstgas has reviewed and unified transmission pipeline interconnection arrangements as part of the GTAC development. This included developing an Interconnection Policy explaining how it will facilitate new interconnections and setting out key terms of interconnection.
In this section:
Current arrangements refers to the most recent review of the current arrangements which are expected to remain unchanged until the new Gas Transmission Access Code (GTAC) is introduced.
Developing has our review of how Firstgas’ new interconnection arrangements, that will come into effect with the new Gas Transmission Access Code (GTAC), compare to the Interconnection Guidelines.
Background contains information on how the Guidelines on Interconnection were developed and reviews of the Interconnection arrangements.
Related documents
Current arrangements
In August 2014, we updated the then Minister of Energy and Resources on the following interconnection matters:
- Report on interconnections to Maui and Vector transmission pipelines: relating to the physical interconnections of the McKee/Mangahewa field facilities to the Maui pipeline and the Sidewinder and Cardiff/Cheal field facilities to the Vector pipeline.
- Report on gas trading market interconnections and related issues: relating to the establishment of the NZX Limited gas trading market on the Maui transmission pipeline and Energy Market Services (a commercial business within Transpower Limited and since renamed emsTradepoint) gas trading market on the Vector transmission pipeline.
These two reports can be found under Related documents below.
These are the latest in a series of assessments and updates to the Minister since 2009:
- In a letter to the Minister, dated 20 December 2013, Gas Industry Co advised that in response to the 2011 request, it had reviewed two physical interconnections to the Vector pipeline, but that no substantial interconnections to the Maui pipeline had occurred. Gas Industry Co proposes waiting for these interconnections before completing our review.
- This letter also advised that while gas trading market interconnections did not involve physical equipment, trading on a centralised platform was a new concept for the New Zealand gas market with the potential to improve market efficiency. Gas Industry Co therefore suggested to the Minister that these 'interconnections' were also reviewed.
- In a letter dated 9 March 2011, the Associate Minister of Energy and Resources acknowledged progress reported in 2010 and requested we 'undertake a formal review of the current interconnection arrangements after the next two interconnections to each of the transmission pipelines, or by the end of 2013, whichever is sooner.'
- In 2010, we formally assessed improved interconnection arrangements against the objectives of the Gas Act 1992 and Government Policy Statement on Gas Governance 2008 from the 2009 assessment. The findings were generally favourable.
- In 2009, we conducted an initial review of the interconnection arrangements of both MDL and Vector against the guidelines. Both MDL and Vector made further improvements in response.
Key Areas
Gas Industry Co issued the Transmission Pipeline Interconnection Guidelines (the Guidelines) in February 2009. 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.
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 of February 2009 were considered necessary and they were republished in November 2009. These amendments and the reasons for them are noted in a Related Document listed below. The November 2009 Updated Guidelines is also found below.
Related documents
Related documents
Developing
The latest review of the Interconnection arrangements was released in August 2014 and can be found here.
There are no current consultations in this Work Programme.
Background
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'.
In 2006, a review by Gas Industry Co of transmission access issues identified a number of concerns relating to interconnection with transmission pipelines, with subsequent discussion with interconnecting parties suggesting that: interconnection processes were poorly defined; technical requirements for interconnection equipment had been changed during the course of projects; roles and responsibilities had been confusing; and liability/insurance matters had not been addressed until late in the process.
In response, Gas Industry Co developed Interconnection Guidelines, setting out its view on the features of good interconnection practice. The Guidelines have no legal standing, but are intended for use by transmission system owners (TSOs) - at the time Vector Limited and Maui Development Limited (MDL) but since mid-2016 only First Gas Limited- in the development of their interconnection services, and by parties seeking interconnection as a guide to the principles, processes, documentation and dispute arrangements that might apply.
Key Areas
In relation to the gas market interconnections we note that the introduction of a gas trading market is a significant step towards achieving the Government's policy objective of efficient arrangements for short-term trading of gas. We find no issues requiring intervention, but note that the Maui pipeline owner is concerned that market trading may cause pipeline balancing issues. While acknowledging these concerns, we consider that the risks arising from the introduction of the market are manageable. We will keep track of balancing metrics in the immediate future to identify any emerging problems.
In relation to the physical interconnections we find that the owners of the Maui and Vector transmission pipelines each had very comprehensive interconnection policies, procedures and documentation in place, closely aligned with the Interconnection Guidelines Gas Industry Co published in 2009. The recent interconnections have all been effective, with pipeline owners, and propose to continue monitoring new connections.
Material from the 2014 reviews of the 'interconnection' of the gas trading markets and physical interconnections is presented below:
Related documents
In this section you can find all the previous reviews and their corresponding documents.
Related Information
2013 Review2010 Review
2009 Review