(For AEMO to complete and administer)
Issue Number / IN006/14
Impacted
Jurisdiction (s) / NSW/ACT
Proponent / Danny McGowan /
Deep Juneja / Company / AEMO
Affected Gas Markets(s)
§ Retail
§ Wholesale
§ Bulletin Board
§ STTM / Retail / Consultation process (Ordinary or Expedited) / Ordinary
Industry Consultative forum(s) used / GRCF, NARGP-PRWG, NARGP-TWG and NARGP-CF / Date Industry Consultative forum(s)consultation concluded / 11 December 2014
Short Description of change(s) / Harmonisation of NSW/ACT business to business processes
Procedure(s) or Documentation impacted / Retail Market Procedures (RMP) NSW/ACT
Gas Interface Protocol (GIP) NSW/ACT
Interface Control Document (ICD)
IIR for IN006/14 – Harmonisation of NSW-ACT B2B Page 11
Summary of the change(s) / The proposed change in this Impact and Implementation Report (IIR) involves significant IT systems changes for AEMO, Retailers and Network Operators to facilitate the harmonisation of NSW/ACT business to business processes similar to those in other jurisdictions.Changes to the documentation that underpin the existing IT systems and business processes will also have significant changes. They involve replacing version 14 of the NSW/ACT Retail Market Procedures (RMP) and amendments to the NSW/ACT Gas Interface Protocol.
In terms of the IT changes the major changes are:
(i) Replace the hybrid aseXML with the aseXML standard used in other jurisdictions;
(ii) Replace the existing FTP delivery method with the Hub used in other jurisdiction;
(iii) Enable IT systems to receive and send transactions as prescribed in the GIP.
I&IR Prepared By / Danny McGowan / Approved By / Roy Kaplan
Date I&IR published / 9th January 2015 / Date Consultation under 135EE or 135EF concludes / 9th February 2015
Contact address for written responses / Danny McGowan, Australian Energy Market Operator, GPO Box 2008, Melbourne VIC 3001
Email Address for Responses /
Other key contact information /
IIR for IN006/14 – Harmonisation of NSW-ACT B2B Page 11
IMPACT & IMPLEMENTATION REPORT – DETAILED REPORT SECTIONCRITICAL EXAMINATION OF PROPOSAL
1. Description of change(s) and reasons for change(s) / The proposed changes in this IIR are the culmination of multiple workshops (both technical and regulatory) held with New South Wales/Australian Capital Territory (NSW/ACT) gas Retailers and Network Operators (NWO) that commenced back in late March 2014.
The changes relate to the NSW/ACT Retail Market Procedures (RMP) and the Gas Interface Protocol (GIP). The high-level scoping documents that AEMO jointly developed with Retailers and Network Operators in June 2014 were used as the baseline to amend the RMP and GIP. Final versions of the RMP and GIP will enable AEMO, Users and NWOs to develop their own internal system specification documentation. This will help facilitate their internal IT systems builds in preparation for a “go live” implementation - currently targeted for April 2016.
The changes for the Wagga Wagga network and environs owned by Australian Gas Networks Limited (AGN) and the Tamworth network owned by the APA Group have now been included. These networks refer to the provisions within the Retail Market Procedures of South Australia. A list of exclusion and/or inclusions is the subject of ongoing discussions during the IIR consultation phase.
The proposed changes to the RMP and GIP are described in section 3. The RMP describe various obligations that enable the interaction between AEMO, Users and NWO in the gas retail market, whereas the GIP describes the set of standard for the transactions to be used. These documents may require further minor amendments before they are finalised. This final round of consultation will allow AEMO to seek further clarity on the RMP and GIP to ensure that they reflect how the gas retail market arrangements will operate in relation to:
(i) business to market operator (B2M) interactions; and
(ii) User to NWO transactions or NWO to User transactions or business to business (B2B) interactions.
AEMO has scheduled workshops on the 15th, 22rd and 29th of January, to finalise the RMP and GIP documentation in preparation for publishing an AEMO final determination on the RMP and GIP which is currently targeted for late February 2015. Meeting invites have already been issued to NSW/ACT working group members and to those that expressed an interest in attending such workshops during the Proposed Procedure Change (PPC) stage. Anyone else wanting to attend these workshops should e-mail before COB 13th January 2015.
Submissions for this final stage of the consultation close on 9th February 2015 and should be emailed to . Please use the response template provided in Attachment A.
Background:
Currently the Retail Gas Market arrangements that operate in Victoria (VIC), Queensland (QLD) and South Australia (SA) are similar in terms of interactions between AEMO, Retailers and NWO. A technology platform known as the Retail Gas Hub (the Hub) is in place to facilitate the transactions for most of these interactions. These transactions are defined in a set of technical standards in the GIP in the VIC and QLD markets, and the Specification Pack for the SA markets. The set of B2B standards represented in these documents are largely the same across the three jurisdictions.
A jurisdictional specific implementation is used for the retail gas market interactions in NSW/ACT and uses FTP file transfer to facilitate transactions that are directed to and from the market operator only.
