Gas Wholesale Consultative Forum (GWCF)
Meeting Minutes
Meeting:
Gas Wholesale Consultative Forum (GWCF).
Date:
Tuesday 11 April 2017.
Time:
9.30 am – 12.00 pm (AEST).
Location:
AEMO Offices and teleconference.
Meeting Number:
18.
Attendees:
AEMO
Gas Trading Australia
Hydro Tas
AGL
Jemena
Australian Energy Market Commisson
Jemena Gas Networks
Epic Energy
APA Group
Energy Australia
Lochard Energy
Origin Energy
Australian Energy Regulator
Queensland Electricity Users Network
Gas Markets Reform Group
Energy Consumers Australia
AEMO Attendees:
Neale Scott (Chair), Catherine Fetherstonhaugh (Secretariat), Hayley George, Luke Garland, Rachael Saw, Paul
Austin, Robbie Flood, Hugh Ridgeway, Melly Tan, Damien Sanford, Roger Shaw
1.0
WELCOME AND INTRODUCTIONS
Neale Scott (Chair) welcomed participants to the GWCF and confirmed the agenda.
2.0
MINUTES OF PREVIOUS MEETING AND ACTIONS
The GWCF noted and accepted minutes from the February 2017 GWCF.
Action Items were updated as displayed in Appendix 1.
3.0
GAS MARKET REFORM GROUP (GMRG) VERBAL UPDATE
Sandra Gamble (GMRG) noted that the Gas Market Reform Group was formed towards the end of 2016 with
the purpose of implementing the gas market reform package items from the Council ofAustralian
Governments(COAG) Energy Council Meeting held in August 2016.
Sandra noted the three main objectives that the group is currently involved in:
-
Formation of an advisory panel, containing 10-12 senior executives from energy businesses around
Australia with gas market exposure. Invitations to join the panel were released on Friday 7 April 2017,
with the first meeting scheduled towards the end of April 2017.
GWCF MEETING 11 April 2017
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-
Creation of an Implementation Options paper for the Arbitration and Disclosure Framework, as a
result of Dr Michael Vertigan’s examination of the coverage template. Public submissions to this
paper will be due by 13 April 2017.
-
Running of industry forums around Australia for various stakeholder groups. The group is currently in
the process of considering feedback received from stakeholders participating in the forums.
In relation to Capacity Trading, Sandra noted that three project teams have now been formed. These are the
Standardization project team, the Capacity Trading Platform project team and the Design of the Day-Ahead
Trading team. Details of the work streams can be found at: http://gmrg.coagenergycouncil.gov.au/workstreams
Sandra confirmed she will be available to provide an update on the progress of the GMRG’s work as a standing
item for the duration of the programme.
4.0
AUSTRALIAN ENERGY MARKET COMMISSION (AEMC) REVIEW OF THE
VICTORIAN DECLARED WHOLESALE GAS MARKET (DWGM)
Tom Walker (AEMC) provided an update on the AEMC review of the DWGM, noting that on 21 October 2016
the Commission published a draft final report. Tom explained that the draft final report investigated the issues
facing the DWGM and set out the Commission’s recommendation to address the issues.
Given the complexity of this review, on 9 March 2017 the Victorian Government extended the time lines and
requested that a final report be provided by September 2017. Tom noted that the purpose of the extension is
to allow additional consultation with stakeholders, with a focus on some of the incremental options to
improve the DWGM and other alternatives.
Tom noted that on 30 March 2017, the Commission released an assessment of alternative market designs for
stakeholder consultation. The paper examines a range of different options to reform the gas trading
arrangements and the pipeline capacity allocation arrangements in the DWGM. Submissions on the
assessment of alternative market designs are due no later than Thursday 11 May 2017.
Tom noted that a workshop will be run by the AEMC in Melbourne on 27 April to discuss current work
packages. Workshop details can be found at –
http://www.aemc.gov.au/Markets-Reviews-Advice/Review-of-the-Victorian-Declared-Wholesale-Gas-Mar#
Tom confirmed he will be available to provide a standing update on the progress of the AEMC’s review for the
duration of the programme.
5.0
FINAL SETTLEMENT STATEMENT CHANGES
Melly Tan (AEMO) gave an overview on upcoming changes to final settlement statements. Melly noted the key
benefits the changes will bring for participants, details of which can be found in Appendix 1 - Overview Item
One.
