gasedi implementing the gisb standards in canada - electronic gas trading ian anderson gas...

GasEDI

IMPLEMENTING THEGISB STANDARDS IN CANADA -

ELECTRONIC GAS TRADING

Ian Anderson

Gas Reregulation in Ontario

Toronto - 1999/11/30

1999/11/30 GISB Standards in Canada - Electronic Gas Trading

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OUTLINE

Background GISB Standards Canadian Situation Standard Contracts Enforceability of Electronic Contracts Further Information


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GasEDI

Sponsors: CAPP - Canadian Association of Petroleum Producers. SEPAC - Small Explorers and Producers Association of Canada. CGA - Canadian Gas Association. CEPA Canadian Energy Pipeline Association.

Mission: Promote the development and implementation of North American

business and electronic information standards to improve the competitive position of natural gas.

We believe all participants in the gas industry - including end use consumers - are best served by a vibrant, efficient, industry - from well head to burner tip.


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GISB

Gas Industry Standards Board (US): Sponsored by the US gas industry.

Developing business and electronic commerce standards for the gas industry: Applicable across North America. Input from Canadians.


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FERC

Federal Energy Regulatory Commission (US). Public Conference - 1995/09/21:

Too many differences in basic gas services. Difficult and labour intensive to manage gas:

Company managing “energy” - coal, heavy fuel, electricity, gas: customer effort to manage gas = 6 times the customer effort to manage equivalent amount of other energy types.


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GISB STANDARDS (1)

GISB (Gas Industry Standards Board) is developing business practice and electronic commerce standards: Canadians participate. US interstate pipelines must implement:

FERC mandate.

Voluntary in Canada.


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GISB STANDARDS (2)

Canadians affected because: >50% of Canadian gas to US consumers. Additional Canadian gas to Canadian consumers

through US facilities. US gas imported for Canadian consumers. Canadians hold capacity on US pipelines.


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GISB STANDARDS (3)

Canadian GISB Implementation Task Force: Developed recommendations for Canadian

implementation. Published report on 1997/03/18:

On GasEDI web site (http://www.gasedi.ca). Task Force membership drawn from about 20 organizations.


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GISB STANDARDS (4)

Transacting in Energy Gas Day Nominations Schedule, Intra-Day Nominations Accounting Issues Electronic Delivery Mechanisms Capacity Release


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TRANSACTING IN ENERGY

The standard unit of measure for nominations, confirmations, scheduling, measurement reports, allocations and invoicing: US: Dekatherms (Dth)

1 Dth = 1,000,000 Btu(IT).

Canada: Gigajoules (GJ) 1 Dth = 1.055056 GJ.

Mexico: Gigacalories (GC) 1 Dth = 0.251996 GC.

Btu(IT) = International Btu (British Thermal Unit).


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GAS DAY (1)

Canadian operators comply with the GISB standard gas day - beginning and ending at 9:00 am central clock time. To be consistent with other North American operators.


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GAS DAY (2)

Canadian implementation: Nominations based on 9:00 am - 9:00 am central

clock time (CCT). Measurement reports and allocations based on 9:00

am - 9:00 am central standard time (CST) all year. Avoid the twice a year shift, and the 23 hour and 25

hour days, for measurements and allocations. This approach will avoid costs estimated at

US$200/meter/year to change meters back and forth between standard time and daylight time.


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GAS DAY (3)

Use OBA’s (Operational Balancing Agreements) to absorb the variances caused by the nomination 24 hour period being not identical to the measurement 24 hour period during the half year the two periods are offset by one hour.


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NOMINATIONS SCHEDULE,INTRA-DAY NOMINATIONS (1)

GISB’s Nomination Model:

Cycle Nomination Deadline Scheduled Quantity Flow Start Bumping

Timely 11:30 am, Day before GasDay

4:30 pm, Day beforeGas Day

9:00 am NotApplicable

Evening 6:00 pm, Day before GasDay

10:00 pm, Day beforeGas Day

9:00 am Allowed

Intra-Day 1 10:00 am, Gas Day 2:00 pm, Gas Day 5:00 pm Allowed

Intra-Day 2 5:00 pm, Gas Day 9:00 pm, Gas Day 9:00 pm No


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Notes: All times are Central Clock Time (CCT). Firm Evening and Firm Intra-Day 1 Nominations have

priority over (ie: can bump) scheduled interruptible service.

