1. Options for structuring DM arrangements
29 January 2012

2. Broad Demand Management (DM) choices
Interrupt: ie call for interruption of whatever interruptible arrangements are in place (applies only to Vector)
Buy-back capacity: ie reduce the amount of reserved capacity in the congested area by buying it back and leaving it to retailers to manage arrangements with their customers (applies only to Vector)
Buy curtailment: ie pay end users to reduce their demand, either directly or through their retailers, but do not alter the amount of reserved capacity (could apply to both Maui and Vector)
Choices can be put into effect in different ways:
Interrupt: arrangements must be dealt with in VTC and related contracts
Buy-back capacity: arrangements could be dealt with in VTC or largely outside VTC
Buy curtailment: arrangements could be dealt with in codes or entirely outside codes
Gas Industry Co

3. 1st option: Individual DM arrangements in codes…
Interrupt
Buy-back capacity
Buy curtailment
Buy curtailment
MPOC
modified to include DM arrangements
VTC
modified to include DM arrangements
Considerations:
If buying back capacity or buying curtailment, pay-when-used charges could apply ie shippers pay only when service is provided
Possible CC complications over tariffs and accounting?

4. 2nd option: Individual DM arrangements outside each code…
MPOC
VTC
Buy-back capacity
Buy curtailment
Buy curtailment
Maui DM
arrangements
Vector DM
arrangements
Considerations:
DM arrangements sit outside the regulated entities (avoids possible CC issues)
DM arrangements managed by independent party but ‘called on’ by TSO as required
Either all shippers/TSO can ‘opt-in’ or DM arrangements can be regulated
Funding by compulsory ‘insurance premium’ or industry levy

5. 3rd option: Single DM arrangement outside codes…
MPOC
VTC
Buy curtailment
Joint DM
arrangements
Considerations (in addition to considerations on previous slide):
DM arrangements would need to allow for different ‘insurance premiums’ to apply to each pipeline