Natural Reticulated Gas Supply CUARGS2014

Category A – small use customer

Consuming less than 1TJ per annum

Bundled pricing is available, as a standing offer to Pick and Buy, or through a quote process.

Category B – Large use customer

Consuming 1TJ or higher per annum

Unbundled pricing is available for large end-user sites. There is an option for bundled pricing available up to 5TJ per annum.

Other value-add services

Other value-add services directly related to the supply of reticulated gas (as determined by the Contract Authority) include:

• real time monitoring, gas demand management tools and an on-line portal for access to the customer’s gas consumption profile
• improving customer understanding of the billing components in an invoice, applicable formulae, and charges for gas usage
• identification of cost reduction opportunities on how to use energy effectively, and where gas usage may reduce customer costs in comparison with other forms of energy
• free training on how to use gas safely.

Out of scope activity

The Albany, Kalgoorlie-Boulder, Esperance, Margaret River and Oyster Bay distribution areas are currently not covered under this CUA. Please refer to Western Australian Procurement Rules that will apply to your procurement.

Bottled gas is not covered under this CUA. There is a separate CUA to purchase bottled LPG, medical and industrial gases

The below table shows the minimum number of quotes to be sought. Customers may seek more than the minimum number of quotes.

Method	Site gas consumption threshold	Access arrangement covered system (Coastal supply area as defined by the ERA)	Pricing structure
pick and buy	Less than or equal to 1,000 GJ per annum	Pick and Buy from a Category A supplier that provides standing offer rates OR seek a quote.	Bundled
simplified quotation	Between 1,000 GJ to 5,000 GJ per annum	Minimum of two written quotations from Category B suppliers (where available).	Bundled or unbundled
	Above 5,000 GJ per annum	Invitation to quote to ALL Category B suppliers.	Unbundled

All government sites will have the option of remaining on regulated tariffs (not part of this CUA) based on a value for money assessment.

For further information on how to buy from this CUA, view the How do I buy section.

Exemption from using this CUA

As the use of this CUA is discretionary, no exemption requests are required.

State agencies should be aware of the following requirements under Western Australian Procurement Rules as they apply to purchases from this CUA.  The below table is a summary of the requirements, and State agencies are encouraged to review the WA Procurement Rules.

Procurement Planning

Requirement	WA Procurement Rules
Buyers must prepare a procurement plan and submit it to the State Tenders Review Committee.	No, when purchasing from this CUA.
Buyers must involve the Department of Finance.	No, buyers do not need to involve the Department of Finance when purchasing from this CUA. (WA Procurement Rule C1)
Buyers must obtain approval from an authorised officer of the Department of Finance to purchase through an alternative arrangement to this CUA.	No, the purchase of goods and / or services under the CUA are non-mandatory. Please note that State agencies are not required to request advice or approval from the Department of Finance, regardless of value, to purchase from an ADE or an Aboriginal Business (WA Procurement Rule C2.2).

Request Development and Contract Formation

Requirement	WA Procurement Rules
Buyers must prepare an evaluation report.	An evaluation report must be developed for all Procurements valued $50,000 and above (WA Procurement Rule D7(1)). The detail of an evaluation report must be commensurate with the value, risk and complexity of the Procurement (WA Procurement Rule D7(2)).
Buyers must submit an evaluation report to the State Tender Review Committee.	No, when purchasing from this CUA.
Buyers must publish details of their purchase on Tenders WA.	Yes, for all purchases above $50,000 (WA Procurement Rule D8.1).
Buyers must record the purchase on the agency’s contract register, as instructed within the buying agency’s financial management manual.	Yes, for all purchases above $50,000 (WA Procurement Rule F5), unless alternative arrangements have been approved under WA Procurement Rule F5(6).

Contract Management

Requirement	WA Procurement Rules
Buyers must prepare a contract management plan.	Contract management or project management plans must be developed for all Procurements with a Total Estimated Value of $5 million and above (WA Procurement Rule E1(1)), unless exempted under WA Procurement Rule E1(2).
Buyers must publish details of contract variations on Tenders WA.	State agencies must publish variations on Tenders WA in accordance with WA Procurement Rule E3.1.
Buyers must seek advice from the Department of Finance on variations.	No, State agencies do not need to seek advice from the Department of Finance on variations.

As part of the tender process, contractors on this arrangement have provided details of, and have been evaluated on, their corporate social and environmental responsibility and environmental accreditations.

In addition, contractors have provided details of the internal policies on how they manage energy efficiency, waste prevention and use of recycled / recovered materials.

