Effective road and traffic management

Written evidence from National Grid plc (ETM 28)

Executive Summary

1. National Grid believes existing road and traffic management legislation is sufficient to manage street works if implemented and applied by Street Authorities consistently, and equally to all works promoters.

2. We are certain that collaborative working between all stakeholders involved in road and street works [1] would provide the opportunity to improve performance and reduce costs under the current regime, thereby providing benefits to energy consumers and UK plc. We are proactively engaging with all parties to drive this forward.

3. The current application of legislation is ineffective and is leading to additional, unnecessary but also unavoidable costs which will be passed onto energy consumers. We recognise this is an important issue, especially given the current economic climate. So it is very important that National Grid and its street works stakeholders work together towards a common goal; reducing street works costs and minimising disruption to the public.

Introduction

4. Energy is essential for our domestic and working lives. National Grid carries out street works for the purpose of providing energy safely and reliably to end consumers. Due to the nature of National Grid’s statutory obligations street works are essential for public safety and security of energy supply. Street works legislation has a major impact on our operations. In 2010-11 National Grid will have submitted approximately 372,000 notices and permits. [2]

5. Parity between works promoters, including Street Authorities, is essential to ensure that all parties are incentivised to carry out work in an efficient and timely manner.

6. We are working closely with stakeholders to improve the coordination of works so as to minimise the impact of our street works.

7. Permit schemes and their associated conditions have added significant complexity to the street works regime and removed our statutory rights to undertake works. The inconsistent application and format of such schemes between Street Authorities has limited our ability to optimise processes and has had a negative impact on our productivity, hence prolonging total works duration in some cases. This leads to unavoidable increased costs which will ultimately pass through to energy consumers and UK plc.

8. It is crucial that network companies carrying out street works are appropriately incentivised to minimise costs and disruption. National Grid advocates the introduction of a national permit scheme with consistent requirements and conditions which can be deployed in locations where a permit scheme is deemed appropriate against a set of transparent criteria. This would allow rationalisation and optimisation of processes by those undertaking works and provide a real incentive to improve the efficiency of street works and deliver net benefits to all parties.

9. National Grid does not believe that lane rental will necessarily deliver any benefits. Proposals should be carefully analysed and only those which demonstrate clear net benefits should be considered for implementation, as the costs must be ultimately passed on to energy consumers.

10. Proposals for the devolution of approval of permit schemes would risk increasing inconsistency between Street Authority requirements, thereby significantly increasing both administrative costs, the regulatory burden for utilities and further impacting on productivity and congestion.

11. It is in National Grid’s interest, as much as it is in the interests of consumers and the public that we are able to complete street works in the minimum possible time and causing minimum disruption to the local community. So we are committed to working with all stakeholders on these issues to jointly identify and deliver the improvements required to enable effective street work management.

National Grid and street works

12. National Grid owns and operates the gas transmission system throughout Great Britain and distributes gas throughout the heart of England to approximately eleven million homes, schools and offices. Its primary duties in the UK are to develop and maintain efficient networks and also facilitate competition in the generation and supply of electricity and the supply of gas.

13. National Grid undertakes street works for four main reasons;

· safety;

· security of supply;

· connecting new or enhancing existing customers’ supplies; and

· diverting apparatus for major transport or urban regeneration projects.

In practice, for most premises which we are under a duty to connect to the gas network (as dictated by the Gas Act 1986 as amended), there is no practical alternative but to install pipework in streets. Safety is our top priority and our responsibilities in this area are driven by the Gas safety (Installation and use) Regulations 1998, Health and Safety at Work Act 1974, Pipeline Safety Regulations 1996, Gas Safety Management Regulations 1996 plus associated approved Safety Cases. We are required to publish and comply with plans to ensure security of supply under our Gas Transporter Licence granted under section 7 Gas Act 1986 (as amended) and requirements to divert pipes and apparatus are driven by the New Roads and Street Works Act (NRSWA) 1991, Traffic Management Act (TMA) 2004, the Highways Act 1980 and the Town & Country Planning Act 1947 (as amended 1990).

14. Due to the nature of National Grid’s obligations street works are unavoidable. Most of National Grid’s street works relate to work on the low pressure gas distribution network within four of the eight regional gas distribution networks.

15. National Grid seeks to minimise disruption caused by street works by ensuring compliance with the existing legislation within NRSWA 1991 and the TMA 2004. In 2010-11 National Grid will have submitted approximately 372,000 notices and permits. [1] The stages of compliance and noticing requirements for different types of works are illustrated in Appendix 1, for example for planned major works the noticing process starts at least 90 days prior to undertaking works, with six notices required in total.

16. National Grid seeks to deliver world class street works, with safety as the number one priority. We share best practice with companies across the industry, through regional Highway Authorities and Utilities Committee (HAUC) conferences and National Joint Utilities Groups (NJUGs) Street Works Forums. We are fully supportive of NJUG’s submission to this inquiry.

