2015

GNI PROPOSALS ON NEW

CONNECTIONS POLICY
JANUARY 2015

Contents
Background............................................................................................................................ 2
Rationale for Change............................................................................................................ 2
Proposal 1: Amendments to Financial Security Criteria ............................................ 3
Proposal 2: Inclusion of Transmission Revenue in all appraisals ............................. 8
Proposal 3: Amendment of Institutional I & C Customers .................................... 12
Proposal 4: Proposals on Existing Gas Areas ........................................................... 14
Proposal 5: Group Sites (different entities, same corridor) ..................................... 16
Proposal 6: Group Sites (same entity, different sites)............................................... 17
Proposal 7: Treatment of CNG Connections............................................................ 18
Summary & Conclusions .............................................................................................. 20

GNI proposals on Connection Policy Dec 14 1

Background
The Connections Policy was approved by the CER on 6th April, 2006 and is a
single connections policy dealing with connections to both the Transmission
and Distribution networks. The policy sets out the detailed criteria for the
evaluation of extensions to the gas network, including extensions to towns not
currently served by natural gas.
While there were some changes to the policy in the interim, the current policy
has been in effect since April 2006. This paper seeks to outline some proposed
amendments to the connections policy to enhance the level of economic
connections to the gas network.
The context of this review is that areas of the current policy may be hampering
the full realisation of the potential economically efficient demand and load
growth available for the gas network in Ireland. While the overall risk will be
increased, Gas Networks Ireland (GNI) believe that this is mitigated as these
proposed changes will facilitate additional connections, who would not
otherwise connect to the Natural Gas network under the existing Connections
Policy. The addition of the extra load to the system will have the effect of
reducing tariffs for existing customers in the long term.
Separate to this review of the Connections Policy, GNI is working on the roll-out
of a range of initiatives aimed at furthering public awareness of the availability
and benefits of natural gas versus other fuels. Initiatives to promote the use of
natural gas as a clean, efficient and cost competitive fuel for transport, along
with integration of biogas in the network are also currently being implemented.

Rationale for Change

There are significant benefits associated with increasing the load on the gas
network. A key benefit is the ability to spread the cost of running the network
over a larger customer base, thus achieving economies of scale and a lower
tariff rate for customers. New incremental load also offsets decreases in
consumption arising from the loss of existing gas sites (e.g. disconnected sites)
and/or lower gas usage by existing gas sites.

Encouraging the connection of new customer load where it is efficient which

should in the medium and long term increase throughput and reduce unit
tariffs for all gas customers
--- Current Connection Policy

GNI proposals on Connection Policy Dec 14 2

Proposal 1: Amendments to Financial Security Criteria

Background and Key Issues:
Under the provisions of the current connections policy, Financial Security (FS) is
required where the total cost of a connection, less the Customer Contribution,
is at least 250,000. Where a connection meets this threshold, the customer
must provide appropriate Financial Security in accordance with the Financial
Security policy and sign up to a Large Network Connection Agreement (LNCA).
In light of feedback from new and potential customers, a review of the 250k
threshold is appropriate. While there will always be increased risk associated
with adjusting the requirements of FS to make it easier for more customers to
connect to the network, it is important to ensure growth such that tariffs for
existing customers will not increase in the long term. This needs to be balanced
with the Regulated Asset Base being underpinned appropriately by the
provision of Financial Security.
It is not proposed to amend section 5.2.2 of the current Connections Policy
which states that for Large Daily Metered and Daily Meters customers, a de
minimis level of capacity will be set in the Capacity Register for the term
required to pay back the outstanding connection costs. The de minimis level of
capacity will be based on the projected load profile provided by the customer
and used in the connection appraisal.
The risk of an LDM or DM customer booking less capacity than was appraised
would therefore not materialise. The increased risk associated with the
proposed changes is reduced to the possibility of a new I&C customer
disconnecting. In practice, few large customers disconnect within their capacity
commitment period, and in general, if a large customer does disconnect, a new
customer will take over the premises.
Considering the above, and after completing an analysis of the need for
Financial Security, it is clear that the additional throughput stemming from
these otherwise non-users, will bring down the tariffs in the long term and
benefit all customers on the network. It is the view of GNI that the benefits of
additional growth outweighs the overall risk to the system as a result of the
changes proposed. For example, GNI have identified a number of customers
who have expressed interest in connecting but have highlighted the LNCA and
the Financial Security as a barrier to proceeding with a connection. GNI has
done some analysis and if three of these missed opportunities did connect to
the Natural Gas network, the impact is a potential 0.24% reduction in the
Distribution tariff.