In February 2014, Jemena Gas Networks (JGN), the largest NWO in NSW/ACT, announced the replacement of their retail gas systems. JGN’s system replacement provides an opportunity to introduce the same set of B2B standards that are used in VIC, QLD and SA into the NSW/ACT retail gas market.
To assess the feasibility of this opportunity, AEMO in consultation with Retailers and NWO during most of 2014,:
· Developed high-level scoping documents;
· Provided Costs and Benefits based on scope documentation; and
· Engaged consultancy services from the NOUS Group to undertake a cost/benefit assessment.
The key features of the high level scoping documents were:
· The proposed design is based on the current arrangements in VIC taking account the specific jurisdictional allowances for NSW/ACT;
· The main allowances made for NSW/ACT include the contestability of hot water, differing market transaction types (i.e. no retrospective customer transfers), retaining the bulk transfer processes, and the ability to transfer customers on estimated meter reads; and
· The technology architecture (system, network and infrastructure) be based on the Hub.
The results of the cost/benefit analysis undertaken by NOUS Group, in Q3 2014, identified that implementing B2B and harmonising B2M arrangements a positive return outcome in the medium term is anticipated. On that basis, harmonising B2B and B2M processing across all retail gas markets delivers the market benefits of standard business operations and improves competition.
Between late August 2014 and early November 2014, AEMO in consultation with NSW/ACT gas Retailers and NWOs developed the RMP and GIP documents that formed part of PPC consultation which was issued on 21st November, with submissions closing on 11th December. During this period AEMO facilitated several workshops to resolve sections of the RMP and PBP5 that were not properly defined. The outworking from these workshops along with the interim and closing submission were used by AEMO to update the documentation that forms part of this IIR.
2. Reference documentation
§ Procedure Reference
§ GIP/Specification Pack Reference
§ Other Reference / Retail Market Procedures (NSW/ACT) (see attachment B)
Gas Interface Protocol (see attachment D)
Participant Build Pack 5 (see attachment C)
3. The high level details of the change(s) to the existing Procedures
This includes:
§ A comparison of the existing operation of the Procedures to the proposed change to the operation of the Procedures
§ A marked up version of the Procedure change (see Attachment B and C) / The proposed change in this IIR involves significant changes to the documentation that underpin the existing IT systems. They involve:
(i) Replacing version 14 of the NSW/ACT Retail Market Procedures (RMP) with the version described in attachment B.
(ii) Adding Participant Build Pack 5 (see attachment C) to the NSW/ACT Gas Interface Protocol (GIP).
(iii) Replacing version 1.0 GIP with the version described in attachment D.
Given the significant nature of the RMP changes a detailed comparison of the existing operation of the Procedures to the proposed change is not possible. However AEMO has undertaken a section by section comparison between the old and new NSW-ACT RMP. In addition a comparison to the VIC RMPs has been completed as well. Attachment E describes where the old NSW-ACT RMP clause have ended up in the new NSW-ACT RMP, and also includes reference to clauses that AEMO believes are no longer required.
4. Explanation regarding the order of magnitude of the change
(e.g.: material, non-material or non-substantial) / The proposed changes are material. They involve significant changes to the current NSW/ACT B2M transactions and the introduction of standardised B2B transactions. Most of the existing B2B transactions are being retired and replaced with a suit of transactions used in the other gas retail markets.
ASSESSMENT OF LIKELY EFFECT OF PROPOSAL
5. Overall Industry Cost / benefit (tangible / intangible / risk) analysis and/or cost estimates / Stakeholder Consultation:
As prescribed in the “Approved Process”, participants and stakeholders were asked to complete submissions. Submissions closed on 11 December 2014.
Feedback received:
AEMO received written responses from all Network Operators and the following Retailers in the NSW-ACT market: AGL, Lumo Energy, and Energy Australia. The responses that were received were evaluated and if appropriate incorporated into the proposal. For completeness a “marked up” version showing the differences between the PPC version of the RMP and PBP5 have been included. Also a document containing all responses and AEMOs assessment of each response is provided in Attachment F.
None of the responses that were received during the PPC consultation phase opposed the broad intent of the proposed changes which were to harmonise the NSW-ACT RMP and processes with other jurisdictions.
During the period 21st November to the 18th December, inclusive, AEMO facilitated several workshops to resolve sections of the RMP and PBP5 that lacked clarity. These workshops were attended by all Network Operators and the following Retailers in the NSW-ACT market: Origin Energy, AGL, Lumo Energy, Covau, and Energy Australia. The outworkings from these workshops along with the interim and final submissions, which were received by the 11th December, were used by AEMO to update the documentation that forms part of this IIR.
Costs and Benefits:
Prior to releasing the PPC, AEMO in consultation with Retailers and Network Operators developed high-level scoping documents that were largely based on the current arrangements in Victoria taking account the specific jurisdictional allowances for NSW/ACT. Participants were then asked to provide AEMO with estimated cost and benefits based on those scoping documents. The NOUS Group, with agreement from Participants, were appointed by AEMO to undertake a cost/benefit assessment (CBA). The assessment that was undertaken also factored in a sensitivity analysis component as a way of capturing divergence from the high-level scoping documents which AEMO and Participants felt offset the need to undertake another CBA i.e. completing a Self-Assessment Form (SAF) during the formal consultation phase.