17. National Grid has been very active in the development of a range of programmes to reduce the impact of our works on both road users and the general public. We helped develop and are a signatory to the National Code of Conduct which we launched with NJUG, Transport for London and the London Mayor in June 2010 following the success of the Mayor’s London Code of Conduct. The Code’s features include:

· Assisting local authorities in the development of permit schemes to ensure they are workable and effective at tackling disruption;

· Sharing long term plans for major street works projects between local authorities and utilities to allow greater opportunities for coordinating works;

· Promoting the use of minimum-dig technology to reduce the duration of works;

· Encouraging the use of plating over road excavations where safe and practical to do so;

· Striving to work outside of peak hours wherever possible to reduce excessive traffic delays;

· Providing work site information boards at all sites with contact details and updates on progress;

18. It is important to make clear that just as it is in the interest of energy consumers and the public that National Grid completes its street works as quickly as possible and with minimum disruption it is also in National Grid’s interest. We are committed to working with the Department for Transport, Street Authorities and other stakeholders to ensure that congestion and disruption to the general public is minimised without imposing unnecessary costs on energy consumers. We feel certain that with a common goal in mind, it is possible to develop an effective regime to deliver the best outcome for all stakeholders.

Price control

19. National Grid is funded by a price control mechanism which is agreed with and set by Ofgem, the energy regulator. Historically the Price Control was based on a retail price index model with an element of efficiency savings. This approach has served the customer well; however the UK energy sector is now facing a number of new challenges in providing safe, reliable and secure energy which will also be sustainable in a decarbonised future. In response to these challenges, Ofgem has recently introduced a new regulatory framework known as RIIO [2] .

20. Under the RIIO model, network companies are required to develop well-justified business plans setting out their outputs and how they propose to deliver these. Stakeholder engagement is a key element of this and National Grid is currently consulting with a wide range of stakeholders to ensure we fully understand their priorities. These will, in turn, help us to develop our business plans to ensure that, alongside delivering energy safely, reliably and efficiently, we are funded appropriately by Ofgem to deliver the street works service that our customers and stakeholders want. Recent feedback from our first stage of stakeholder engagement indicates that there is recognition and concern that increased costs incurred as a result of street works legislation will be passed through to energy consumers. Our stakeholders also believe that networks should be incentivised to minimise cost impacts of street works where it is within their control.  . 

21. We welcome the opportunity to share this feedback and our resulting proposals with government and other utilities in order to help shape improvements and deliver a mechanism that could be rolled out across works promoters.

Opportunities to improve performance of the current regime

22. From our experience of the current regime we have identified potential improvements in the areas of measurement, parity and best practice, work co-ordination, and permit scheme consistency, conditions and transparency which we believe could deliver a more effective regime and incentivise improvements.

Measurement, parity and sharing best practice

23. National Grid would welcome a defined method for measuring congestion and its root causes. This would facilitate an assessment of the impact and effectiveness of the current regime, enable targets to be set and progress to be mapped.

24. Independent studies have indicated that only 10% of congestion is attributable to road and street works. [3] Utilities undertake approximately 50% of the works in the street with the other 50% accounted for by Street Authorities’ work. Therefore just 5% of congestion is attributable to utility works.

25. National Grid believe that to tackle disruption effectively legislation needs to show parity between all works promoters, including Street Authorities, so that all parties are incentivised to carry out work in an efficient and timely manner.

26. It should be noted that different stakeholders will measure regime success by different parameters. Statutory undertakers will be driven by customer service, cost and productivity, aiming to complete works safely in the shortest time possible, causing minimum disruption and protecting business reputation.

27. Key Performance Measures (KPMs) applied across all works promoters could be used to demonstrate performance, identify best practice and incentivise improvements. Currently there are no KPMs available from the Street Authorities to measure the performance of those undertaking works under either the NRSWA or TMA regimes. National Grid therefore welcomed the requirement to produce precise KPMs within the London Permit Scheme Section 22.8.5, 6 & 7, unfortunately however this has not yet been completed and the KPMs to measure the Authority’s own works are optional. In order to ensure effectiveness KPMs need to be developed and applied equally to all works promoters including Street Authorities.

28. Benefits could also be gained from the inclusion of all works promoters in areas where Permit Schemes are introduced. This would enable benchmarking; the identification and sharing of best practice and the introduction of incentives schemes (for example by rewarding upper quartile performance). Currently a substantial part of Street Authorities’ works are excluded from permit schemes. For example Section 22.8.1 of the London Permit Scheme excludes ‘highway works, defined in Section 86 (2) of NRSWA as works for road purposes’ (i.e. works for the maintenance of the highway, improvement works, any works associated with traffic signs and the construction of crossing for vehicles in footways) from having to comply with the scheme. In contrast all works undertaken by utilities such as National Grid, are subject to the permit scheme requirements. We believe this arrangement to be inequitable and not therefore in the best interests of customers.