GNI proposals on Connection Policy Dec 14 3

GNI proposed changes

Proposed amendments to the FS for new connections are outlined below:
i.

Increase the FS threshold

ii.

Introduce a tiered threshold for FS that recognises the relative payback

period for alternative projects

iii.

Adjust the credit rating applied to Letters of Credit for Financial Security
associated with new connections

Proposal 1.1: FS Threshold

GNI believe it is appropriate the raise threshold at which Financial Security
applies. A base threshold of 500k is proposed as GNIs view is that the current
threshold of 250k is too low.
Proposal 1.2: Tiered Threshold
GNI believe it is appropriate to introduce a tiered threshold to more
appropriately reflect the relative payback periods of alternative connections. If
Project A has a quicker payback period than Project B then all else being equal,
the relative financial risk of Project A is lower and this should be reflected by
the requirement for Financial Security.
The GNI proposals are as follows:
If the project becomes NPV positive in 7 years or more, and/or a supplemental
contribution is required, the proposed threshold for Financial Security is 500k.
If the project becomes NPV positive in years 4, 5 or 6, the proposed threshold
for Financial Security is 750k.
If the project becomes NPV positive in 3 years or less, the proposed threshold
whereby Financial Security is required, is 1m.

NPV Positive
in
>= 7 years
4-6 years
<= 3 years

Threshold
500K
750K
1m

LNCA Required
Above Threshold only
Above Threshold only
Above Threshold only

FS Required
Above Threshold only
Above Threshold only
Above Threshold only

Note: For all of the above cases, the current threshold is 250k and a Large
Network Connection Agreement is required.

GNI proposals on Connection Policy Dec 14 4

The proposal is that a Large Network Customer Agreement is only required

when the FS threshold is met, an NPV amount under the appropriate threshold
is covered by using the standard I&C Agreement. The benefit of this
amendment is that the FS requirement is more closely based on the risk profile
of the new connection regarding the speed of payback for investment in the gas
network i.e. recognising the relative risk of different projects with different
payback periods. If Project A has a quicker payback period than Project B then
all else being equal, the relative financial risk of Project A is lower and this
should be reflected by the requirement for Financial Security.
In this way, connections that cover their costs and contribute downward
pressure to tariffs in a relatively short period are facilitated and incentivised to
connect to the gas network through the removal of the requirement for
financial security.

Proposal 1.3 Financial Security Credit Ratings

Under the current financial security policy, if the connecting entity is rated BBB
or higher by S & P and/or BBB or higher by Fitch and/or Baa2 or higher by
Moodys the customer will be exempt from providing financial security.
Connections by such entities are not considered the norm however. Financial
security is required in the majority of cases.
The most popular (and practical) form of financial security for new connections
is a letter of credit. Under the current financial security policy, the letter of
credit must be issued by either:
(a) a Bank with long term unguaranteed unsubordinated debt rated at least
AA by S&P and/or AA2 by Moodys and/or AA by Fitch. OR
(b) a subsidiary of a Bank which has total balance sheet assets of not less
than 1,000 million (or equivalent in other currencies) and the long term
unguaranteed unsubordinated debt that is rated at least A by S&P or A2
by Moodys or A by Fitch.
Whilst many banking institutions would have met this criteria when the policy
was initially written, the benchmark needs to be reviewed to allow connecting
customers procure a letter of credit from robust financial institutions that they
regularly transact with.
To achieve this, GNIs view is that the financial security approach applied to
shippers financial security (which is typically of a much larger scale than new
connections) should be differentiated from that applied to new connections.

