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Critical Contingency Management FAQs

Compliance Process FAQ

Answers to some common questions about Critical Contingency events and gas user obligations can be found below.

FAQs for gas users interested in potential breaches of Critical Contingency Regulations during Maui gas outage

This FAQ deals specifically with matters related to compliance with the Gas Governance (Critical Contingency Management) Regulations 2008 and issues arising from the October outage on the Maui transmission pipeline.

For information about a ‘critical contingency’, see the second FAQ below.

What is a breach of the regulations?

A breach may arise where there appears to have been non-compliance with any provision of the Gas Governance (Critical Contingency Management) Regulations 2008. These regulations govern the management of serious pressure events or outages on the gas transmission system. An example of a potential breach is failure to stop using gas when directed.

You can find the regulations by clicking the ‘Legislation’ link under the ‘About Us’ tab.

After the October outage on the Maui pipeline, are breaches of the critical contingency regulations likely?

It is unclear how many breaches will arise out of the Maui gas outage. The Critical Contingency Operator must allege a breach if it believes, on reasonable grounds, that a participant has breached the regulations. Other people may also allege breaches.

Am I allowed to allege a breach?

Any person who believes, on reasonable grounds:

  • that a participant has breached the rules; and
  • that person is affected by that alleged breach,

may notify that alleged breach.

You can allege a breach by completing the notice of breach form on this webpage

http://gasindustry.co.nz/work-programme/compliance and sending to market.administrator@gasindustry.co.nz .

How do I become aware of breaches arising out of the Maui gas outage?

Please fill in the “Compliance Registration” form at www.gasindustry.co.nz to register to receive breach notices. You must be a non-residential gas user to receive such notices (ie, a business or other sort of organisation). Residential gas users are not entitled to receive such notices.

I registered to receive breach notices – what happens when I receive one?

If you register to receive breach notices, the Market Administrator will ensure that you receive any notifications of the breaches relating to the Maui gas outage and any other future gas outages. (See below for more information about the Market Administrator).

The information the Market Administrator sends you will enable you to consider whether the alleged breach has impacted your organisation, and therefore whether you consider that you have been affected by the alleged breach. If you consider that your organisation has been affected, then you may wish to join the breach by sending a return email to the Market Administrator.

Who is entitled to become a party to a breach?

All participants who consider that they are affected by the alleged breach may join as a party to the breach notice. 

Participants, in this context, include consumers (other than residential consumers). 

What happens if I join as a party to an alleged breach?

By joining as a party to an alleged breach:

  • you will be kept informed at key stages of the breach process (for example when the materiality of the breach is determined you will be sent an email);
  • you may be asked to provide information to allow the breach to be assessed; and
  • you may participate in any settlement proceedings or hearings.

Joining as a party to a breach notice is NOT an application for compensation. It is possible that a participant who is found to have breached the regulations may be required to pay a fine or some form of compensation, but joining a breach is no guarantee of entitlement to compensation.

What are the roles of the Market Administrator, Investigator, and Rulings Panel?

The Market Administrator, Investigator, and Rulings Panel are appointed under the Gas Governance (Compliance) Regulations 2008 to undertake a range of functions in relation to alleged breaches.

  • The Market Administrator
    • receives breach allegations,
    • refers material allegations to the Investigator, and
    • attempts to settle non-material allegations.
    • The Market Administrator function is currently performed by Gas Industry Co.
  • The Investigator
    • is independent from Gas Industry Co;
    • has a range of powers to investigate and report on breach allegations; and
    • is able to effect settlements, which must be referred to the Rulings Panel for approval or rejection.
  • The Rulings Panel
    • is an independent body appointed by the Minister of Energy.
    • The current Rulings Panel is a retired High Court Judge. 
    • In a quasi-judicial process, the Rulings Panel has jurisdiction to approve or reject settlements and to determine breach allegations and impose sanctions.

How long does the Compliance process take?

The Market Administrator must make determinations of materiality expeditiously. If a breach is found not material by the Market Administrator, then the compliance process is complete.

If a breach is found material and referred to the Investigator, the Investigator has 30 business days (or longer by agreement) to reach a settlement.

If the Investigator is unable to reach a settlement then the breach is referred to the Rulings Panel. The Rulings Panel must use reasonable endeavours to make its final decision on a breach within 40 business days of the date by which it has received all written and oral submissions on that matter.

Why are residential consumers not invited to receive notification of breaches?

The compliance process allows gas users who believe they are affected by an alleged breach to join the process. 

Residential gas users are not covered by the Regulations and were not subject to curtailment notices.

In the case of the recent Maui gas outage, no residential customers were required to stop using gas.  However, as with the Maui gas outage, a critical contingency may be of such severity that domestic users may be asked to decrease their gas use on a voluntary basis during a critical contingency.

What are the Gas Governance (Compliance) Regulations 2008?

The Gas Governance (Compliance) Regulations 2008 provide for the monitoring and enforcement of gas governance rules including the Gas Governance (Critical Contingency Management) Regulations 2008. 

Critical Contingency FAQ

What is a critical contingency?

A critical contingency generally occurs when gas supply is disrupted to all or part of the natural gas transmission system. Such a disruption can be caused by an outage in a gas production station that prevents gas from being injected into the transmission system or a fault (e.g. a leak or breakage) in a transmission pipeline that prevents gas from being delivered into or from the pipeline.

The pressure in the transmission system needs to be kept within a specific range, and a mismatch between gas demand and gas supply can cause gas pressures to drop. If the gas pressure drops to a level that jeopardises the safe delivery of gas, this in turn triggers a critical contingency to be declared under the Gas Governance (Critical Contingency Management) Regulations 2008 (the Regulations). The Regulations provide for specific gas pressure threshold limits to be set by the transmission system owner.

What happens during a critical contingency?

The Critical Contingency Operator (CCO) has the responsibility under the Regulations for declaring and managing critical contingency situations. Once a critical contingency has been declared by the CCO, his objective is to stabilise pressures and gas supply on the affected parts of the transmission system. Stabilising pressure is important, because if gas pressure drops too low – if the pipeline is effectively sucked dry of gas – then restoring full gas supply to the affected downstream networks can take a very long time (possibly months). 

The main tool that the CCO has in managing pipeline pressure is the ability to require industrial and commercial gas users to stop using gas on the affected parts of the transmission pipeline. The CCO’s directions are relayed to retailers, who in turn instruct their customers to cease their gas usage as soon as possible.

The CCO manages pipeline pressure so that, when the fault causing the critical contingency is repaired, the supply of gas can be restored as quickly as possible.

Gas Industry Co has appointed Core Group to fulfil the role of the CCO.

What was the recent Maui gas outage?

The large Maui gas transmission pipeline, which is the main pipeline transporting gas from the fields in Taranaki to the upper North Island, was shut down on 25 October 2011 following a reported gas escape in the White Cliffs area of North Taranaki. A pipe seam weld was found to have a 120mm long split that required a significant repair, including the isolation and depressurisation of a 24 kilometre section of the pipeline and the removal and replacement of the damaged section of pipe.   Normal pipeline operations resumed on 30 October. The pipeline Operator is conducting a thorough investigation into the circumstances of the pipeline failure.

What are the Gas Governance (Critical Contingency Management) Regulations 2008?

The Gas Governance (Critical Contingency Management) Regulations are intended to ensure that any gas outages are managed effectively. 

Some of the ways the regulations do this is by providing for:

  • the appointment of a critical contingency operator;
  • the development of critical contingency management plans; and
  • processes for managing a critical contingency.
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