Contractor	Category A (small-use)	Category B (large-use)
Alinta Sales Pty Ltd	Yes	Yes
Perth Energy Pty Ltd	Yes	Yes
Synergy	Yes*	Yes
Wesfarmers Kleenheat Gas Pty Ltd	Yes	Yes

*For small-use customer sites consuming 0.18 TJ to 1 TJ of gas per annum only.

Please Note:

1. All suppliers have departures from the Head Agreement or additional Terms and Conditions for this CUA. For further information please contact the contract manager.
2. All IP is owned by the supplier; however the State has the right of use.

• The CUA generally offers industry standard 14 days payment terms, however, some suppliers offer 30 days payment terms. There are provisions for customers to negotiate 30 days payment terms without extra charges and you can also seek quotes under 30 days’ payment terms.
• Consider the supplier Terms and Conditions as part of your overall value for money assessment.
• Contract for a two-year term to receive the best overall total cost of ownership prices. If you need a longer term, include them as extension options, to give flexibility for new contracts. Suppliers normally factor in a higher price premium beyond the second year to mitigate their risks due to cost uncertainties beyond a two-year horizon. For best pricing, suppliers have indicated that customer contracts should be entered into for a maximum of two years to allow for more regular price resets that reflect changes to underlying costs.
• Use available tools such as the eDecision Aid to help you in your evaluation.
• All government sites will have the option of remaining on regulated tariffs (not under this CUA) based on a value for money assessment.
• If you are considering the option of a sole supplier, it is encouraged that you package your sites appropriately to allow for competition – your contract manager can assist
• Contracted sites achieve savings by selecting the lowest cost supplier that meets requirements and paying bills on time.

The following sections explain the bundled and unbundled pricing options as governed by CUARGS2014. At your request, and where both bundled and unbundled pricing options are available, the panel supplier will advise you on the risks and benefits of each option and recommend the most cost-effective proposal based on the information available.

Bundled pricing

Bundled pricing is a simple pricing structure that includes the aggregated price of network, metering and other charges factored into the one rate. The cost component is a single ‘gas usage charge’ with all other costs factored into this rate – with the exception of the supply charge component, which is charged as a separate line item.

The supplier is responsible for all network charges payable to the network operator and all market charges payable to the Australian Energy Market Operator (AEMO), applicable to the delivery of reticulated gas to the customer sites.

When you request bundled pricing, the panel suppliers will quote rates as per the bundled pricing pro forma in the Pick and Buy order form.

Unbundled pricing

Unbundled pricing is pricing that disaggregates the price for reticulated gas into separate components such as daily supply charge, gas usage charge, network and other charges.

All pass through costs will be billed through to you at cost. Cost increases imposed by tax reform measures or legislative and regulatory changes may be passed through to you at cost.

When you request unbundled pricing, the panel suppliers will quote rates as per the unbundled pricing pro forma in the Quote and Order form.

Kleenheat Gas only offer unbundled pricing for sites above 5,000 GJ per annum.

Note that cost increases imposed by future legislative changes shall also be passed through to the customer at cost.

Price variations

Prices may be varied in accordance with the ‘price variation’ clause. To ensure that the pricing pro formas are kept current with the market environment, the Contract Authority may, in consultation with the panel of suppliers:

1. update the pricing pro formas in the Pick and Buy order form to reflect changes in the market from time to time
2. for any pass-through component, alter the ‘$ pass through’ provision to be replaced with a tendered rate such as ‘cents / kWh’ and vice versa.

Payment by Purchasing Card

The government Purchasing Card offers a quick and convenient method of payment allowing many goods and services to be efficiently purchased. Note that all suppliers will charge a fee for credit card use except for direct debit arrangement with Kleenheat Gas.

• Alinta – 0.7% merchant service fee applies
• Synergy – 0.53% merchant service fee applies
• Perth Energy – 1.5% merchant service fee applies
• Kleenheat Gas – 0.7% merchant service fee applies. No fees apply for direct debit arrangement using credit card.

Always remember to inform the supplier that you will be paying by government Purchasing Card at the time of ordering the product or service. Ensure they clearly understand that they must send the tax invoice directly to you, the cardholder.

More information

For more information about pricing, please refer to the eDecision Aid which contains the following information:

• price comparison calculator
• price schedule: Category A standing offer rates for all suppliers
• distribution and network charges calculator

Please contact us to request a login.

Pick and Buy : sites < 1,000 GJ per annum

Category A suppliers provide bundled rates for small-use customer sites using below 1,000 GJ per annum.