29. National Grid welcome the creation of the four Task Forces set up under the TMA legislation under London Permit Scheme section 22.7. These should provide a good opportunity for identifying and sharing best practice. To this end, we would welcome early communication of the Task Forces’ objectives and ongoing transparency regarding attendance and progress.

Co-ordination of works

30. National Grid works closely with stakeholders to improve the coordination of street works so as to minimise the impact to the lowest reasonable level. [4]

31. National Grid supports the drive to co-ordinate street works under both Sections 59 and 60 of NRSWA in order to reduce disruption and congestion. Section 59 stipulates that it is the duty of the Street Authorities to use their best endeavours to co-ordinate works. Improvements in co-ordination both within and between Street Authorities and all works promoters could be delivered through process development, more frequent co-ordination meetings and incentivisation of collaborative working. At present there is only limited proactive approaches by Street Authorities and work promoters to co-ordinate the works and therefore a failure of duty to effectively bring together undertakers proposing works. Where co-ordination results in trench sharing the scheme regulations place a large onus on the initial promoter to instigate all the relevant permitry and take ownership of the final reinstatement and appropriate guarantee period, so even with reduced fees the incentive to co-ordinate works may not be sufficient to offset the substantial risks borne by the initial promoter. Hence the understandable lack of collaborative working between utilities within the same streets.

32. In addition co-ordination of works could be further improved by the mandatory contribution of all works promoters, including Street Authorities to a transparent and easily accessible central works register. National Grid consistently uses the London Central Works Register however this is not mandatory and the number of both participating Permitting Authorities and utilities makes it only partially effective.

33. Efficiencies could also be achieved by improved communication processes between Local Authority departments. The circulation of notices within Local Authorities would negate the need for works promoters to actively coordinate interdepartmental engagement within the Authority where works involve more than one department (e.g. excavation near trees and parks).

Permit scheme consistency, conditions and transparency

34. National Grid advocates the introduction of a national permit scheme with consistent requirements and conditions which can be deployed in locations where a permit scheme is deemed appropriate against a set of transparent criteria. In their current format permit schemes and their associated conditions have added complexity to the regime and in certain respects conflict with the statutory rights to undertake works conferred to gas distribution network owners under the Gas Act. The fact that different Street Authorities may develop varying schemes, or may interpret the same scheme in different ways and with different levels of rigour leaves utilities unable to define one "best-practice" approach to managing permitry, thus creating inefficiencies across the entire work planning and delivery process. This unavoidable inefficiency and resultant reduced productivity generates increased costs which ultimately pass through to the energy consumer and UK plc.

· Site productivity: The negative impact on site productivity has been evident from the analysis of the impact of the London Permit Scheme on our essential mains replacement programme activity (Appendix 2). Due to conditions imposed works are taking longer to complete and congestion may be worsening as a result (Appendix 3).

· Administrative support functions: Differences between and within permit schemes also necessitates a multitude of different administrative processes to be undertaken by those applying for permits in more than one geographic area. For example the three current schemes in operation or preparation covering areas where National Grid undertakes work (London, Northampton, Manchester) are being implemented in very different ways in terms of both interpretation and application (Appendix 4).

35. A single consistent permit scheme would allow rationalisation and optimisation of processes by those undertaking works and provide a real incentive to improve the efficiency of street works and deliver net benefits to all parties. As with current proposals we would support Street Authorities deciding whether or not to deploy the scheme or retain the noticing system under NRSWA.

36. Cost benefit analysis should be applied to all proposed schemes to ensure there is a net benefit across all elements. The blanket application of permit requirements in some schemes such as the London Permit Scheme to all classes of road, whether they be major routes where congestion is an important issue or side roads, where there is little if any impact, imposes costs that are disproportionate to the benefits to be gained.

37. Benefits of reduced administrative burden could also be accrued by aligning central systems with the legislation.

· The advent of Permits has led to a discrepancy between the Code of Practice for permits (in which works should be co-ordinated) and the ETON Technical Specification (under which applications are made). These two pieces of regulation do not allow fluency in the implementation and interpretation of the legislation (both fall under TMA 2004). Due to discrepancies between the interpretation of requirements by the permit applicants and the Permit Authorities the system does not comply with what is stipulated in the Legislation. Thus a greater administrative burden is placed on the permit applicants to make the system and processes work via the application of ‘work arounds’ (Appendix 2).

· Systems are also currently incompatible with the requirement for Permit Authorities to attach conditions. In National Grid’s practical experience the onus falls on the applicants to meet this requirement (Appendix 2). Permitting meetings between works promoters, developers, Department for Transport and the Authorities have failed to make any impacts on getting the systems changed due to the costs associated with amendments.