Based on the information provided to AEMO, the overall industry once off implementation cost to the industry (AEMO, Retailers and Network Operators) is estimated to be $22M. AEMO’s once off implementation cost is estimated to be $3.1M. The ongoing system maintenance cost of is estimated to be $1.6M. AEMO’s ongoing costs are estimated to be $0.3M. The estimated benefits to industry is $2.6M up front with $5.6M ongoing. Using the information that was provided the cost/benefit analysis undertaken by NOUS group which identified that implementing B2B and harmonising B2M arrangements a positive return outcome in the medium term is anticipated. The Net Present Value (NPV) at ten years is estimated to be $3.6m. On that basis, harmonising B2B and B2M processing across all retail gas markets delivers the market benefits of standardised business operations and improves competition.
Retailers operating in other jurisdictions need to augment their business processes to operate in NSW/ACT compared to Victoria, Queensland or South Australia. Harmonising NSW/ACT IT and business processes should reduce entry cost for new retailers and increase competition or realise efficiencies for retailers currently operating two different sets of processes.
From the responses received, no Participant provided any feedback in relation to the positive NPV outcome.
6. The likely implementation effect of the change(s) on stakeholders
(e.g. Industry or end-users) / This change involves significant IT changes for AEMO, Users and Network Operators.
· For Jemena the changes will require software development and new hardware procurement.
· For AEMO the changes will require software development and an upgrade of the Hub.
· For others it will involve mainly software development.
In relation to the Wagga Wagga network and environs owned by Australian Gas Networks Limited (AGNL) and the Tamworth network owned by the APA Group, at the time of preparing this IIR the precise details of the IT changes are unknown but are the subject of ongoing discussions during the IIR consultation phase.
7. Testing requirements / The testing requirements have not yet been defined however at a minimum it will include Hub certification. Detailed testing requirements will be developed as part of the Testing Development and Configuration work steam which commences June 2015.
8. AEMO's preliminary assessment of the proposal's compliance with section 135EB:
- consistency with NGL and NGR,
- regard to national gas objective
- regard to any applicable access arrangements / Consistency with National Gas Law (NGL) and National Gas Rules (NGR)
AEMO’s view is that the proposed change is consistent with the NGL and matters about which Procedures can be made within section 135EA of the NGR. Implementation of this change is consistent with the policy intent on AEMO establishment. The change is also consistent with the operation and intention of other regulatory instruments such as the NERR.
National Gas Objective
The National Gas Objective (NGO) states “Promote efficient investment in, and efficient operation and use of, natural gas services for the long term interests of consumers of natural gas with respect to price, quality, safety, reliability and security of supply of natural gas.”
Based on the information that participants have currently provided to AEMO there appears to be sufficient benefits, tangible or otherwise, to offset the potential IT costs that a participant has expressed and AEMO has estimated. On that basis this proposal satisfies the NGOs efficient operation criteria.
Applicable Access Arrangements
Network Operators or Retailers did not raise any material concerns with the proposed amendments in relation to Access Arrangements during the PPC consultation phase. AEMO is of the view that the proposed changes do not conflict with any Access Arrangements.
9. Consultation Forum Outcomes
(e.g. the conclusions made on the change(s) whether there was unanimous approval, any dissenting views) / The GRCF is a standing forums for providing effective and efficient consultation with stakeholders on development of the Gas Retail Markets.
Given the significant nature of this project a new forum and working groups were established to manage the overall progression of the NSW & ACT Retail Gas Project (NARGP). The new forums and working groups provides opportunity for retail market participants to contribute to project planning activities and facilitate review and endorsement of relevant project documentation throughout the end-to-end project lifecycle.
Based on the responses received and the feedback within the working groups broadly there have been no dissenting views opposing the overall changes proposed in this IIR.
The consultation did raise several specific topics that largely resolved a number of known sections that were either incomplete or required further clarify in relation to the PPC versions of the RMP and PBP5.
RECOMMENDATION(S)
10. Should the proposed Procedures be made, (with or without amendments)? / AEMO recommends that these Procedures be made in line with Attachment B and C.
In response to Participant feedback, all suggestion were evaluated and if appropriate they were included into the IIR versions of the RMP and PBP5. For completeness a “marked up” version showing the differences between the PPC version of the RMP and PBP5 have been included Also a document containing all responses and AEMOs assessment is provided in Attachment F.
11. If applicable, a proposed effective date for the proposed change(s) to take effect and justification for that timeline. / AEMO proposes that the changes will occur in accordance with the following timeline:
· 25 February 2015 – AEMO publishes notice of decision
· March 2016 – Target date for AEMO publishing notice of effective date.
· Mid-April 2016 – Target date for go-live of systems and the effective date for the documentation changes.
ATTACHMENT A – DOCUMENTATION CHANGES (SEE SECTION 3)
Blue represents additions Red and strikeout represents deletions – Marked up changes
Attachment A