The management of pipeline capacity at times of congestion was a concern of the PEA, and in its Quarterly Report of March 2014 the GITAWG noted that:
The Working Group has considered market structures and market components and believes that the most effective approach to making progress on the allocation of capacity is to focus on designing and implementing effective congestion management arrangements. Congestion management arrangements are a necessary component of any capacity allocation solution and taking this bottom-up approach better reflects the reality that designing a market structure involves dealing with interdependent parts of a complex puzzle.
The GITAWG’s proposals were explained in a consultation paper dated July 2014, entitled Congestion Management Arrangements on the Vector Gas Transmission System. Submissions on this consultation paper were summarised in the GITAWG’s 30 September 2014 Quarterly Report. The GITAWG reported that there was broad support for the proposal, with the main area of concern being the setting and recovery of fees.
A further consultation paper entitled Straw Man for Congestion Management Arrangements on the Vector Gas Transmission System was issued by the GITAWG in February 2015. The paper was followed by workshops in Wellington and Auckland in March 2015, and the GITAWG’s 31 March 2015 Quarterly Report commented (p7) that the two submissions received on the February 2015 Consultation Paper were generally positive.
Subsequently the GITAWG refined the congestion management product design, leading to release of the Change Request Notification (CRN) on 1 May 2015.
Key elements of the proposal
The CRN describes a congestion management arrangements with the following key elements:
- When congestion is anticipated, Vector would offer Load Curtailment Agreements (LCA). Each LCA would allow for a specified end-user (or multiple end-users) customer of a Shipper to be curtailed in certain circumstances;
- Each LCA identifies how a congestion event would be identified and notified, how Vector would then require the LCA Shipper to curtail its customers, and how the payments for this service would be calculated; and
- A congestion management payment pool would be established (shippers who use gas during a congestion event would pay into the pool, and LCA shippers whose customers are curtailed would be paid from the pool).
Submissions on CRN
Vector received 8 submissions on the Congestion Management CRN. A summary of these submissions and Vector’s response to the matters raised was provided when the next step of the new VTC amendment process took place; the issuing of a Draft Change Request.