Firm Evening and Firm Intra-Day 1 Nominations to a primary point do not have priority over scheduled firm service to a secondary point.

Firm Intra-Day 2 Nominations do not have priority over scheduled service.


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Canadian implementation: Be aware that GISB standards are evolving towards a

continuous, contiguous, transactionally based business process and that GISB members are exploring ways to reduce the amount of time required to approve a nomination.


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Migrate to electronic transactions. The gas industry can only meet the GISB nomination / confirmation schedule through the use of standard electronic transactions. Fax is not electronic, because an inbound fax is not

automatically computer processable.

Pipelines should adopt this schedule except in situations where current practices “exceed” the GISB standards.


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ACCOUNTING ISSUES (1)

GISB Standards: Measurements by the 5th business day. Allocations before or with the invoice. Invoice by the 9th business day. Settlement not standardized (anti-trust issue).

Expect settlement earlier than now, maybe as early as 12th business day.

Prior period adjustments limited to 6 months. Settle within 3 more months.


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Gas production: Canada:

Wells produce gas. Production in working interest shares. Unmarketed gas carried with marketed gas.

US: Well owners produce gas. Production per individual owner instructions. Unmarketed gas stays in the ground.


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Canadian implementation: Utilize financing arrangements to bridge any timing

differences between Canadian and United States settlement dates.

Examine implementation of OBA’s at more interconnects.


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ELECTRONIC DELIVERYMECHANISMS (1)

GISB TECHNOLOGY MODEL

CUSTOMER

1

1

TRANSPORTER EBB

2

TRANSPORTERINTERNET SITE

2

2

TCP/IP & PPP

TRANSPORTERINTERNAL SYSTEM

CUSTOMERINTERNET SITE

Internet may be private or public.

1 = Technology and mechanisms that are at the sole discretion of the customer.2 = Technology and mechanisms that are at the sole discretion of the transporter.


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ELECTRONIC DELIVERYMECHANISMS (2)

FERC requires migration to internet only by 2000/06/01.

Canadian Implementation: Implement GISB’s electronic delivery mechanism

standards. Adopt GISB’s standard formats for transmitting

electronic documents.


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CAPACITY RELEASE

The Task Force does not recommend implementation of GISB’s capacity release standards in Canada. The Task Force is not aware of any problems with

Canada’s current practices. National Energy Board, 1995/02/02:

“Secondary market … working well without regulatory oversight … continue to evolve according to the needs of the parties involved …”


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CANADIAN SITUATION

Already exceed many GISB standards. Some challenges:

Energy. Accounting deadlines. Electronic transactions. “Change”.


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STANDARD CONTRACTS (1)

Not mandated by FERC. Developing usage “momentum”. Electronic Commerce Trading Partner

Agreement: On paper, signed in ink. Parties agree to be obligated to perform per electronic

documents.


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Short-Term Gas Sale / Purchase Agreement: On paper, signed in ink. Standardized contract designed for gas sale /

purchase up to 1 month. Actually being used for gas sale / purchase up to 1

year. GISB version in use for a few years. Canadian amendment being developed - should be

available for use early 2000. See http://www.gasedi.ca


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Electronic Contracting: Tape recorded telephone short-term gas sale /

purchase agreements now fairly common. During 2000, GasEDI expects to develop:

Guidelines for electronic gas transportation contracting. Data elements for electronic contracting. See http://www.gasedi.ca


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GasEDI’S ENFORCEABILITY OF ELECTRONIC CONTRACTS WORKING GROUP

Mission: Develop standards for enforceable electronic

contracting for use by the Canadian gas industry. These standards are to be compatible with GISB ((US) Gas

Industry Standards Board) standards, and/or lead to requests for modifications to GISB standards.

Review legislation and monitor legislative proposals to assure the requirements of the Canadian gas industry are satisfied.

Monitor establishment of Certification Authorities.


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ISSUE: UNCERTAINTY

There is sufficient uncertainty regarding the enforceability of an electronic contract that commerce may be significantly adversely affected.


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OBJECTIVE: LEGISLATION

Create a legal environment in which electronic commerce can be carried out with ease and certainty. Commerce is a provincial issue.


