The first bidweek under Pacific Gas & Electric’s Gas Accordtransportation framework was a rough ride for many doing businessin the drastically changed northern California market. WhilePG&E went ahead with its massive computer system upgrade onschedule, few shippers were prepared to handle it.
“We have had significant customer interface problems,” said KirkJohnson, manager of gas system operations for PG&E. “The systemis a drastic change from the previous Inside Track system, whichthey normally nominated through. All the business rules havechanged and the processes have changed. We have had significantnumber of people having difficulty getting nominations into thesystem for various reasons: numerous nominations to the same place,a lot of matching errors, not using the proper pools, not using theproper contract numbers, that sort of thing. That’s been thebiggest issue.”
One shipper said he ended up with 20 times the capacity henominated. When he didn’t get confirmation, he kept retrying hisnomination. And when his package finally was confirmed, PG&Einformed him he had 20 packages of capacity rather than just one.
“There are probably people that didn’t get the gas they expectedbecause they incorrectly nominated,” Johnson said. “There’sprobably confusion in the market: doing trades and not knowing eachothers’ appropriate nomination path.” The Gas Accord start-uprepresented the completion of a massive, 18-month computertechnology upgrade effort by PG&E.
Johnson said by the end of last week, most of the difficultieshad been cleared up. He blames the start-up problems on theshippers rather than the system. “We didn’t have a terrific turnoutfor training.” But he notes the new system is “very complex.I guessto put it into perspective the best way to explain it is when youwent from DOS to Windows.”
In addition, the number of nominations PG&E now must handlehas grown “probably 50%. The actual number of shippers hasn’tincreased much, but they have many more transportation paths, manymore options, many more pooling options. They can do a lot ofthings.”
The Redwood path, which is from the Malin, OR, California borderpoint to PG&E’s citygate has been by far the most active.Sixteen shippers requested 4.7 times the 731,000 Dth/d of capacityavailable in 1998 on the path during a recent open season and 2.3times the 973,000 Dth/d available in 2002. Those who were willingto pay the entire price for the entire period ended up with some ofthe capacity, which was prorated among the group. It clearly paidoff for them during bidweek. The price spread between Malin andPG&E’s citygate was 41 cents while firm transport cost only 25cents plus fuel.
The other paths have not been used nearly as much and Marchbidweek prices show why. The Baja path, which runs from theSouthern California border to PG&E’s citygate, was not fullysubscribed during the open season and during bidweek SouthernCalifornia border prices were actually 3 cents more than PG&Ecitygate prices ($2.34/Dth compared with $2.31). Shippers whosigned up for the capacity must have been trying to give it awayduring bidweek.
That could change next winter, however, because Alberta isn’tlikely to experience record warmth two winters in a row. In factsome observers speculate the Redwood path will lose itsprofitability eventually as new Canadian pipelines to the Midwestand Northeast are place into service and the price of gas inAlberta rises.
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