PTL Transportation Code Modification 39 - Transfer of Exit Capacity between
Northern Ireland Exit Points to permit Secondary Trading of Exit Capacity
Phoenix Natural Gas Ltd. Response
24th October 2016
Introduction
Phoenix Natural Gas Ltd. (PNGL) welcomes the opportunity to respond to the Initial Modification
Report issued by PTL in response to the Transportation Code Modification raised by AES
Ballylumford (AES) which proposes to permit the transfer of exit capacity between NI exit points
through a secondary capacity trading mechanism.
Having reviewed PTL’s comprehensive assessment of the modification proposal, PNGL has reached a
similar conclusion to that made by PTL that this Code Modification appears to be attempting to
address the issue previously identified by NI Power Generators during the NI Exit Reform review
process and relates to the remuneration of operating costs incurred by them as part of the
electricity wholesale market design. PNGL are somewhat disappointed to note that NI Power
Generators have chosen to attempt to amend gas industry transportation arrangements again to
address the problem given that the NI Exit Reform review findings clearly indicated that NI Power
Generators should aim to resolve this matter in the first instance by finding an electricity market
solution. The remainder of this response sets out PNGL thoughts on this and any other specific
comments it has with the proposal.
Appropriateness of Proposal and Proposed Timescales for Introduction
In its response to the NI Exit Reform Call for Evidence consultation in May 2016, PNGL had indicated
that the gas industry should not be used to address wholesale electricity market deficiencies and
agreed with the NI Exit Reform findings that in the first instance the NI Power Generators should
look to the electricity wholesale market and in particular the i-SEM project to deal with what would
appear to be genuine concerns. PNGL had also agreed with the NI Exit Reform findings that any
attempt to address this issue through amendment to the gas industry business rules was both
inappropriate and extremely premature given that i-SEM discussions were still ongoing. As further
indicated in the conclusions of the review, only when it was properly determined that an electricity
market only solution would not resolve all issues, should a further gas market amendments be
considered.
PTL also have explained in detail in its Modification Report its initial assessment of the significant
amount of work that would be required to deliver an appropriate solution for this proposal at this
time. PNGL would support PTL’s view that again it seems premature to consider undertaking any
work to deliver on this proposal before October 2017 which is the current proposed delivery date of
the transmission single system operation project, which will see a single transmission transportation
code as well as a single NI transmission system being introduced. Any move to introduce these
proposals in advance of this project delivery date will potentially lead to unnecessary costs being
incurred which will need to be recovered from NI gas market participants and ultimately NI gas
consumers.
Fair and Equitable Treatment of Network Users
Similar to PTL, PNGL recognises the importance of the Power Generation sector for the NI gas
industry but we cannot support proposals that are neither fair nor equitable when considered on a
NI wide basis. As with the Exit Capacity reform proposals put forward by NI Power Generators the
proposal outlined in this modification would bring no benefit to Shippers exiting the transmission
network at distribution network offtakes due to the current capacity booking regime whereby
Distribution Network Operators hold transmission exit capacity on their behalf.
Continuing Development of the Gas Industry
Again PTL’s assessment has correctly identified in PNGL’s opinion that the NI Power Generator’s
proposals would potentially result in re-distribution of costs across the NI Networks with distribution
network end users being negatively impacted by offering NI Power Generators the ability to trade
capacity at the exit points. In addition, any changes in transportation arrangements must support
the continuing development of the gas industry and recognition has to be given to the fact that
network growth will come primarily from both development of the existing and introduction of new
distribution networks. Any regime change which introduces uncertainty and /or instability into
future network charges has to be considered unsuitable and avoided at all costs.
Conclusions
Having considered the AES proposals and PTL’s initial assessment of the proposals, PNGL has
concluded the following:

Premature delivery of a gas market solution should be avoided.
o NI Power Generators need to consider finding electricity sector solutions to electricity
wholesale issues before any further consideration is given to amending the gas industry
transportation rules to address this type of problem.
o Priority must be given to the delivery of single system operation with any future
proposals of this type only considered when this project is complete to ensure
duplication of work is avoided and unnecessary system development is undertaken


which results in stranded asset for which costs will still need to be recovered from gas
market participants and gas end users.
Changes in transportation arrangements must deliver a regime which allows fair and equitable
system access and does not favour one type of Shipper over another.
Regime amendments must support the continuing growth of the NI gas network, particularly in
the areas where future growth can be realised.