GNI proposals on Connection Policy Dec 14 5

GNI proposed changes

Taking account of the current financial circumstance along with customer
feedback during discussions with potential new customers as part of the
connection process has highlighted difficulties for new customers (e.g. I&C
sector) in putting the required provisions of the current financial security policy
in place such that they are unable to use the banks they regularly transact with.
GNI therefore propose the addition of the following text within clause 3.2.1 of
the Financial Security Policy:
In respect specifically of new connections, and with the prior written
approval of the Transporter and where the Financial Security Amount is
less than or equal to 1,000,000, an irrevocable standby letter of credit
in or substantially in the form attached at Appendix 1, or in such other
form as may be acceptable to the Transporter (a Letter of Credit)
issued for the account of the Counterparty in favour of the Transporter
which Letter of Credit shall allow for partial drawings, if necessary, and
shall provide for payment to the Transporter forthwith on demand and
shall be issued by a Bank with long-term unguaranteed unsubordinated
debt rated at least BBB by S&P and/or Baa2 by Moodys and/or BBB by
Fitch and which has total balance sheet assets of not less than 1,000
million (or equivalent in other currencies)

GNI proposals on Connection Policy Dec 14 6

A summary of the initiatives on financial security is outlined below:

Initiative
Number

Outline of Initiative

Rationale

Increase the base threshold

for both the Financial Security
and Large Network
Connection Agreement from
250k to 500k

GNIs view is that the value/threshold

of FS was set too low initially

Introduce a tiered threshold

(ranging from 500k to 1m)
for financial security that
reflects the relative payback
period

This change provides a risk-adjusted

approach to financial security under
which connections that involve lower
financial security should have more
flexibility

Adjust the minimum credit

ratings requirement where the
Financial Security amount is
<=1m

Taking account of the current financial

circumstance along with customer
feedback during discussions with
potential new customers as part of
the
connection
process
has
highlighted difficulties for new
customers (e.g. I&C sector) in putting
the required provisions of the current
financial security policy in place such
that they are unable to use the banks
they regularly transact with.

In addition, the threshold needs to be

adjusted to reflect time value of
money changes since the policy was
last updated.

GNI proposals on Connection Policy Dec 14 7

Proposal 2: Inclusion of Transmission Revenue in all

appraisals
Each new connection provides incremental revenue for both the transmission
and distribution networks. However, under the current policy, only the
following sectors recognise transmission revenue in the appraisal exercise:
1. New Towns
2. Loads with consumption greater than 57.5 GWh/annum
3. Connections that involve investment in transmission assets
2.1 Transmission Exit Capacity Revenue:
At the time of the last policy change, there was extensive flexibility for shippers
to optimise their transmission exit capacity bookings through internal transfers
in their portfolio and trading with other shippers. Therefore it was very difficult
to determine the incremental benefit of a new connection on transmission exit
revenue.
A recent key change in the market has seen the removal of trading transmission
exit capacity on a secondary basis. In the new market structure, shippers need
to book peak capacity pertaining to each gas point and cannot rely on a
portfolio effect to transfer transmission exit between points (or trade with
shippers). It is therefore appropriate to recognise the incremental transmission
exit revenue benefit from each connection, and amend the Connection Policy
accordingly to reflect this.
With this in mind, it is proposed that transmission exit revenue be extended to
the appraisal of all categories of connection (i.e. Transmission exit revenue
should be included in the appraisal for all sectors). This would be based on a
commitment by the customer on de minimis transmission exit bookings for the
required period which ensures that the Transmission Exit Capacity revenue
does indeed materialise. Even though the fact that no Large Network
Connection Agreement would be applied, a contract is still put in place and the
customer would have an obligation to book the de minimis level of capacity as
per the Connections Policy. Under the current Connections Policy, only 80% of
Distribution revenues are generally included in the appraisal, therefore the de
minimis level of capacity only applies to Distribution Supply Point Capacity.
However, if Transmission revenues were included in the appraisals, it is
proposed that Transmission Exit Capacity would also be included in the de
minimis level of capacity required and the customer would be obliged to book
both the de minimis level of Distribution Supply Point Capacity and
Transmission Exit Capacity until the cost of the connection was paid off.