The changes are scheduled to be released to Production in the second half of 2017. Before being released to
Production, changes will be made available in the Pre-Production environment for participants testing.
More details will be communicated to the GWCF and AEMO Settlement Communication distribution list as the
changes progress. Neale Scott (AEMO) advised that an example of the updated changes will be sent once the
changes have been developed.
5.0
2017 GAS STATEMENT OF OPPORTUNITIES (GSOO)
GWCF MEETING 11 April 2017
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Rachael Saw (AEMO) presented on the 2017 AEMO Gas Statement of Opportunities’ (GSOO). Rachael noted
that the 2017 GSOO highlights the increasing interdependencies between gas and electricity and supply and
demand. It also demonstrates the need for holistic and integrated planning across the entire supply chain to
deliver energy security. Details of the presentation can be found in Appendix 2 - Presentation One.
Alexandra Curran (APA) queried if there is an update to the Victorian Gas producers production forecasts post
the Turnbull commitment announced in April. Rachael Saw (AEMO) advised that AEMO is currently waiting on
this new data to be supplied, with a view to update the GSOO once the new forecasts are received. AEMO
estimates this update to be delivered in mid May 2017.
Tim Forcey asked if there is greater resolution to review the data in month by month scenario. Rachael advised
that the original model was run with a daily forecast, and there may be scope for AEMO to update the GSOO at
a monthly level once the new production forecasts are received.
Vuong Nguyen (Lochard Energy) queried what the assumed gas price is for the demand curve on slide 5. Neale
Scott (AEMO) took an action to distribute this information following the meeting (Action Item 18.5.1)
Jennifer Brownie (QUEN) queried how the Northern Gas pipeline fits into the graph on Slide 5. Rachael Saw
(AEMO) noted that the Northern Gas pipeline wasn’t considered in AEMO’s neutral scenario for the 2017
GSOO due to the uncertainties surrounding timing and quantities of gas.
Tim Forcey queried what is driving the decline in peak gas shortages in 2018/2019, as illustrated on Slide 7.
Rachael Saw (AEMO) noted the following drivers for the decline:
-
AEMO’s assumption of the retirement of certain coal assets to meet the Victorian Governments
Renewable Energy Target (RET)
-
Local limitations in the model in relation to when coal can generate and transmission constraints,
combined with local interconnector constraints.
-
The increase in Solar and Wind generation driving coal generation levels down.
Tim further queried on a monthly level, as opposed to annually, whether the shortfalls would be seen in
January and February only. Rachael confirmed that the shortfalls are seen predominately in the summer
months.
Scott Young (APA) queried if the points on Slide Eight can be tied to the graph on Slide Five, which shows
sharply declining gas production in Victoria however gas pipeline infrastructure constraints in South Australia.
Rachael noted that the constraints noted on Slide Five are reduced on an annual level, and production may
peak on any given day. Rachael added that on days with high gas production it becomes a pipeline capacity
issue.
Rachael Saw (AEMO) noted that moving forward, AEMO won’t be producing a stand-alone GSOO. Instead, it
will produce a whole of energy supply outlook every three to four months. The first one is expected to be
published in May 2017, following updated forecast data from producers.
David Headberry (ECA) queried the extent to which AEMO has assumed reductions of demand in electricity
and gas that will come from an increase in process. Rachael Saw (AEMO) noted that the demand forecast in
the GSOO is based on the National Gas Forecasting Report (NGFR) which assumes future gas and electricity
prices. Gas forecasts were revised for the 2017 GSOO however the GSOO doesn’t forecast prices.
6.0
2017 VICTORIAN GAS PLANNING REPORT
Luke Garland (AEMO) gave an overview of the 2017 AEMO Victorian Gas Planning Report (VGPR). The full
paper can be found in Appendix Item Three.
Alexandra Curran (APA) provided a brief up on the status of the APA Access Arrangement, noting that a
proposal for the next five years was submitted by APA on 3 January 2017. Alexandra noted that the Australian
Energy Regulator (AER) is working with APA to remain flexible to future market changes. Alexandra explained
that the proposal includes projects covering the Iona refill and Warragul supply shortfall issues. With regards
GWCF MEETING 11 April 2017
Page 3 of 7
to the Southwest pipeline, Alexandra noted that APA has included a project to increase the Iona refill capacity
from the current 102 TJ to 147 TJ
Touching on the changing Gas Powered Generation (GPG) landscape, Alexandra explained that APA are
working with the AER regarding the requirements and the forecasts. APA has a watching brief to supplement
the current access arrangement if further network augmentations are required. A draft decision on the Access
Arrangement will be published at the end of June. Alexandra noted that expansion plans should address the
needs for the Lochard facility, for linepack and GPG adequacy issues.
