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Gas Transportation Charging Review Group

Minutes of the meeting held on 11 April 2001

Present:

Dr Neil Johnson, Chair (HSE)

Industry members

Mr C Musgrave, Transco
Mr D Smith, Transco
Mr P Clark, AIPGT
Mr D Childerhouse, AIPGT
Mr J Taylor, UNISON

HSE members

Ms Jane Soloman, Finance Unit
Mr Mark Reylan, Finance Unit
Mr Charles Ransome, HID (Secretary)

Apologies for absence were received from Miss S Channon, CBI.

1 Welcome and introduction

1.1 The Chairman welcomed everyone to the meeting. The Secretary undertook to update and re-issue the list of members.
Action: Secretary

2 Minutes of the meeting held on 20 September 2000.

2.1 These were agreed as an accurate record of the meeting.

3 Matters arising

3.1 It had taken longer than anticipated to up-date the Gas Safety Case Assessment Manual (item 3.1) because of other demands on resources. However, it was hoped that the Manual would be placed on the Internet within the next three months; the Secretary would keep members informed.
Action: Secretary

3.2 As to the position on exemplar safety cases (item 3.1), the Chairman took the view that the gas transportation network is essentially a single network and that only one safety case is required from each operator. Any additions to the network could be dealt with by updating the relevant safety case; such updates should not attract any additional assessment cost. In response to a query from Mr Clark about progress with bringing Local Authority systems under the regime, the Chairman said that more information was needed (from industry if available) about 'LA owned' systems. The legislative requirements also needed amendment in order to clarify that owners of individual properties do not have duty-holder responsibilities - this was a matter for consideration by the GSMR Review Group (see item 4.1 below).

3.3 The nominees as independent member of the Disputes Panel (item 9) were Mr Smith, Mr Clark and Mr Childerhouse. Ms Soloman thanked members for these nominations, and would be in touch with the appropriate nominee as and when needed.

4 Chairman's Report

4.1 The Chairman reported progress with revision of GSMR. Apart from issues of defining responsibilities in regard to Local Authorities, the main area of contention/difficulty was in determining a clear, acceptable and sensible allocation of duties in relation to the 'end of the network'. For example, while there appeared to be no added value in placing responsibilities on certain sub-transporters such as owners of blocks of flats (assuming that it is possible identify them), duties placed on the main transporter must reflect their position and the extent of their liability as supplier while not owning the pipework in such scenarios. In addition, clarification was required in respect of the responsibilities of individual appliance owners, and in defining transporters' responsibilities in regard to control of regulators downstream of the emergency valve.

4.2 Members considered paper 2001/09 which provided 2000/01 statistics on chargeable hours, numbers of invoices issued and numbers of charging queries and disputes. The Chairman explained that effort had concentrated on assessment in view of a larger number of safety cases and revisions than had been expected. The single piece of enforcement activity involved issue of an improvement notice requiring an operator to produce a new safety case following purchase of an existing duty-holder's company. The Chairman suggested that transitional provisions were required to cater for such instances and this was being considered in connection with the revision of GSMR. There was some feeling that the bureaucracy surrounding charging (charging review group, disputes procedure etc.) was perhaps excessive for gas transportation in the light of the relatively modest costs and income involved.

5 Charge out rate for 2001/02

5.1 Mr Reyland presented paper 2001/02 which set out the components of the hourly charge out rate for financial year 2001/02. A rate of £107 had been calculated as necessary to recover the costs of HSE's GSMR chargeable work. The increase from the existing rate of £101 per hour was the first since the gas transportation charging regime had been introduced. The increase would be implemented by means of the 'Fees and Charges' regulations, for which it was unlikely that ministerial approval would be obtained until late May;and implementation might be further delayed by a general election [NB it is now known that the implementation date will be 20 August 2001].

5.2 It was estimated that the total cost of chargeable GSMR work in 2001/02 would be in the region of £15,000 - £20,000. Mr Childerhouse was anxious that there should be an appropriate balance between assessment and inspection to avoid any risk of complacency within the industry. It was recognised however that site visits under GSMR are appropriate only in specific instances (e.g. when an installation is in progress).

6 Industry Wide Charging Review Group (ICRG) meeting on 30/10/00

6.1 Ms Soloman reported that the ICRG meeting had considered its draft report to the Health and Safety Commission (HSC); proposed charge out rates for 2001/02; the queries and disputes procedure (see item 7); and the evaluation of charging (see item 10). The minutes of the meeting would be made available on the Internet.

