Pipeline capacity consultation

Over the coming months Vector is engaging more deeply with the industry to consult on the assumptions and inputs (including its system security criteria) to its determination of available capacity if any, particularly as it relates to the North Pipeline. Vector’s objectives in relation to this engagement include:

Seeking feedback on the modelling assumptions and inputs;
Using this feedback to inform Vector’s decision making in relation to determining the availability of capacity on the North Pipeline;
Providing transparency of Vector’s decision making;
Providing greater understanding of how Vector determines the availability (or otherwise) of capacity; and
Promoting a wider understanding of availability of capacity on the North Pipeline.

Vector is required to operate (and operates) the transmission pipeline as a reasonable and prudent operator, in an even handed manner, in order to provide a level playing field to facilitate the efficient operation of markets. As a reasonable and prudent operator Vector has regard to the security and safety of the assets as well as the operational stability of the network. These factors directly impact on the total physical capacity of the system and how much of that capacity can be made available for contracting. This process requires a number of complex judgements that impact system planning and real time operation. Vector wishes to improve the understanding of these judgements across the industry, make its decision making processes more transparent and, where appropriate, reflect stakeholder views in its decision making framework.

At the end of the process Vector will publish its final determination of available capacity if any for the current gas year together with supporting rationale.

It is Vector’s intention to make all feedback it receives publicly available as the consultative process is best served by transparent information exchange between all parties. Vector, however, recognises that some information may be commercially sensitive. Throughout the process, industry participants should include commercial information by providing two submissions: one labelled for public release and one labelled confidential. Vector will ensure that confidential information is kept confidential to Vector Transmission.

In order to meet its objectives, Vector proposes the following process:

Step One:

Vector will issue a discussion paper that sets out Vector’s modelling approach, assumptions and inputs (including its system security criteria) as it relates to the North Pipeline.

Vector will distribute these papers to stakeholders, including regulators, shippers, direct transmission customers and key customers nominated by retailers. It is our intention to consult widely. Accordingly, the papers will also be available for download.

Step Two:	Interested parties will be invited to provide (written) feedback to Vector in relation to its modelling approach, assumptions and inputs (including its system security criteria). Vector will run workshops during this phase to review the papers referred to in step one above and provide interested parties the opportunity to ask questions prior to submitting their written submissions. Vector will use the feedback it receives from consultation to refine its base case and develop its sensitivity analysis. Vector intends to provide its reasons for choosing the parameter settings in its final base case and sensitivity analysis.
Step Three:	Vector will use the feedback received from the industry to inform its decision making in relation to the modelling assumptions and inputs (including its system security criteria) and will issue a discussion paper that contains its capacity base case outputs, reasons behind various assumptions and inputs, and a draft determination of available capacity if any.
Step Four:	Industry participants will be invited to provide (written) feedback to Vector in relation to its base case scenario and its draft capacity determination discussion paper.
Step Five:	Vector will publish its final determination of available capacity if any for the current gas year with supporting rationale.

The indicative timetable is as follows:

What	When
Interested parties provide Vector with feedback in relation to this paper (Pipeline Capacity Consultation)	~~21 October 2011~~ Complete
Physical Modelling Inputs Discussion Paper: explains and seeks feedback on Vector’s modelling approach, demand assumptions, security criteria, reasonable and prudent operator.	31 October 2011
First Consultation: public forum to answer questions.	31 October to 25 November 2011
All Industry Feedback received on the first consultation papers.	By 30 November
Final Copy of this paper with an updated indicative timeline will be released. [This date is dependent upon the impact of the information contained in the submissions that we receive. If the feedback is such that a major re-work is required Vector will provide an updated timeline.]	Early-December 2011
Consultation feedback and publication of modelling outputs: modelling base case and sensitivity scenarios, including a draft determination of available capacity (if any).	Early February 2012
Presentation of capacity determination discussion paper: public forum, discussion.	Depends on feedback received.
Consultation period
Vector's determination of available capacity (if any)

We are seeking feedback on this paper; in particular we would be grateful for your views on the following:

Are the timeframes we have allowed for consultation and feedback adequate for you to make submissions?

We have allowed 3 weeks for feedback on this document and 4 weeks for feedback on the modelling inputs. We have left the later part of the process open ended as this will, in part, depend on the level and nature of the feedback we receive.
What is the best way/location to hold workshops?
The list of recipients of this paper is attached. Please advise us ASAP if there is someone who we have not included.
Please advise us if you would like to be a direct recipient of Vector’s papers during this process.

Please send any feedback to capacity.consultation@vector.co.nz.