1. Transmission Workstream 7th Dec 2006 Chris Logue
“Gas Reserve” Review
Transmission Workstream 7th Dec 2006
Chris Logue

2. Gas Reserve Working Group
Where did we get to?
Above the Line
Status quo was maintained following 086 non-implementation
Below the line
“Imperfect” 071a Compensation arrangements retained
Procurement of “Below the Line” gas by NG NTS received little support.
Status quo retained for this winter
Review of arrangements still necessary for future winters

3. Background Safety Monitors introduced in 2004
Replaced the so-called ‘Top-up’ monitors
Safety monitors define levels of storage that must be maintained throughout the winter period
Focus of safety monitors is public safety rather than just security of supply
They provide a trigger mechanism for taking direct action to avoid a gas supply emergency

4. Concept
Safety Monitors ensure that sufficient gas is held in storage to support those gas consumers whose premises cannot be physically and verifiably isolated from the gas network in the event of a 1 in 50 winter.
To achieve this all gas consumers are categorised into one of two groups:
Protected by Monitor – Gas is held in storage to facilitate continuity of supply and safe control to these consumers in a 1 in 50 winter
Protected by Isolation – Safe control of operations is ensured by physically isolating these customers from the networks

5. End consumer categorisation
Sites which can be safely isolated from the network
NTS Interruptibles
LDZ Interruptibles
NTS Power Firm
NTS Industrial Firm
DM (excluding priority customers)
Sites which require protection under the safety monitor
Priority Firm DM
Ireland Firm
All NDM

6. Potential New Approach
Safety Monitor Gas is there for PBM customers
Therefore should be held by PBM shippers
Assessment made of the total Protected by Monitor load
Assessment made of each shipper’s portion of that PBM load
Shippers required to secure and hold gas in storage below monitor line equivalent to its portion of PBM load.
E.g. Shipper A has 20% share of PBM market and would therefore be required to hold stored gas equivalent to 20% of Safety Monitor quantity in each storage type.

7. Potential New Approach
This new shipper obligation will replace 071A compensation arrangements – no future requirement for compensation in the event of storage curtailment
Shippers would be notified of the quantity of gas that they must hold
Shippers required to warrant to NG that they have secured rights over this gas and will maintain this position until monitors are lifted
This position can be achieved as deemed appropriate by each shipper
Many (most?) shippers will already have significant storage holdings well in excess of the obliged quantity

8. Potential Advantages
Targets the requirement to hold stored gas at those that will be supplying the gas in a severe winter.
Removes requirement for a complex and “imperfect” compensation regime
Takes reserved gas out of the supply chain (unless a 1 in 50 winter occurs) and therefore increases the value of contracted demand response – therefore reducing risk of NGSE
Incentivises additional supplies - therefore reducing risk of NGSE
Helps PBM to quantify storage requirements in a timely manner ahead of winter period