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PROPOSED UNIFORM ELECTRONIC COMMERCE ACT (UECA)

The Uniform Law Conference of Canada (ULCC) has adopted a Uniform Electronic Commerce Act and has recommended it for enactment in all provinces. Purpose: Reduce legal risk for doing e-business across

the country by eliminating uncertainty about the law that applies and by making the law suit the needs of modern commerce.

Application: Beyond the scope of commerce to almost any legal relationship that may require documentation.

See http://www.law.ualberta.ca/alri/ulc


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SALE OF GOODS ACT

“A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.” United Nations Convention on Contracts for the

International Sale of Goods.

This Convention has been adopted by Canada’s federal government and several provinces.


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STATUTE OF FRAUDS

The Statute requires a “note or memorandum” of the contract “signed by the party to be charged” or the party’s authorized agent. The memorandum must contain all the essential terms

of the contract, including the identity of the parties. There is a strong argument that the note or

memorandum need not necessarily be on paper, but the information must be accessible so as to be useable for subsequent reference.


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EVIDENCE ACT

Information should not be denied legal effect or enforceability solely by reason that it is in electronic form. A digitally signed document should be given equal

weight to a manually signed document as evidence. If both a hardcopy and electronic version of a

document are executed both should be kept.


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INTERPRETATION ACT

A legal contract should be interpreted to be in writing provided the information is accessible so as to be useable for subsequent reference. The law has endeavoured to take cognizance of, and

to be receptive to, technological advances in the means of communication: Teletype. Fax.


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CANADA BILL C-6(FORMERLY CANADA BILL C-54)

Restricted (mostly) to communications with the Canada’s federal government. Will only apply to to situations specified in a schedule

(opt in statute).

This bill also covers privacy issues. Canada House of Commons passed on

1999/10/26, Canada Senate first reading on 1999/11/02. See

http://www.parl.gc.ca/36/2/parlbus/chambus/house/bills/government/C_6/C_6_3/C_6_cover_E.html


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ELECTRONIC COMMERCE TRADING PARTNER AGREEMENT

Prior to passage of appropriate legislation, electronic transactions will likely be enforceable provided they are preceded by a paper-based Electronic Commerce Trading Partner Agreement. An Electronic Commerce Trading Partner Agreement

should address the issues of enforceability, authenticity and integrity of the electronic transaction.


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ENERGY BOARDS

Alberta Energy and Utilities Board (AEUB): Electronic filing is being adopted.

National Energy Board (NEB): The NEB Act does reference documents being in writing

and having a signature. Nevertheless the NEB is moving to mandatory electronic filings

for the fall of 2000 and is working on changing systems from paper to electronic to support this.

Ontario Energy Board (OEB): The OEB is cooperating with the NEB in developing

electronic filing standards.


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WORKING GROUP REPORT

The Working Group will present its findings: Canadian Association of Petroleum Producers:

2100 - 350 - 7 Avenue SW, Calgary.

Thursday, December 9, 1999. 9:30 am, Calgary time. Tele-conference will be available.

RSVP: Ian Anderson Tel: 403-243-1079 Fax: 403-243-0546 Email: [email protected]

Further information: http://www.gasedi.ca


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GasEDI

DISCLAIMER

Information is published by GasEDI as a service - such information should not be considered a comprehensive treatment of any subject. Comments published by GasEDI reflect the views of individual authors and are not intended to provide legal advice. Readers should not act or rely on information provided by GasEDI without seeking specific legal advice.


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SUMMARY

Background GISB Standards Canadian Situation Standard Contracts Enforceability of Electronic Contracts


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FURTHER INFORMATION

Contact: Ian Anderson

Project Manager, GasEDI Tel: 403-243-1079 Fax: 403-243-0546 Cell: 403-860-5941 Web: http://www.gasedi.ca Email: [email protected]

GasEDI

IMPLEMENTING THEGISB STANDARDS IN CANADA -

ELECTRONIC GAS TRADING

Ian AndersonPrincipal Consultant - I. S. Anderson & Associates Limited

Business Reengineering Electronic Commerce EDI

100 - 1039 - 17 Avenue SW, Calgary, Alberta, Canada T2T 0B2

Tel: 403-243-1079 Fax: 403-243-0546 http://www.isanderson.com

Cell: 403-860-5941 Email: [email protected]

gasedi implementing the gisb standards in canada - electronic gas trading ian anderson gas...

Documents

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additional canadian

cga canadian gas association

basic gas services

intraday nominations

canadian implementation