Thursday 4th April 2019
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Meridian Energy is pushing for faster action on the disclosure of gas trading, maintenance shutdowns and near-term production and consumption forecasts.
The country’s biggest electricity generator says a work programme underway within the Gas Industry Company – the industry regulator – is “too slow” and risks damaging the reputation of both the gas and electricity sectors.
Chief executive Neal Barclay says the uncertainty created by the lack of transparency in the gas market is a major cause of the current volatility in the electricity futures market.
In a letter to GIC chief executive Andrew Knight, Barclay says gas industry players should be able to disclose “very soon” information on the timing and scale of planned and unplanned outages at major facilities, wholesale prices and traded volumes, one-year consumption forecasts and one-week and one-year production forecasts.
“We expect that voluntary agreement to disclose at least some of this information would not be too difficult to negotiate with gas market participants, with the relevant information then disclosed on the GIC website,” Barclay says in his March 29 letter.
“We suggest the GIC should explore urgently with gas market participants what can be achieved and what they believe they could commit to.”
Meridian operates dams and wind farms. But like all power retailers, it relies on the gas- and coal-fired plants operated by Contact Energy, Genesis Energy and Nova Energy for electricity supplies when hydro lakes are low or when demand is high.
Barclay’s letter was sent two days after the GIC hosted a workshop on options for improving information disclosure in the sector. It was acting after complaints mid-2018 on the limited information Shell provided on shutdowns at the Pohokura field last year. The GIC previously signalled new disclosure regulations may not be in place before 2020.
Power prices soared late September when the second unplanned outage at Pohokura coincided with declining hydro storage, reduced output from the Maui field, repair work on the Maui pipeline north of New Plymouth, and a planned shutdown at the Kupe gas field.
Power prices, while still high, have moderated in the past week as hydro storage has returned to average levels. But further disruption to gas flows from the offshore part of the Pohokura field is expected this month when new operator OMV completes a round of well maintenance and the COSL Boss, a jack-up rig, is disconnected from the field’s offshore production platform.
Last month, the GIC indicated a voluntary information disclosure regime may not work in New Zealand, given the number of firms that had said they wouldn’t participate and the tight controls that exist in some joint-venture agreements.
Barclay said Meridian will work with the Electricity Authority and the Ministry of Business, Innovation and Employment to expedite a regulated solution if one is required. The quickest option may be to write new rules directly into the Gas Act, he said.
The Electricity Authority will have jurisdiction over some gas market players, given their participation in the power market, and amendments to the electricity industry code could also be used to improve gas market disclosures, he said.
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