You have two options:

• View the price schedule within the eDecision Aid to obtain the bundled rates for the services you require. Apply the Pick and Buy process to purchase from any Category A panel supplier that has provided standing offer rates after a value for money assessment; or
• Seek a quotation from one or more panel supplier(s) to determine if they are prepared to offer even better rates.

Suppliers may revise their standing offer rates fortnightly (or longer periods at the supplier’s discretion).

You can negotiate with panel suppliers for better rates and services.

The decision to purchase through Pick and Buy or to seek a quote(s) is at the sole discretion of the customer.

To establish value for money, evaluate the standing offer rates by comparing them with existing tariffs or contracted rates. To do this:

1. find out your annual usage in units.
2. send an email to confirm with your current supplier which ATCO tariff (ATCO B2 or ATCO B3) applies to each of your sites. Generally, you will be required to provide the site name, MIRN, meter number and consent for the supplier to obtain the network details from ATCO.
3. on receiving confirmation on ATCO tariff applicable to the site(s), use eDecision Aid to compare rates and make a ‘value for money’ decision. If the recommended supplier is not the lowest price, you may be required to justify the purchasing decision (e.g. product differentiation, value added services etc.). Be sure to maintain appropriate records for audit purposes.

Once you have reached a decision, make your purchase by completing the Pick and Buy, ticking the Purchase Order box, signing the order form, attaching the applicable standing offer price, and sending the documents back to the successful supplier.

Your chosen supplier will acknowledge the purchase agreement by confirming that the order form is received, and will liaise with you to deliver services as per the order.

Simplified quotation: sites > 1,000 GJ per annum

Category B suppliers provide pricing in a simplified quotation process for large-use customer sites consuming 1,000 GJ or more of reticulated gas per annum.

You must obtain the required number of quotes from panel suppliers. The supplier will then provide quotes in bundled or unbundled pricing structure at your request and in accordance with the buying rules.

The quotation buying process is:

1. you must complete the quotation form and attach customer contract details, if required. Tick the Request for Quote box and send it to the required number of suppliers.
2. the suppliers will quote prices as per the required price pro forma in the quotation form. They will then sign and return a copy to you by the stipulated date (if any) by you. Quotes are valid for six weeks.
3. after receiving quotes, you can use the price comparison calculator within the eDecision Aid to compare the prices with existing contract rates or tariffs and determine a value for money decision.
4. after selecting the quote representing value for money, you may seek to negotiate with the potential supplier on further terms to finalise the order.
5. if you choose to accept the quote:
   1. review the successful quote and insert any negotiated terms or conditions
   2. tick the Purchase Order box, sign the order form and print a copy for records; then
   3. scan and email the order form to the successful panel supplier to establish a purchase agreement.
6. the successful panel supplier will confirm the order form is received by returning a signed copy to you, and will then liaise with you to deliver services as per the order.
7. you will need to advise unsuccessful panel suppliers of their bids as soon as is reasonably practical. The free CSS beautifier allows you to organize your style sheets.

• Keep track of your site’s consumption profile over the term of the contract.
• All government sites will have the option of remaining on regulated tariffs (not under this CUA) based on a value for money assessment. Keep this in mind when you consider renewing or extending your contract.
• Aggregation elevates an agency’s significance in terms of total business and may provide better leverage in negotiations with suppliers. For some suppliers, all sites taken together may be considered as a combined facility and this minimises penalty risk of not meeting the minimum contracted gas consumption.
• Your gas supplier is not responsible for maintaining the gas pipes. However, you should report any safety issues to your gas supplier or distribution provider.

What benefits and savings can I expect from this CUA?

This CUA provides an efficient Pick and Buy system for small-use customers and a simplified quote process for large-use customers. This reduces the lead time required by agencies to purchase retail gas and eliminates duplicated agency tendering and negotiation costs. In addition, agencies can purchase a wider range of incidental services using a simplified process.

Contestable sites currently on regulated tariffs may achieve savings when moving over to non-standard contracts. Contracted sites achieve savings by selecting the lowest cost supplier that meets agency needs and paying bills on time.

What are the areas where I can purchase reticulated gas?

Under this CUA, agencies are able to get supply of reticulated gas if their sites are located within the ‘access arrangement covered system’, primarily the coastal supply area shown as ‘8’ on the map below.

Note : Natural gas distribution networks are primarily available in the Coastal Supply Area where most government sites are located. Gas distribution networks do not exist in most regional areas – a separate Gases CUA is available for bottled gas.

For more information about access arrangement covered system(s), see the National Gas Access (WA) Act 2009

What are the areas not covered by the CUA?

