AEMO reading, page-42

OK so I thought I'd share some clarifying points which DM kindly answered for me. Questions were asked (and answered) in a way so as to not be specific enough to get into disclosure issues.

As you all know (by now hopefully) is that I consider the GSAs to be the greatest asset COE has. And hopefully in this next Qtrly and the June HY report we start to see to impact of them (and maybe talk less about OGPP and more about OP3D).

Therefore it is important to understand their structure and the gas market structure for ECA ... so for reference (as a proxy) would be the earlier post showing the AEMO graph of peak demand. Just as important is to understand our buyer's objective with their GSA. Our customers are large utilities (e.g. Origin/AGL who would have more seasonal to their demand) and large industrial users (e.g. Visy). Also worth noting is VIC has more seasonality than NSW.

One of the key flexibility factors within a GSA is the"load factor" flexibility. Zero (0%) flexibility means a 100% load factor with the customer takes the same volume each day and every day over the term of the contract. More oriented towards the large industrial gas consumer. With flexibility of 10% (and assume the volume commitment was 20TJ/d) means the customer can nominate between 18 - 22 TJ/d and to remain within the GSA. This variability is more suited to a utility. It is common to have a maximum (obviously as their is plant capacity to consider) but not common to have a minimum. It should also be obvious that flexibility has a price attached to it (fixed volume every day is a cheaper contract).

This notion of flexibility has to fit within the customer's T-o-P commitment ... which is an ANNUAL volume amount and is not typically seasonally adjusted (that's what the flexible load factor is for). So if the GSA was for 10PJ per annum with a T-o-P commitment of 90%, then they must take at least 9PJ. If they have taken less, say 8PJ, then they pay for the shortfall 1P now bring the them up to the minimum 9PJ of "pay" and take (the 1PJ) the gas at a later time. This is the customers responsibility to manage.

What COE has done on slide 5 of the HY presentation is to aggregate the (Sole only) GSAs and their T-o-P commitments.

Obviously the math can be easily done to figure out the average TJ/d thats left for the remainder of the year after the Mar Qtrly but my modeling and valuation is built on the annual GSA basis.

FWIW ... hope it helps