Review of Transmission Access and Capacity Pricing

Transcription

1 PEA Work Plan 2012 Review of Transmission Access and Capacity Pricing Purpose 1. The purpose is to ensure Vector s arrangements for transmission access and capacity pricing allocate capacity efficiently and effectively signal the need for investment in additional capacity. PEA functions 2. In relation to this work, the PEA is expected to: (a) Provide advice to Gas Industry Co, with supporting analysis, on improvements to existing market arrangements for access to gas transmission capacity, so that they result in more efficient allocation of capacity, effectively signal the need for investment in additional capacity, and meet the Gas Act objectives. Advice provided by the PEA should be in relation to the following: (i) (ii) (iii) Service definition (including an examination of what is the most efficient carriage regime); Economic allocation of capacity (including developing pricing mechanisms, including market based pricing); and Implementation (in relation to the above, plans for how changes could be introduced and over what timeframe). (b) (c) Provide analysis and justification for supporting or rejecting alternative options; and Review and comment on submissions received on any papers related to the review. PEA key deliverables Key deliverable 1: Assessment of current arrangements and identification of options 3. The PEA should: (a) Identify whether there are market failure(s) that cause it to believe that: (i) The current regime requires reform, and

2 (ii) Reform is unlikely to be achieved through the negotiation of contracting parties. (b) Review previous work completed by Gas Industry Co on access arrangements including the papers (available on the Gas Industry Co website): (i) Review of Vector Capacity Arrangements - A Research Paper, January 2009 (ii) Options for Vector Transmission Capacity, May 2010, and submissions on that paper. (c) (d) Develop a set of evaluation criteria for assessing the merits of alternative options. Identify and assess reasonably practicable access regime options and prepare an initial shortlist of preferred market design/access regime options (including service definition and capacity allocation pricing mechanisms). The supporting analysis should contain: (i) (ii) (iii) (iv) Descriptions of the options that could alter/replace the existing regime so as to enhance efficiency, including a description of how the option would allocate capacity efficiently and effectively signal the need for investment in additional capacity; An assessment of how well the alternative options would meet the objectives of the Gas Act, GPS and GTIP; An evaluation of the options against the evaluation criteria; and Justification for the rejection of any options; 4. The PEA will submit its analysis of options to Gas Industry Co, which will compile the work into an Access and Pricing Options consultation paper and seek submissions from stakeholders. Key deliverable 2: Analysis of submissions 5. The second key deliverable is an analysis of submissions on the Access and Capacity Pricing Options consultation paper developed under Key deliverable The PEA will review and comment on the submissions received on the options paper. This review will be provided to Gas Industry Co, who will use it as the basis of a submissions analysis paper to be published on the Gas Industry Co website. Key deliverable 3: Development and analysis of shortlisted option(s) 7. After having considered submissions on the Access and Capacity Pricing Options paper, the PEA will develop its final advice.

3 8. The advice should include: (a) Recommendation of a single preferred option; 1 (b) (c) (d) (e) (f) Detailed descriptions of the preferred option, including a description of how the option will ensure that capacity is efficiently allocated, particularly at times of constraint, and pricing of capacity effectively signals the need for investment in additional capacity; An assessment of how well the preferred option would meet the objectives of the Gas Act, GPS and GTIP and satisfy the PEA s evaluation criteria; Overview of how the option would be implemented, including whether it could be implemented through a VTC change or would require regulation; A draft timetable for implementing the preferred option (if applicable); and An assessment of the costs and benefits of the preferred option. 9. The PEA s work will be used by Gas Industry Co as the basis of an Access and Pricing Decision consultation paper, which may take the form of a Statement of Proposal, if the preferred option is for regulation. If two or more options are equally preferred by the PEA, then Gas Industry Co may ask the PSA to consider the options and the PEA s analysis prior to releasing a consultation paper. Key deliverable 4: Analysis of submissions on the Review of the Access and Pricing Decision paper 10. The fourth key deliverable is an analysis of submissions on the Access and Pricing Decision paper. 11. The PEA s work will be used by Gas Industry Co as the basis of an analysis of submissions on the Review of the Access and Pricing Decision paper. Key deliverable 5: Detailed implementation plan 12. If the analysis of submissions causes the PEA to reconsider its previous advice, steps 7 to 11 will be repeated. 13. The PEA will develop detailed implementation plans in consultation with industry stakeholders and Gas Industry Co. 14. The PEA will give advice to Gas Industry Co on how the new access regime should be implemented. 1 If two or more options are equally preferred, then the PEA will outline the relative merits and drawbacks of those options.

4 Participation overview 15. This diagram illustrates the process the PEA will follow for advising Gas Industry Co in relation to this review and Gas Industry Co, Panel of Strategic Advisers (PSA), and Stakeholder participation in that process. PEA GIC/PSA Stakeholders Identification and preliminary assessment of access regime options Key deliverable 1 Market failures Evaluation criteria Reasonably practicable options GIC develops and publishes an options consultation paper Consider and make submissions on options Analysis of submissions on the options paper Key deliverable 2 Submissions on options paper GIC develops and issues a submissions analysis paper Development and analysis of shortlisted option(s) Reconsider if necessary Key deliverable 3 Preferred option Details of preferred option Implementation Costs and Benefits GIC develops and issues an decision paper Consider and make submissions on decision Analysis of submissions on the decision paper Key deliverable 4 Submissions on decision paper GIC develops and issues a submissions analysis paper Detailed implementation plan Key deliverable 5 Submissions on decision paper

5 Draft schedule of meetings 16. Below is a draft schedule of meetings for the first x months of the review of the VTC and Pricing. The schedule will be reviewed and revised at each PEA meeting. The schedule will be published on Gas Industry Co s website. Mtg # When Activities GIC Actions 1 March 2012 Discuss/agree first steps for beginning review Discuss market failures Discuss access and pricing principles 2 April 2012 Agree market failures Agree access and pricing principles Discuss possible options 3 May 2012 Assess options Shortlist options Outline advice on options paper developed Agree work plan for next 4 months Industry workshop on options 4 June 2012 Finalise and submit analysis of options to GIC (Key deliverable 1) GIC uses Key Deliverable 1 as basis of an Options Paper and issues for consultation 5 July 2012 Consider and agree response to submissions Begin work on an analysis of submissions on the Options Paper 6 August 2012 Continue work on analysis of submissions 7 September 2012 Submit analysis of submissions on the Options Paper to GIC (Key deliverable 2) GIC uses Key Deliverable 2 as basis of final Analysis of Submissions on Options Paper and issues 8 October 2012 Agree preferred option Describe/analyse option in more detail Industry workshop on preferred option 9 November 2012 Submit final advice on review of the VTC and Pricing to GIC (Key deliverable 3) GIC uses Key Deliverable 3 as basis of a Review of the VTC and Pricing Decision paper and issues for consultation 10 December 2012 [submissions due] PEA meeting? 11 January 2013 Consider and agree response to submissions Begin work on an analysis of submissions on the Decision Paper

6 Mtg # When Activities GIC Actions 12 February 2013 Finalise and submit an analysis of submissions on the Decision Paper to GIC (Key deliverable 4) 13 March 2013 Draft implementation plan with industry at workshop 14 April 2013 Finalise and submit implementation plan to GIC (Key deliverable 5) GIC uses Key Deliverable 4 as basis of final Analysis of Submissions on Decision Paper and issues