Transcript IMPLEMENTING THE GISB STANDARDS IN CANADA IN THE …

IMPLEMENTING THE
GISB STANDARDS IN CANADA ELECTRONIC GAS TRADING
GasEDI
Ian Anderson
Gas Reregulation in Ontario
Toronto - 1999/11/30
OUTLINE
GasEDI
Background
GISB Standards
Canadian Situation
Standard Contracts
Enforceability of Electronic Contracts
Further Information
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GasEDI
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
GasEDI
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
GasEDI
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)
GasEDI
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)
GasEDI
 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)
GasEDI
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)
GasEDI
Transacting in Energy
Gas Day
Nominations Schedule, Intra-Day Nominations
Accounting Issues
Electronic Delivery Mechanisms
Capacity Release
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TRANSACTING IN ENERGY
GasEDI
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)
GasEDI
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)
GasEDI
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)
GasEDI
 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)
GasEDI
GISB’s Nomination Model:
Cycle
Nomination Deadline
Scheduled Quantity
Flow Start
Bumping
Timely
11:30 am, Day before Gas
Day
4:30 pm, Day before
Gas Day
9:00 am
Not
Applicable
Evening
6:00 pm, Day before Gas
Day
10:00 pm, Day before
Gas 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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NOMINATIONS SCHEDULE,
INTRA-DAY NOMINATIONS (2)
GasEDI
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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NOMINATIONS SCHEDULE,
INTRA-DAY NOMINATIONS (3)
GasEDI
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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NOMINATIONS SCHEDULE,
INTRA-DAY NOMINATIONS (4)
GasEDI
 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)
GasEDI
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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ACCOUNTING ISSUES (2)
GasEDI
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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ACCOUNTING ISSUES (3)
GasEDI
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 DELIVERY
MECHANISMS (1)
GasEDI
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ELECTRONIC DELIVERY
MECHANISMS (2)
GasEDI
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
GasEDI
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
GasEDI
Already exceed many GISB standards.
Some challenges:




Energy.
Accounting deadlines.
Electronic transactions.
“Change”.
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STANDARD CONTRACTS (1)
GasEDI
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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STANDARD CONTRACTS (2)
GasEDI
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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STANDARD CONTRACTS (3)
GasEDI
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
GasEDI
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
GasEDI
There is sufficient uncertainty regarding the
enforceability of an electronic contract that
commerce may be significantly adversely
affected.
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OBJECTIVE: LEGISLATION
GasEDI
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)
GasEDI
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
GasEDI
“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
GasEDI
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
GasEDI
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
GasEDI
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)
GasEDI
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/governm
ent/C_6/C_6_3/C_6_cover_E.html
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ELECTRONIC COMMERCE TRADING
PARTNER AGREEMENT
GasEDI
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
GasEDI
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
GasEDI
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:
Fax:
Email:
403-243-1079
403-243-0546
[email protected]
 Further information: http://www.gasedi.ca
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DISCLAIMER
GasEDI
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
GasEDI
Background
GISB Standards
Canadian Situation
Standard Contracts
Enforceability of Electronic Contracts
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FURTHER INFORMATION
GasEDI
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]
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IMPLEMENTING THE
GISB STANDARDS IN CANADA ELECTRONIC GAS TRADING
GasEDI
Ian Anderson
Principal 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]