GNI proposals on Connection Policy Dec 14 8

2.2 Transmission Entry Capacity Revenue:

In terms of transmission entry, shippers book this on a portfolio basis and are
able to trade transmission entry with other shippers. It is assumed each
connection will always offer incremental entry bookings to the network as the
shipper must increase entry bookings to accommodate the new load.
To establish what level of entry revenue is appropriate to include in the
appraisal, GNI have undertaken a study to review the relative ratio of total
transmission entry capacity bookings versus total exit bookings in recent years
to assess the incremental value of new connections in terms of increased total
transmission entry bookings. The findings are outlined in the chart below.
Before the removal of secondary transmission exit capacity, there was generally
a 1:1 ratio between entry and exit bookings, as shippers optimised their
aggregate entry and exit portfolios.
The impact of the removal of secondary exit capacity trading outlined above is
clearly evident, where the ratio falls from c. 1:1 to 0.8:1 in Gas Year 13/14. The
fall in the ratio is due to the following:
Exit: Since the removal of secondary exit capacity trading, shippers need to
book specific firm bookings prevailing to each exit gas point and can no longer
spread its exit capacity portfolio across its sites. Therefore the outcome is more
firm bookings on the exit side versus the previous regime which allowed a
portfolio approach.
Entry: In contrast, the market conditions for transmission entry remain
unchanged and therefore the ratio of entry bookings (which were not affected
by the market change) to exit bookings (which increased due to the market
change) has therefore decreased.
On this basis, GNI propose that a factor of 80% (0.8) be applied to peak day
bookings of each new connection entry revenue calculation. For example, if
peak = 100 KWh, then 80% * 100 KWh = 80KWh is the volume included for
incremental transmission entry revenue.

GNI proposals on Connection Policy Dec 14 9

Ratio of Total Entry Bookings to Total Exit Bookings

1.2
1.1
1
0.9
0.8
0.7
0.6
0.5

02-Oct-2009
27-Nov-2009
22-Jan-2010
19-Mar-2010
14-May-2010
09-Jul-2010
03-Sep-2010
29-Oct-2010
24-Dec-2010
18-Feb-2011
15-Apr-2011
10-Jun-2011
05-Aug-2011
30-Sep-2011
25-Nov-2011
20-Jan-2012
16-Mar-2012
11-May-2012
06-Jul-2012
31-Aug-2012
26-Oct-2012
21-Dec-2012
15-Feb-2013
12-Apr-2013
07-Jun-2013
02-Aug-2013
27-Sep-2013
22-Nov-2013
17-Jan-2014
14-Mar-2014
09-May-2014
04-Jul-2014
29-Aug-2014

0.4

Source: GNI Analysis

The key benefits of these changes would be evident in the Medium and Small IC
category of the connection policy, where currently the transmission revenue
(both entry and exit) are not considered in appraisals. However Transmission
revenue is received from these customers through shipper bookings, and
therefore should be reflected in the appraisals.
The overall benefit that this will bring will vary depending on the requirements
of the specific connection:

For connections which pay the 30% contribution charge and also pay a
supplemental charge, there should be a decrease (if not removal) of the
supplemental charge as the commercial appraisal will be improved by
the inclusion of the transmission revenues. There should also be a
decrease in the time for which Financial Security is required.

For connections which pay the 30% contribution and are not required to
pay a supplemental charge, the benefit will be that the length of time
that Financial Security is required should decrease.

All appraisals that currently dont recognise transmission revenue will benefit to
a greater or lesser extent from this change, but the inclusion of the
transmission revenue is reflective of the incremental value the new site offers
in contributing to the remuneration of the network. The inclusion of such
revenues should lead to a reduced upfront contribution by the customer and/or
reduced financial security obligations which will make the connection to gas
more commercially attractive to the prospective customer.

