Select Committee on Public Accounts Minutes of Evidence


Supplementary memorandum by the Office of Gas and Electricity Markets (Ofgem)

  On 8 May 2006 Alistair Buchanan, Chief Executive, and David Gray, Managing Director, Networks, Ofgem, gave evidence to the Committee of Public Accounts. During the course of the evidence session several questions were asked about safety issues relating to gas pipes. This supplementary memorandum contains further background information which Mr Buchanan offered to provide to the committee.

  Some of the points raised in the meeting are properly a matter for the Health and Safety Executive (HSE). This memorandum, therefore, sets out the statutory responsibilities of the HSE, the network operators and Ofgem; factual information about the gas distribution networks, including the breakdown of pipes and interruptions in supply; and details of the regulatory framework for gas safety which is administered by the HSE. The following information has been shared with the HSE.

ROLES AND RESPONSIBILITIES

  The network operators have comprehensive duties under the Health and Safety at Work Act 1974 and regulations made under it. These duties are designed to secure the health and safety of their employees and all others persons who may be affected by their work activities, including the general public.

  The Health and Safety Executive (HSE) has primary enforcement responsibility for gas safety. The HSE administers an established regulatory framework in which each network owner is required to prepare a Safety Case showing how it is safely managing the conveyance of gas. This will include arrangements for managing its mains replacement programme. Each Safety Case has to be accepted by the HSE before gas can be transported; and a Safety Case is also required from the Network Emergency Co-ordinator (NEC) who has overall responsibility for co-ordinating emergencies across networks. The HSE reappraised its Safety Case processes after the announcement by National Grid of its intention to sell some of its distribution networks. The new network operators submitted safety cases to the HSE, which were accepted. Subsequently the HSE have prepared an inspection programme for each operator, which includes checking compliance with their mains replacement programme.

  The Gas and Electricity Markets Authority has statutory responsibilities under Section 11 of the Utilities Act to consult the Health and Safety Commission about all gas safety issues which may be relevant to the carrying out of its functions and to take into account any advice given by the Health and Safety Commission about any gas safety issue. Ofgem has a Memorandum of Understanding with the HSE, which sets out the general arrangements for achieving co-operation and the exchange of information and effective consultation between both parties.

BRITAIN'S GAS PIPELINE INFRASTRUCTURE

  The table below shows the total population, in kilometres, of Cast Iron (CI), Spun Iron (SI) and Ductile Iron (DI) mains of varying diameter for each GDN: East of England, London, North West, West Midlands (all owned by National Grid Gas plc), North of England (operated by Northern Gas Networks), Scotland, South of England (both operated by Scotia Gas Networks plc) and Wales and the West (operated by Wales and West Utilities).
NGG
NGN
SGN
WWU
2005-06EoE LonNWWM NoEScot SoEW&WTOTAL
CI (>12")269888 971533253 2218231,389 5,348
CI (<=12") 5,9006,2248,606 6,7093,7334,166 10,1852,98848,511
SI (>12")35181 117145341 1652421,043 2,485
SI (<=12") 7,5371,4251,947 1,9077,1142,117 6,3803,56031,987
DI2,8241,809 1,6811,3353,646 9481,8482,469 16,559
TOTAL16,88010,427 13,32210,63015,086 7,61819,47911,449 104,891

INTERRUPTIONS IN GAS SUPPLY

  Ofgem collects data from the gas distribution network (GDN) owners on the number and duration of non-contractual interruptions which occur on each of their networks. Annual data for the 2005-06 regulatory year is due to be submitted to Ofgem by 31 July 2006. To date, however, Ofgem has received notification of the following major interruptions (where loss of supply occurs to over 250 supply points):
DateLocation Cause of interruptionSupply points affected
06/06/05ChingfordThird party damage 583
24/08/05GrassmoorNGG initiated 1,233
23/11/05East Grinstead Water ingress390
31/01/06RomfordWater ingress 400 (an additional 1,500 experienced pressure problems)
01/03/06MarsdenBroken main 2,000
22/03/06Henham & Elsenham Third party damage1,200