Scott Young (APA) queried the source of the different GPG forecasts in the GSOO and the VGPR. Luke Garland
(AEMO) and Rachael Saw (AEMO) noted that the GSOO had two GPG scenarios in its modelling. The GSOO
neutral used the neutral NGFR GPG forecast as published in December 2016 which included an assumption of
the Portland Aluminium Smelter closure. The GSOO high GPG scenario is consistent with the VGPR and
included that the Portland Smelter would be continuing operations.
Scott Young (APA) asked for clarification that both the NGFR and GSOO assumed Hazelwood would shut end of
March 2017, however the difference in the two reports is that the VGPR included that the Portland Smelter
continuing operations. Luke Garland (AEMO) confirmed that was the case. APA then queried why the GSOO
used a low GPG forecast for the neutral case and hadn’t been updated to include the Portland Smelter
continuing operations.
Scott Young (APA) queried the methods used in the VGPR to conclude how Laverton North is assumed to be
dispatched preferentially over Mortlake. Luke Garland (AEMO) explained that the dispatch is based on an
economic and constraint model. However, on peak summer days both generators were required and that it
was not that Laverton would be dispatched ahead of Mortlake, but that both would be required to run to meet
peak NEM demand.
Damien Sanford (AEMO) took an action to hold an offline discussion with APA to discuss AEMO’s forecasting
process Action Item 18.6.1
Luke Garland (AEMO) noted that the Annual Winter Gas Outlook presentation to industry will be held on 10
May 2017. Luke encouraged participants to send any questions prior through to the GWCF correspondence
inbox. Participants that have not already received an invitation who would like to attend should email
[email protected]
7.0
AMDQ UPLIFT ALLOCATION REVIEW
Hugh Ridgway (AEMO) noted that a report on the Longford outage on 1 October 2016 was released by AEMO,
in which AEMO sought feedback from participants on the sufficiency of the uplift allocation methodology. At
the GWCF in December 2016, ERM Power questioned the fairness of the settlement outcomes arising from the
Longford outage and requested a review of the uplift payment allocation methodology. AEMO agreed to
facilitate an industry conversation as to whether such a review should be undertaken.
Hugh noted that the cost of opening the DWGM Settlement Systems is likely to be substantial, with a ball-park
figure of four to seven hundred thousand dollars. Hugh added that given the current AEMC review of the
DWGM, AEMO doesn’t think commencing a project to change the uplift allocation methodology is warranted,
and proposes to await the outcome of AEMC review.
Neale Scott (AEMO) requested that this action item remains open until ERM have responded with a view to
close out at the June GWCF.
8.0
IMPROVING ASPECTS OF ADMINISTERED PRICING IN THE DWGM
Roger Shaw (AEMO) recapped the paper attached in Appendix Item Four. Roger noted that AEMO has
reviewed the administered pricing provisions in the DWGM and compared them with those in the STTM.
While there are many similarities, the different market designs have led to different approaches and there are
some areas where value can be added to the DWGM through greater alignment between the markets.
GWCF MEETING 11 April 2017
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Roger noted that AEMO is proposing to hold a workshop later in the month, and sought participant’s feedback
on a proposed date of 28 April 2017.
Scott Young (APA) queried if this issue will be covered as part of the DWGM review. Roger Shaw (AEMO)
advised that this change requires a lower level of intervention (procedural) and no system changes are
required. Roger added that the DWGM is currently in a period of increased risk and AEMO is seeking to clarify
its position going forward in case an event was to occur.
Roger confirmed that an invite would be extended to participants via the GWCF mailbox.
9.0
STTM CONTINGENCY GAS CONFIRMATION PROJECT AND OUTCOMES FROM
EXERCISE KAPPA
Cara Teoh (AEMO) recapped the paper released prior to the meeting, included as Appendix Item Five. Cara
noted that Contingency Gas is a market mechanism for the STTM, designed to alleviate supply shortfalls and
prevent involuntary gas load curtailment within an STTM hub.