The CUA does not cover sites that are located in areas ‘ not under access arrangement’ such as Albany, Kalgoorlie-Boulder, Esperance, Margaret River and Oyster Bay.

Where can I find regulated tariffs for gas?

Regulated tariffs for gas are available within the WA.gov website

Can a site remain on regulated gas tariff if it offers better value?

Yes. However a contract is likely to deliver savings.

Can a customer site on contract move back onto tariff?

Yes, but only the legacy supplier Alinta offers regulated tariffs.

Will gas quality be the same if I change from my current gas supplier?

Gas quality is the same for all suppliers – gas is delivered from the same distribution pipes. Gases from various wholesalers are all in the mix as they pump in gas through the various gateways. EnergySafety WA, a division of the Department of Mines, Industry Regulation and Safety, administers gas technical and safety legislation, oversees the reliability and quality of gas and enforces minimum safety standards.

Will a sole supplier minimise gas costs?

Unlikely, as taking ‘good’ pricing with the ‘bad’ can cost more. However, agencies with very large sites may still get very competitive rates with a sole supplier approach. There is Full Retail Contestability (FRC) in the WA gas market and suppliers are competitive in different sized market segments.

Can a sole supplier service all areas across WA?

No. Synergy is prevented by legislation from supplying sites below 0.18 TJ per annum. Alinta is the sole supplier at Albany and Kalgoorlie. Kleenheat is the sole supplier at Margaret River, Leinster and Oyster Bay (Albany). Esperance Gas Distribution Company is the sole supplier at Esperance. However, most government sites are located in the coastal supply area where they will have a choice of suppliers.

If you are considering the option of a sole supplier, it is encouraged that you package your sites appropriately to allow for competition – your contract manager can assist.

Will aggregated buying reduce my overall costs?

Costs are usually quoted on a site-by-site basis based on the site’s usage profile, network tariff and gas demand requirements. The supplier will assess the profile associated with each metered site before quoting. The cost that is incurred is the sum of all individual site costs; hence reductions are not likely to be significant particularly when aggregating many small sites.

However, aggregation elevates an agency’s significance in terms of total business and may provide better leverage in negotiations with suppliers. For some suppliers, all sites taken together may be considered as a combined facility and this minimises penalty risk of not meeting the minimum contracted gas consumption.

Can we sidestep the gas supplier and purchase direct from wholesalers?

State agencies use less than 0.5 per cent of all reticulated gas supplied in Western Australia. Consumption would generally be too small to buy transmission capacity and there are huge operational costs and skills required in D.I.Y.

What if my supplier exits the market half-way through a contract?

Under Part 2A, Division 6A of the Energy Coordination Act, the ERA must ensure that for each gas supply area in which there is small-use customers, there is at all times a last resort supply plan that has been approved or determined by the ERA. The ERA may designate any holder of a gas trading licence in the supply area as a supplier of last resort. Hence small-use customers may automatically be transferred to another supplier under the Act.

Large-use customers will have to seek alternative gas supplies as they are deemed capable of taking care of themselves. This CUA can offer an alternative supplier for the majority of sites and agencies should have no difficulties transitioning over.

Should sites seek quotes individually or as an agency?

This is an administrative decision of the agency whether their sites should individually seek quotes or to have a purchaser seek quotes on behalf of all sites simultaneously. The Finance contract manager will be available to provide support. Agencies seeking quotes for several sites may have better leverage in negotiating further benefits.

What is available to help me compare the quotes received?

A price comparison calculator is available for agencies. Enter all the quoted component rates and any applicable site usage profile data and the calculator will provide an estimated annual cost for comparison. The contract manager can provide further assistance.

Note: For unbundled rate comparison, the quoted estimates for network charges should be identical across all suppliers if the same network tariff is offered.

Will signing a longer contract term offer better prices?

Not necessarily. Suppliers normally factor in a higher price premium beyond the second year to mitigate their risks due to cost uncertainties beyond a two-year horizon. For best pricing, suppliers have indicated that customer contracts should be entered into for a maximum of two years to allow for more regular price resets that reflect changes to underlying costs.

Are gas prices varied over the term of a Customer Contract?

A standard price variation clause in the Head Agreement and Customer Contract governs the price variations. The standard provisions are:

• bundled pricing – prices are fixed for the first year and then varied annually by CPI.
• unbundled pricing – pricing components that are not pass-through costs may be varied annually by CPI.

However, suppliers may have negotiated variations and the details are available from the contract manager.

What makes up my gas costs?