GNI proposals on Connection Policy Dec 14 10

For the avoidance of doubt, this proposed amendment is only applicable to

connections where transmission revenue is not recognised where it is already
accounted for in appraisals (e.g. new towns) the appraisal continues as is.

Initiative
Number

Outline of Initiative

Rationale

Include TX Exit Revenue (100%) to Recent market changes which

all appraisals which currently dont removed secondary exit support
recognise transmission revenue
the inclusion of TX exit to all
sectors.

Include TX Entry Revenue (80%) to Each new connection provides

all appraisals which currently do not some level of incremental entry
recognise transmission revenue.
capacity to the network. Based on
historic data, a factor of 80% (0.8)
is proposed.

GNI proposals on Connection Policy Dec 14 11

Proposal 3: Amendment of Institutional I & C Customers

The connections policy outlines that an Institutional I&C Customer is one which
as a result of their load characteristics are likely to remain connected to the
network for a longer period of time than a typical commercial enterprise.
The current connections policy allows for a 20 year appraisal for such
connection types which are institutional in nature and a list of Institutional
I&C Customers is provided in Annex 3 of the current connections policy.
GNI propose to include five more connection types to this list:

Ports

Bus Stations

Waste Collection Depots

Biogas Injection Facility

Retail CNG Forecourts

The first two additions are institutional types which are built for long term use
(ports/bus stations). The remaining three additions are typically significant long
term investments to provide services on a long term basis to customers:
Waste collection depots are built to provide municipal services to customers
for a 20-30 year lifetime at a specific location
Biogas plants will inject gas into the grid at the specified location for a
prolonged period of time with potential expansion. Including biogas injection
facilities to the institutional I & C list would encourage more installations. This
in turn would support the requirement for EU Member States to undertake
measures to assist the wider use of gas from renewable sources. Note biogas
plants will typically be injecting/entering gas in the system whereas
conventional connections in the connections policy are exit points that offtake
gas from the grid. However, the exercise at the start of connecting the facility to
the gas grid by way of extending the gas network can follow the same
principles.
Retail CNG forecourts would be developed at strategic locations to provide
long-term refuelling services to CNG vehicles.

GNI proposals on Connection Policy Dec 14 12

To summarise, GNI would propose that the list would include new additions as
follows:
Current List

Additional New Sites

Schools

Ports

Third Level Colleges

Bus Stations

Hospitals

Waste Collection Depots

Prisons

Biogas Injection Facility

Garda Stations

Retail CNG Forecourts

Stadiums
Airports
(airport
infrastructure only)

specific

Railway stations
Museums/Heritage Sites
Fire/Ambulance Station
Army Barracks
Government Buildings

Initiative
Number

Outline of Initiative

Rationale

Amend institutional list to reflect Extend list to other

additions above
forms of institutional
sites which merit a 20
year appraisal due to
longevity of tenure

GNI proposals on Connection Policy Dec 14 13

Proposal 4: Proposals on Existing Gas Areas

The purpose of this proposal is to develop a policy to allow for infill projects in
areas close to or including the existing gas network. The Connection Policy as it
stands does not specifically address opportunities for infill in urban or
suburban areas i.e. industrial zones/streets/regions that could be connected
with a minimal incremental increase to the existing infrastructure. There is
therefore the risk of missing opportunities for new connections and load
growth, as the existing gas infrastructure is not utilised to its fullest extent on
an economic basis. The existing Connections Policy does not facilitate the
efficient extension of the network into an area within an already connected
city/town. In practice, there are some areas within cities that could potentially
be the equivalent of a small town, however, there are limited methods of
connecting the areas outside of connecting a single customer (using a 7 or 20
year appraisal or appraise as a non-gas estate). This has resulted in potential
missed opportunities to grow the network in existing gas areas.