At the 11 October 2016 GWCF Meeting, AEMO advised participants of the Contingency Gas Confirmation
Project to implement a market system change for submitting Contingency Gas bid/offer confirmations, and
two new Market Information System (MIS) reports. This project was undertaken to replace and automate the
manual data input, validation and scheduling processes for Contingency Gas. The new Contingency Gas
process went live on 22 March 2017.
Cara noted that on 8 March 2017, AEMO and participants completed Contingency Gas Exercise Kappa for the
Adelaide Hub. This Exercise was used to facilitate end to end pre-production testing of the new systems
implemented during the Contingency Gas Confirmation Project.
Cara also noted that the Contingency Gas phone into the AEMO Gas Control room will be recorded going
forward. This is consistent with all other phone lines into AEMO Control Rooms.
Cara sought feedback from participants around the preferred method of user acceptance testing when market
system changes are introduced. Kieran O’Leary (AGL) commented that testing went well however
communication around testing outcomes and go live dates was unclear.
Neale Scott requested any additional feedback around the testing be sent through to the GWCF mailbox.
10.0
2017/2018 DRAFT DECLARED WHOLESALE AND FRC GAS BUDGET AND
FEES
Jack Fitcher (AEMO) highlighted the key messaging and fee decreases from the 2017/2018 AEMO Draft
Declared Wholesale and Full Retail Contestability (FRC) Budget.
Jack noted that the budget provides a view of the 2017-18 Victorian gas fees, revenue and expenses, and fee
estimates for the following four-year period. In budgeting for 2017-18, AEMO has continued to apply strong
commercial discipline to control costs to reduce the impact of fee increases to market participants.
Jack noted that the final budget and fees will be effective from 1 July 2017, and will be published by the end of
May 2017. The fees will be formally advised on AEMO website at the end of May 2017.
11.0
GAS MARKET UPDATE
Yvonne Tan (AEMO) ran through the standing market update, available for review in Appendix Item Six.
Alexandra Curran (APA) queried if AEMO has now seen more trades on the Gas Supply Hub due to the
modified settlement allocation. Paul Austin (AEMO) noted that it is currently too early to tell and AEMO is
seeing a similar amount of trade to previous periods. Yvonne Tan (AEMO) took an action to capture this in the
next market update. Action Item 18.11.1
GWCF MEETING 11 April 2017
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Yvonne Tan (AEMO) noted that all web links to data published in the market update has been made available
on the final slide, as requested at GWCF 17.
12.0
OTHER BUSINESS
Yvonne Tan (AEMO) queried whether participants wanted to see AEMO provide a notification to Gas Bulletin
Board (GBB) user when a new PDF is uploaded.
It was agreed by the forum that these changes can be considered as part of GBB Stage Four in early 2018.
13.0
NEXT MEETING
The next GWCF meeting is scheduled for Tuesday 13 June 2017.
GWCF MEETING 11 April 2017
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APPENDIX 1 - ACTION ITEMS RAISED AT MEETING 18
Item
Topic
Action required
Responsible
Due By
18.5.1
2017 Gas
Statement of
Opportunities
2017 Victorian Gas
Planning Report
Clarify assumed gas price for the demand
curve of Slide 5 of GSOO presentation
Neale Scott
(AEMO)
21 04 2017
Meet with APA to discuss forecasting
challenges and explain forecasting
methodology
Report on increased/decreased trade levels
since introduction of modified settlement
allocation
Damien
Sanford
(AEMO)
Yvonne Tan
(AEMO)
30 05 2017
18.6.1
18.11.1
Gas Market Update
Notes/Updates
13 06 2017
UPDATES ACTION ITEMS RAISED AT PREVIOUS MEETINGS
Item
Topic
Action required
Responsible
Due By
Notes/Updates
15.4.1
AER Significant
Price Variation
Report – 1 October
Gas Day
Other Business
Investigate producing supporting
documentation for System Wide Notices
(Reference Guide)
AEMO
Ongoing
Needs to be considered in context of
broader piece of work for AEMO
Provide an update on AEMO’s thoughts RE:
Gas Markets following the Finkel review
AEMO
13 06 2017
Ben Skinner has written a
submission to the Finkel Review
(ongoing)
15.9.1
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