CAG Project – Objectives - CBI Annual Energy Forum 2009. Presented by David Flinn, A&L Goodbody

1. CAG Vision and Goals
David Flinn
A&L Goodbody

2. CAG Vision and Goals
CAG Project – Objectives
• Optimal operational flows of gas;
• A single balancing zone is created;
• A single IT interface for shippers, so that only one set of nominations is required;
• Planning and investment decisions are taken on an all-island basis either by a single
TSO or coordinated among TSOs
2

3. CAG Vision and Goals
Aims of CAG
• Benefits must be shared fairly between the jurisdictions
• New tariff regime will ensure no-one is worse off as a result of CAG
3

4. CAG Vision and Goals
Benefits of CAG
Real benefits are strategic:
• Competition
• Investment
• Security of Supply
• Interoperability with GB and Europe
• level playing field
• Efficient Network planning
4

5. CAG Vision and Goals
Northern Ireland – Present Structure of Industry – Ownership
• Premier Transmission Limited (a wholly owned subsidiary of NIEH) who own the
Scotland to Northern Ireland Pipeline (SNIP) which links Twynholm in Scotland with
the Ballylumford power station in Co. Antrim.
• Belfast Gas Transmission Ltd. (a wholly owned subsidiary of NIEH) who owns the
Ballylumford Torytown Pipeline (“BTP”) which runs from Ballylumford power station
to the Belfast distribution network. BGTL and PTL will have the same management
team but are legally separate companies.
• BGE (Northern Ireland) who own the North West Pipeline (NWP) which links the
Ballylumford Torytown Pipeline (BTP) at Carrickfrgus to the Coolkeeraghk power
station in Co. Derry and the South North Pipeline (SNP) which runs from
Gormanstown in Co Meath to connect with the North West pipeline at
Ballyalbanagh in Co Antrim.
5

6. CAG Vision and Goals
Northern Ireland has two distribution system operators (DSOs):
• Phoenix Distribution Limited who operate the distribution network in the Greater
Belfast and Larne areas.
• Firmus Energy Distribution Ltd who are licensed for the conveyance of gas within
the towns along the route of North West and South North Pipelines.
• Firmus Energy has exclusivity in these towns.
6

7. CAG Vision and Goals
Options for Single System Operation
The Options are:
• Coordination between multiple TSO/TOs who are responsible for the provision of
system operator services in their areas and who coordinate their activities in order
to provide certain system operator services on an all-island basis.
• Multiple TSO/TOs who contract with a Single Service Provider (SSP) for the
provision of all-island system operator services.
• Dual TSOs licensed to provide system operator functions on an all-island basis.
• A single TSO licensed to provide system operator functions on an all-island basis.
7

8. CAG Vision and Goals
Multiple TSO/TOs with a single service provider (SSP)
1. A licence obligation on the existing TSO/TOs to contract with the same company
for system operator services.
2. This model requires contracts between the TSOs and the service provider rather
than between TSOs.
3. PTL has a current service provider, BGE, for the operation of the SNIP pipeline.
4. The key difference between this approach and a single TSO approach is that the
asset owners remain the licensed TSOs and continue to be legally responsible
for performing all operation functions.
5. Regulation of the SSP given that it would not be a licensed entity. The contract
between the TSOs and the SSP will ensure that the SSP provides the services
specified in the contract and should address any performance issues.
8

9. CAG Vision and Goals
Single TSO
1. Licensing a single TSO for the island to provide those system operation functions
which are to be provided on an all-island basis.
2. Single TSO option would require fewer contracts to achieve as sub-contracts
between TSOs would not be required.
9

10. CAG Vision and Goals
Dual TSOs
1. Involve assigning a NI TSO to work alongside the RoI TSO as has been done in
SEM.
2. Each TSO would be licensed separately in its own jurisdiction. The licences
would place an obligation on the dual TSOs to co-ordinate their activities on an
all-island basis.
3. Appropriate co-ordinatation mechanisms could be set out in a contractual
arrangement between the two TSOs.
This option would require:-
4. A decision on who the NI TSO should be.
5. Interface agreements between the Northern Ireland TSOs and the Northern
Ireland asset owners would also need to be drafted.
6. A decision on which of the TSOs will be responsible for the operation of the
south-north pipeline will be needed.
10

11. CAG Vision and Goals
CAG Network Code Options
Multiple Network Codes
This option would see all the current codes remaining in place resulting in three
transmission codes, one distribution code and a combined transmission and distribution
code.
11

12. CAG Vision and Goals
Dual Network Codes
This option would involve two network codes – one in the north and one in the south.
The current code structure in Northern Ireland would need to be streamlined into one
code.
Single Network Code (SNC)
A single all-island code would be developed to govern the movement of gas on the all
island system on a daily basis. This code would replace the existing codes north and
south.
• The final SNC would have to be agreed with all parties and this will require adoption
of each section of the code.
• A unified code would require a set of governance arrangements to co-ordinate
decisions between the two Regulators (NIAUR and CER). The SEM committee
provides a model for this.
12

13. CAG Vision and Goals
CAG DECISION
• Final conclusions on the high level design for CAG will be published on 30 January
2009
• A single TSO for the island
• Independent TSO
• a single Transmission Code of Operations with an opt-out for distribution codes
• A single gas quality standard for the island (based on GB standard)
• But the project requires legislative change to implement the changes needed
13

14. CAG Vision and Goals
CAG Decision – Tariffs
• Harmonised transmission tariff methodology for the entire island
• Final conclusions were published in December 2008
• RAs favour Entry/Exit regime
• Provides investment signals for new investment
• Alignment to Europe
• Avoids price rises in Northern Ireland
• Ease of implementation
Requires legislative change to implement
•
14