On this basis, GNI have two key proposals:

4.1 Introduction of a Suburb Policy

GNI would advocate the introduction of an infill suburb policy under the
following criteria:
(i)

Use the mechanics of the new towns model(see description below)

to appraise these projects

(ii)

Where the overall investment <= 1m

(iii)

Where the upstream investment in the network is <=100k

(iv)

The largest user is <= 50% of the total projected volumes

New Towns Model: As per section 8 of the Connections Policy, New Towns are
evaluated over 25 years for both Industrial Commercial Customers and New
Housing to reflect the lower risk and broader growth opportunities of a
diversified area load base. The economic test includes both Transmission and
Distribution revenue and considers the long term potential of the entire area. It
is proposed that funding for such infill suburb projects would be applied to the
most economic projects with each project scored and appraised by GNI against
an annual funding allowance from the CER.

GNI proposals on Connection Policy Dec 14 14

4.2 Removal of Domestic Connection Fee in certain circumstances

At present new domestic connections pay a fee of 250. GNI believe there is
merit in waiving the domestic connection fee in certain circumstances to
increase/accelerate the rate of new domestic connections in new towns or
targeted suburbs/regions. To compete in the energy source market GNI need to
entice new customers to join the gas network. A removal of the domestic
connection fee in these circumstances will assist in the take up during various
campaigns.
Natural Gas is clean, convenient and cheap. Natural gas is always available, no
ordering or storage is required; it is compatible with contemporary appliances
and is the most environmentally friendly of all fossil fuels. The removal of the
connection fee in certain circumstances will encourage growth in the domestic
sector.

Initiative
Number

Outline of Initiative

Rationale

Apply new infill Suburb The new towns model could

policy as outlined above.
easily
be
adapted
to
streets/zones/regions
(suburbs) and would provide
consistency of application in
growing out the network.
Previous I&C infill appraisals
didnt include take up of
domestic connections arising as
a result of the infill project

Domestic
Housing
contribution for targeted
suburb/urban areas and
new towns allow the
domestic
housing
connection fee to be
waived
under
certain
circumstances

Will increase/accelerate the rate

of connection in new towns and
ensures that no opportunities
are missed

GNI proposals on Connection Policy Dec 14 15

Proposal 5: Group Sites (different entities, same corridor)

This proposal will only come into effect when the total investment of the
project is greater than 1m. If the project is less than 1m, Proposal 4 (Infill
Suburb Proposals on Existing Gas Areas) will apply.
The current connections policy is silent on circumstances where GNI are
approached by a number of companies or entities simultaneously on a
corridor/route who collectively want to connect to the network. The current
policy appraises each connection query on a case-by-case basis and GNI would
like to formalise the approach for multi-clients on the same corridor. The
principle would remain that GNI are remunerated for the aggregate cost of the
connection, but a pro-forma share of costs would be proposed to the clients but
on a case by case basis, an alternative cost sharing mechanism could be
developed/agreed.
To reflect this into the policy, GNI propose that the following wording would be
added to the opening section of the Connections Policy which outlines the
objectives/principles of the policy:
Joint cost sharing mechanisms for simultaneous multiple connections from one
aggregate project should be encouraged (e.g. a joint proposal from multiple
potential customers on the same corridor). The key component is that the
aggregate cost of the connection is fully paid through an appropriate cost
sharing mechanism funded by the various clients. This cost sharing mechanism
can be reviewed on a case by case basis

Initiative
Number

Outline of Initiative

Rationale

Apply multi-client model on

a case-by-case basis whilst
retaining the principles of
the Connections Policy.

This provides clarity to

situations where multi-clients
simultaneously
want
to
connect to the grid.

The sharing mechanism

should be flexible (including
input from the clients
involved), with the key issue
being that the aggregate
cost of connection is
remunerated.