MAINS REPLACEMENT PROGRAMME

  In September 2001 the HSE published its enforcement policy for the replacement of iron gas mains for the period 2002-07. The HSE considered that it was realistic and practicable for GDNs to speed up their annual rate of mains replacement over the next five years in order to replace within 30 years all pipes designated "at risk"—defined as the iron pipes within 30 metres of buildings (the 30/30 programme). This enforcement policy has been updated ("HSE's Enforcement Policy for the Replacement of Iron Gas Mains 2006-13") following a review in September 2005 ("Review of HSE's Enforcement Policy for the Replacement of Iron Gas Mains"). Under the Pipelines Safety Regulations 1996 (Regulation 13A), HSE approve annual replacement programmes for each of the network operators. The iron pipes specified in Regulation 13A of the Pipeline Safety Regulations would include wrought iron, spun iron, ductile iron and cast iron pipes.

  The table below shows the length of mains to be replaced under the HSE's enforcement policy and the length of the total mains population. This data has been provided to Ofgem for each GDN. It should be noted that under the HSE's enforcement policy all iron mains within 30 metres of premises at present amounts to 102,000km of mains (38.8% of the total mains population).
NGG NGN SGN WWU
2005-06EoE LonNW WMNoE ScotSoE W&WTOTAL %
HSE Enforcement Policy Mains (km) 16,91910,742 13,15210,267 16,3906,802 18,1889,409 101,86938.8
Total Mains Population (km) 46,50421,916 33,49621,575 35,50023,972 47,54631,990 262,499

PRIORITISING MAINS REPLACEMENT

  During the evidence session on 8 May, concern was expressed about the relative risk associated with different types of iron pipes, and the impact this should have on the prioritisation of mains replacement.

  The risk associated with individual mains that fall within this policy varies by several factors including material, location, and history of leakage. On the particular question of ductile iron pipes, the HSE required Transco to decommission all medium pressure ductile iron (MPDI) mains within 30 metres of property by 30 April 2003. We understand from the HSE that this resulted in excess of 2,800 km being decommissioned; that serious concerns remain about the integrity of MPDI mains; and that any additional lengths which are found or become "at risk" must be replaced as soon as reasonably practicable and in any case within 12 months of being found.

  GDN operators should set out their policy and procedures in their Safety Case for implementing and managing their mains replacement programme to meet the objectives of this policy. These arrangements should include how the annual replacement programme is prioritised. The criteria for establishing the replacement programme should meet the requirements in the HSE's Gas Safety (Management) Regulations Safety Case assessment manual.

  The methodology of prioritising mains replacement has been agreed with HSE and is based on developing replacement projects around the higher risk mains such that they are targeted earlier in the programme. However, HSE accepts that an appropriate balance has to be struck between operational efficiency and risk reduction and will accept alternative methods of prioritising replacement. However, this requires operators to demonstrate that an equivalent amount of risk will be removed. In reality, changes in the method of prioritising replacement has resulted in much larger replacement projects, delivering economies of scale, a potential shortening in the 30 year programme and a significant reduction in disruption in the networks.

  It is expected that the number of leaks from the networks will fall over the next five years and further over the full 30 years of the programme. It is unlikely to be a linear reduction, due to the large main and service populations involved and the relatively low proportion to be replaced each year, but a downward trend is expected.

MONITORING PERFORMANCE

  Ofgem were involved in discussions with the HSE in 2001 to help formulate an efficient, economic and practically viable length of the programme.

  Ofgem's principal involvement relates to the funding of the work. We agreed that if the HSE require the GDNs to accelerate their current mains replacement programme we will adjust their price control to allow for this. We will assess whether any additional costs associated with HSE requirements are efficiently incurred, and the overall cost and impact on customers.

  The HSE review the mains replacement programme performance with each GDN individually. The HSE will monitor the performance of GDN operators in meeting replacement targets in accordance with HSE document "Monitoring and reporting of the Distribution Networks' Mains Replacement Programmes 2006-13". This updates an earlier document covering the period 2002-07 and covers Ofgem's next price control review period 2007-13. The HSE keep Ofgem informed of progress of this and other safety related issues in regular meetings.





 
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