38. It would also be beneficial to improve transparency over grounds for refusal of permits or application of conditions, and clear and consistent rules about what must accompany a valid permit application or a Permit Advance Application.

Additional comments on the proposed future regime

Lane Rental Proposals

39. National Grid do not believe that lane rental will necessarily deliver any benefits. Proposals should be carefully analysed, only those which demonstrate clear net benefits should be considered for implementation.

40. Any proposals taken forward should aim to drive early completion of works. There should be incentives for clearing site earlier then predicted and refunds available for those who succeed in doing so. There needs to be clear criteria outlining when and where schemes can be imposed. To maximise effectiveness and benefits any scheme should be targeted at pinch points on the strategic road network and should only be introduced upon the removal of other requirements (i.e. Permit and noticing requirements) otherwise there is a danger of further regulatory and cost burden. There is also the need to recognise that Lane Rental costs will be unavoidable by utilities such as National Grid undertaking essential work and that these costs will be ultimately passed on to energy consumers who are already facing higher bills from suppliers.

Proposal to localise powers to authorise permit schemes

41. National Grid is concerned by the proposal in Department for Transport’s Business Plan to localise powers to authorise permit schemes. Currently permit schemes are issued for consultation by Street Authorities, responses are considered by the Department for Transport and recommendations made to proposed permitting authorities to amend schemes.

42. The removal of this arbitrating policing role has the potential to create an even greater variety of permit schemes and cause huge inconsistencies between Street Authorities, resulting in a multitude of issues for utilities working across different Street Authority’s borders. This will serve to further exacerbate the issues identified above. These issues could be overcome by the introduction of a national scheme which Street Authorities could choose whether or not to deploy (see paragraphs 34-35 above).

Appendix 1: Noticing required (NRSWA)

Noticing requirements are dependent upon the type of work to be undertaken.

For major works the process starts at least 90 days prior to undertaking works, with six notices required in total.

For emergency works three notices are required.

Length of time

required to

complete work.

Appendix 2: Productivity under Permit Schemes

Administrative Support:

At present for noticing there is just one exchange of information and the works continue;

a) Notice sent by National Grid informing Street Authority of works

With Permits there is considerably more administrative burden with the potential for numerous exchanges of information;

a) Permit request sent by National Grid

b) Permit rejected by Street Authority. Street Authority request conditions to be added.

c) National Grid add conditions and submit permit request.

d) Permit either accepted or once again rejected by Street Authority (If the permit is rejected steps b and c are repeated until agreement is reached)

On site:

The metric "metres of pipe laid per person per week", allows us to measure productivity within the geography of each Street Authority’s area. The graph below illustrates productivity before, during the preparation and after implementation of the London Permit Scheme across three areas, East Anglia (no scheme adopted), Outer London authorities (no scheme adopted at this time) and the Central London authorities which adopted the London Permit Scheme in January 2010.

Productivity in East Anglia increases over the timescale analysed as we realise the benefits of a number of efficiency initiatives. Productivity in the Outer London Authorities remains fairly constant whereas there is a reduction of 38% in productivity across the Central London Authorities which have implemented the Scheme. Appendices 3 and 4 further demonstrate why productivity is reduced.

Appendix 3: Inefficient permit conditions

These diagrams illustrate the replacement of 200m of gas main. Connection holes are shown in blue and the pipeline is shown in yellow.

Diagram 1: The pipeline is replaced by a single insertion. There are no permit conditions which limit the length of road which can be worked on. This enables the use of just two connection holes. The 200m of pipe would be installed in a single insertion, allowing the work to be completed in just 21 days.

Diagram 2: This shows the added time needed to comply with restrictive permit conditions which limit the length of highway which can be worked on. Undertaking the work under these conditions requires three additional connection holes. The work takes longer to complete (30 days) and there are additional material and backfill costs.

Diagram 1:

Diagram 2:

Appendix 4: Permit Scheme inconsistencies

Northampton’s permit scheme only applies to 15% of the road network. National Grid liaises directly with the Street Authority (SA). This is in contrast with the proposed Manchester permit scheme (GMRAPS) which will apply to 100% of the road network and applications will be processed via an administration team prior to being routed through to the Street Authorities. There is therefore a greater administrative burden associated with undertaking works in the Greater Manchester area than there is in Northampton.

Productivity is impacted by the percentage of the network that schemes apply to. Where a scheme applies to all roads in an area flexibility is minimised. When there is a delay in obtaining a permit there is no scope for the works team to undertake other work in the same geographic area, resulting in significant costs which will ultimately be paid by the end consumer and UK plc.

Schemes which do not apply to 100% of the road network provide scope for reallocating teams when there is a delay in obtaining a permit, enabling the team to work in less congestion sensitive areas within the same geographic area.

February 2011