Gas pipeline unhappy about new rules


According to APA Business Development Manager Rudi Petrig, APA Group was not happy with the plan by eight retailers – under the REMCo Retail Market Rules in Western Australia – to change gas pricing rules under the national gas pool plan. APA Group (APA) owns, or has an interest in, over 10,000km of gas transmission pipelines in Australia, and owns the Mondarra gas storage facility in Western Australia. The document was published in January 2008. APA transports close to 40 per cent of Australia’s natural gas consumption

APA disagrees on gas price pool for WA: Petrig said APA "does not agree" with some REMco views on allocation, reconciliation and swing processes in Western Australia.

REMco logic not acceptable, says APA: REMCo had said there was

– "complexity of the allocation, reconciliation and swing rules;

– lack of understanding amongst the participants of how to correlate the impact of the changes to data with the final results;

– compounded by the departure of M-Co as a potential provider of training …"

APA disagrees: The allocation, reconciliation and swing processes relating to Western Australia were established in the manner as currently implemented in order that there be complete equality with the way in which balancing was to be dealt with between the two interconnection pipelines in Western Australia.

Complexity barrier: Petrig wrote, "If as a result of achieving this equality, the rules are "complex", then that is an inevitable consequence and the rules should be accepted rather than requiring them to be changed.

Lack of understanding barrier;"On the REMco comment – "lack of understanding amongst participants", APA suggested that this was " a question of having the right people with the necessary skills to undertake that activity and not a question of changing the rules because they are difficult to understand. Also the fact that the "departure of M-Co as a potential provider of training in this area" should not he used as the reason to change the rules, rather it is a matter of finding a replacement provider of training.:.

Operation of Swing Service; "APA does not agree with your comments relating to the operation of swing gas in Western Australia that "It is generally acknowledged that these rules represent an imperfect compromise to the commercial tensions that existed when the rules were being developed and that changes are needed…" APA understands that the concerns that have been expressed are concerns raised in the operation of swing in South Australia and not in Western Australia.

Price has so far not varied much: Petrig argued "In Western Australia it is only rarely that swing is significant and the cost is a one day only cost if the shippers all nominate two days later to account for their swing. There have been only a very few occasions where there has been a recurrence of significant swing and on those occasions it was caused because the shippers had not corrected their nominations."

Equality between the pipelines the key: Petrig said APA understands that the Gas Market Leaders Group is currently evaluating the potential for a Short Term Trading Market (STTM) to be implemented in Australia. APA also understands that this market is not contemplated to be introduced into Western Australia. Howver, should the operation of a STTM be introduced in Western Australia. APA would be concerned if the current issues regarding the treatment of equality between the pipelines relating to the Swing process which has been long and hard fought for by new market entrants, be undermined such that shippers would be potentially disadvantaged when using one pipeline or the other". APA supported the continuing operation of the current RRMR for Western Australia.

Reference: Rudi Petrig, Business Development Manager, APA Group, Review of REMCO Retail Market Rules, 1 August 2007.

Erisk Net, 18/1/2008

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