GNI proposals on Connection Policy Dec 14 16

Proposal 6: Group Sites (same entity, different sites)

The current connections policy is silent on circumstances where GNI are
approached by a company/entity to connect a number of their locations e.g.
chain of retail outlets. The current policy appraises each connection query on a
case-by-case basis and GNI would like to formalise the approach for multi-sites
for the same client, recognising the portfolio benefit of getting all the sites
rather than potentially none.
If we consider the different sites as one entity rather than a number of different
sites and look at the NPV as a whole, GNI feel that this would encourage more
connections. If an entity is looking to set up or standardise multiple locations in
Ireland, being able to apply for new connections for all of their sites with one
enquiry could act as an incentive and it also offers economies of scale in
progressing the multiple connections under one aggregate project.
The risk in not considering this approach is that potential multi-national
companies and existing indigenous companies may not decide to expand / set
up in Ireland as they may take an all or nothing approach with their sites.
Therefore GNI feels that multiple sites from the same company/entity should
be group-appraised, with net contribution calculated in aggregate as this will
encourage new connections overall.

Initiative
Number

Outline of Initiative

Rationale

Multiple sites from the

same
company/entity
would be group-appraised,
with
net
contribution
calculated in aggregate.

Recognises portfolio benefit of

multiple sites simultaneously
under one connection/one
contribution.

This initiative would assist in the rollout of CNG infrastructure particularly in the
event that an existing forecourt operator was interested in building a network
of filling stations to adopt the fuel.

GNI proposals on Connection Policy Dec 14 17

Proposal 7: Treatment of CNG Connections

The current connections policy is silent on the treatment of CNG connections as
this in itself is a new technology. GNI proposes to have a clear outline in the
policy regarding CNG connections. This will not preclude end users from
installing their own equipment once all safety requirements have been
satisfied, but where GNI build the compression and multi-storage equipment,
the investment must be remunerated under the principles of the connections
policy.
One of the critical elements of the market for natural gas in transport is the
availability of vehicles. Without a strategic network of refuelling infrastructure
the manufacturers will not commit vehicles to the market. Without GNIs
involvement, refuelling islands may appear without any unified national
network overview. GNI are of the opinion that the provision of CNG refuelling
stations at this early stage of the market will require the support and
involvement of the natural gas system operator.
The benefits of this approach are:

High quality refuelling infrastructure in the market;

Long-term view taken;
Market introduction supported;
Application of gas technical experience;
National infrastructure support;
Lower financial burden on end user;
Consistent technical application across the market; and
Higher probability of market adoption.

In line with the current Connections Policy, customers will make a contribution
of 30% towards the cost of the connection. An economic test will be
undertaken (in line with existing policy), which will dictate that if the customers
capacity charges over a seven year period do not meet the cost of the
remaining 70% of the cost of connection, the customer must pay the difference

GNI proposals on Connection Policy Dec 14 18

Initiative
Number

Outline
Initiative

of Rationale

Include
compression
and multi-stage
storage in the
connection.

Reduce costs for the gas user through

increased use of gas network assets and
long term reductions in tariffs
30% contribution from the customer and
economic test to protect the gas user from
inefficient investments
Maintains consistency of service and
quality
GNI responsible for maintenance and care
of the compression and storage
The inclusion of CNG in the connection will
allow GNI to provide necessary support to
the market development of CNG in Ireland.
Vehicle manufacturers and after sales
converters will not serve the Irish market
until sufficient refuelling infrastructure is in
place. To date private industry has failed to
provide
the
necessary
refuelling
infrastructure and so the CNG in transport
market for Ireland has failed to develop.

GNI proposals on Connection Policy Dec 14 19

Summary & Conclusions

To summarise, GNI propose to amend the Connections Policy in the following
ways:
(i)

Amend the FS provisions to include tiered thresholds

(ii)

Recognise transmission revenue in all appraisals

(iii)

Extend the list of I&C institutional customers

(iv)

Formalise the development of infill suburb/urban projects

(v)

Clarify treatment of group sites (different entities, same corridor)

(vi)

Clarify treatment of group sites (same entity, different sites)

(vii)

Clarify the treatment of CNG connections

Many of the changes are to provide clarity on the treatment of certain

connection types and to apply consistency (e.g. recognising transmission
revenue in all appraisals).
GNI believe the incorporation of these proposals are aligned with the overall
principles of the policy and will assist in economically and efficiently extending
the level of connections to the network, helping to spread the cost of the
network across a larger number of users.

GNI proposals on Connection Policy Dec 14 20