Major components of gas price incurred by suppliers are:

1. commodity gas costs based on the suppliers’ portfolio of supply contracts
2. additional deliverability costs e.g. extra supply to meet peak demand that is not already catered for under commodity gas contracts
3. transmission and distribution costs
4. additional costs such as market fees, supply charge, retail costs and profit

Synergy’s submission to the Economics and Industry Standing Committee in 2010 for the parliamentary inquiry on domestic gas prices had a cost breakdown. The cost of gas was estimated as :

Cost component	Percentage
field price of gas	65%
transportation and reservation	20%
distribution and metering costs	10%
retailing costs, including net profit	5%

These estimates may differ between suppliers due to different organisational settings and operational costs. 

What is a network charge?

A network charge is the charge for using the distribution system to supply gas to a site. The capital investments and maintenance costs of this shared use network for access arrangements need to be recovered with a fair amount of profit. The ERA regulates and approves these network charges. Users on bundled pricing will not see the network charge itemised separately as it is bundled into the gas charges.

What is a User Specific Delivery Facilities (USDF) charge?

This charge is for the provision of service pipe, regulators and metering that is generally applicable only to sites on A1, A2 and B1 ATCO tariffs. This varies between customers in accordance with their individual requirements for user specific delivery facilities and is amortised

What is a covered access distribution system?

A covered access distribution system is determined under the National Gas Access (WA) Act 2009 . The owner of a covered access distribution system (e.g. ATCO) has to grant access to any suppliers entering the market to sell gas to customers.

Who reads the gas meters?

ATCO reads the meters for the WA Coastal Supply Area on behalf of all the suppliers. Where does my reticulated gas come from? Natural gas is primarily from the Northwest Shelf and some from the Perth Basin. Suppliers purchase transmission capacity to ship the gas over long distances to distribution systems that feed customer sites. Suppliers have back-to-back contracts with wholesalers to match their portfolio of gas demands.

What if I consume less than is contracted?

Most suppliers impose a shortfall charge if in any contract year the total consumption is below 75 per cent of the contracted annual gas consumption. This is because suppliers generally have ‘take or pay’ contracts with gas wholesalers.

Some suppliers allow for shortfalls to be calculated based on combined facility consumption while others may be on a site-by-site basis. Check with the supplier or contract manager regarding the offered terms.

What if I consume more than is contracted?

Most suppliers charge a premium for excess gas consumption, which is the gas consumption in excess of 10 per cent of the contracted annual gas consumption in a contract year. When the gas consumption is exceeded, the supplier may have to purchase extra gas to meet customer demands at a higher cost.

How can I know how much gas I am consuming annually?

One way is to add up the invoiced amount of gas units from each gas invoice that you received over the last 12 months. Alternatively, you can request from your retailer your most recent annualised gas consumption.

What is MHQ and what happens if I exceed this?

MHQ is the Maximum Hourly Quantity of gas that a customer can take at the gas meter under a customer contract. MHQ is an element of overall control to ensure that correct gas pressure is maintained within the gas pipes. There is a cost that the supplier may pass back onto customers for exceeding MHQ. It is generally applicable to sites with telemetry meters.

What is an MDQ and what happens if I exceed this?

MDQ is the Maximum Daily Quantity of gas that a customer can take under a customer contract on any one day. The suppliers have back-to-back contracts with the transmission companies for capacity, and they impose an MDQ on customers to recover the extra costs arising from exceeding their contracted capacity. Generally, suppliers only impose this on large-use customers exceeding 10 TJ per annum with a telemetry meter installed.

What if I am given a choice of having an MDQ or no MDQ in my gas quotes?

Having no MDQ means that the supplier will need to factor in a price premium to recover possible gas overrun costs. If the supplier can bill customers for gas overrun charges when MDQ is exceeded, they generally offer lower rates for gas usage.

Is my gas supplier responsible for maintaining the gas pipes?

No, ATCO is responsible for the distribution pipe systems to sites located in the coastal supply area of WA. Customers should report any safety issues to their gas supplier and / or distribution provider.

What is AEMO?

AEMO stands for Australian Energy Market operator. It is the gas retail market operator for WA and an independent organisation. AEMO operates the Western Australia Gas Bulletin Board. The ERA has oversight of the AEMO Scheme.

Is there a CUA for bottled LPG gas?

Yes. There is a Common Use Arrangement to purchase bottled LPG, medical and industrial gases

Do I need to approach Finance to buy off this CUA?

No. The procedure has been made simple for agencies to contract on their own using the prescribed processes detailed in this buyers guide, available calculators and eDecision Aid. You don’t need to negotiate or sign any additional terms and conditions. Note that the contract manager is always available to assist you as needed.