6.2 HSC at its meeting on 28/02/01 had accepted ICRG's report, and had considered how industry might be more effectively involved in/consulted on the determination of fees and charges, as the scope of HSE's chargeable activities extends beyond the regimes covered by the Charging Review Groups.

7 Queries and Disputes Procedure

7.1 Ms Soloman explained that paper 2001/03 set out the revised procedure which had been adopted following the ICRG meeting. The changes enabled HSE to elevate a dispute to the next level when necessary, and provided for an external member to assist the Chair in determining whether a dispute at level 3 should be referred to the Disputes Panel. So far, across all four charging regimes, six disputes (including two in relation to railways) had been raised to level 3.

8 Business improvement and efficiencies

8.1 The Chairman noted that revision of GSMR would reduce the number of duty holders under the regulations (e.g. in respect of point to point pipelines for power stations), thus reducing the workload on HSE. The revision would seek to avoid requiring changes to existing safety cases; the principle was to to avoid additional burdens both on operators and HSE unless they benefit health and safety.

8.2 The Secretary explained that new facilities were being developed for generating invoices, and supporting details, to operators. The proposed facilities would extract details of chargeable work directly from Hazardous Installations Directorate's (HID's) work recording system, thus avoiding the need for Inspectors to complete chargeable time sheets, and invoices would be supported by detailed reports from the system. The ability to generate invoice data in batch would enable resource reductions within HID's administrative charging team.

8.3 Members were keen to see the format of the new reports to operators, and to influence the way in which information was presented and referenced. The Secretary (in his role as HID's charging manager) undertook to ensure that the reports were developed in consultation with the GCRG and operators [NB the new system is due for testing and report prototyping in late August/early September].
Action: Secretary

9 Progress with COMAH component charging feasibility study

9.1 The Secretary introduced paper 2001/04 which summarised the study and the present position, and included as an annexe the full study report to the recent meeting of the COMAH Charging Review Group (CCRG). Paper 2001/05 gave an analysis of industry's views of the component proposals, and paper 2001/06 summarised the main benefits and disadvantages of component charging as compared with existing arrangements. The Secretary explained the principles of the scheme and how it might operate in practice. CCRG had accepted that component charging was a feasible alternative to the present 'actuals' arrangements, and were keen that further work should be done to develop the proposals into a fully implementable scheme. Resourcing for such work would need to be approved by the Competent Authority.

9.2 Members recognised the benefit of charging arrangements which would provide for 'up front' knowledge of the costs of regulatory activity, particularly inspection; uncertainty about the implications of charging was seen as a disincentive to small PGTs to come into the industry. Under present arrangements, there also appeared to be some confusion about the effects both of over-recovery of costs and of delivery of more chargeable work than planned during a financial year.

9.3 It was however felt that the component scheme which had been outlined as feasible for COMAH charging was unnecessarily complex for the gas transportation sector. The Secretary undertook to consider whether some work to establish what might be appropriate for gas transportation was possible at this stage.
Action: Secretary

9.4 There was some feeling that a tax or levy might be most acceptable to industry as a means for HSE to recover the costs of GSMR chargeable work. Ms Soloman pointed out such an approach was currently precluded by law, but that it would be appropriate to feed this view into the evaluation exercise.

10 Evaluation of Charging

10.1 Ms Soloman reported progress with the evaluation study (paper 2001/07). A Project Board had been established and, following some delay in the selection process (resulting from the need for candidates to present their proposals to the Board), a suitable consultant had now been recommended.

10.2 It was planned that the consultants would attend the next meeting of the Charging Review Group to discuss their plans for evaluation of the gas transportation charging scheme and seek views from members. It was noted that the ICRG at its meeting in October had been keen that safety representatives and safety managers should be involved in the evaluation consultation arrangements.

11 Benchmarking Study

11.1 Mark Reyland introduced paper 2001/08 which was being issued to each of the charging review groups. He explained that it had been difficult to identify a representative sample of organisations - most of those contacted were either not useful as a benchmark or unwilling to provide information. Co-operation had been secured from the Maritime and Coastguard Agency (MCA), but comparison with HSE's Offshore Charging Regime was difficult in view of differences of salaries and charging arrangements (e.g. MCA charge directly for travelling time rather than including it in the charge out rate.)

11.2 Mr Reyland drew attention to the arrangements for scrutiny and containment of the costs of charging, in particular HSE's internal audit programmes, external scrutiny by National Audit Office, and reviews to ensure efficiency and consistency of business methods.

12 Any other business

12.1 There was no other business.

13 Date of next meeting

13.1 It was agreed to hold the next meeting on 26 September 2001 at Rose Court.


Updated 2008-12-05