Gas Transportation Charging Review Group

Minutes of the meeting held on 26 September 2001


Dr Neil Johnson Chair, HSE

Industry members

Mr D Smith, Transco;
Mr P Clark, AIPGT;
Mr D Childerhouse, AIPGT.

HSE members;

Mr F Perkins HID;
Mr W Tomkins, Finance Unit;
Mr Mark Reyland; Finance Unit;
Mr Charles Ransome, HID, Secretary;
Mr K McFadyen, HID, observer.

1 Welcome and introduction

1.1 The Chairman welcomed everyone to the meeting. Apologies had been received from John Taylor, UNISON. Mr McFadyen would would be taking over as Secretary for future meetings.

2 Minutes of the meeting held on 11 April 2001

2.1 The minutes were accepted.

3 Matters arising

3.1 Membership List (item 1.1): the list had been updated and issued to members as agreed at the previous meeting.

3.2 Gas Safety Case Assessment Manual (item 3.1): It had taken longer than expected to issue the Manual on the Internet, but it was understood that the text was now being prepared for publication. The Secretary would keep this under review and inform members when the Manual became available on line.
Action: Secretary.

3.3 Benchmarking Study (item 11): members noted that a comparison of charge out rates across a range of public and private sector bodies was now being conducted as part of the evaluation of charging.

4 Chairman's Report

4.1 2001/02 statistical information: members noted the statistics on chargeable work delivered and invoices issued/queried in the current year as set out in Paper GCRG 2001/12. The total number of chargeable hours forecast for the year had already been reached by the midyear stage. Assessment work accounted for the majority of chargeable activity, particularly dealing with applications for exemption. Members welcomed Mr Reyland's assurance that any over recovery of costs would be taken into account in calculating future years' charge out rates. Members were also glad to note the absence of any invoicing queries or disputes.

4.2 Draft Chairman's Report to ICRG: it was agreed that the draft report should be amended to convey the fact that members:

4.3 It was also agreed that GCRG is likely in future to need to meet only once a year (in March/April). A date should be reserved for a second meeting each year, but used only should business require it. This too should be reflected in the Chairman's Report. The Secretary would revise the draft report accordingly and issue to members for clearance.
Action: Secretary

5 Implementation of 2001/02 charge out rate

5.1 It was explained that the current charge out rate of £107 per hour had not been implemented until 20 August 2001; the delay had been due primarily to the general election, and queries from ministers both before and after the election in relation to certain of the charges for other statutory services contained in the Fees and Charges Regulations.

5.2 Mr Reyland explained paper GCRG 2001/14 which showed the direct and indirect components of the 2000/01 charge out rate. HSE was not required to account formally for the delivery costs of its gas transportation chargeable activity as the total costs were less than £100,000. However, the hourly cost of delivering gas transportation chargeable work was known to be very similar to that for COMAH chargeable work, and his paper was therefore based on the economic COMAH rate of £105 per hour (ie the hourly rate which was needed to recover the full cost of HSE's 2000/01 COMAH chargeable activity as declared in that regime's formal trading account).

5.3 Members noted that work was now underway to calculate economic charge out rates for Gas Transportation and the other charging regimes for financial year 2002/03. It was intended to apply the new rates as from 1 April 2002, following HSC and Ministerial approval. It was hoped to be able to inform industry of the proposed rates at the ICRG meeting in November, prior to seeking HSC approval.

6 Business improvements and efficiencies

6.1 The Secretary reported that the system for capturing details of HID inspectors' chargeable work at source was now in operation, and would provide the data used by the June-August invoicing run. Thereafter, this would be supplemented by a new IT system which would provide a more cost-efficient means of extracting this data for invoicing. Examples of the outputs from the new system (ie the detailed statements which would accompany invoices to operators) were circulated for information.

6.2 It was noted that the new facilities would give multi-site operators flexibility as to whether they wished to receive a single invoice covering all sites which had been the subject of chargeable activity, or separate invoices for each site. Mr Smith indicated that Transco would favour the single invoice approach.

7 Progress with COMAH Component Charging Scheme

7.1 The Secretary reported that since the component approach had been endorsed by the COMAH Charging Review Group (CCRG) in March, there had been little progress with developing the scheme into a fully implementable alternative to 'actuals' charging. Work to identify suitable COMAH sites to use for refining the calibration of the component models had revealed that there was still relatively little data available on actual effort expended (e.g. to date, only a few safety report assessments had been fully completed). And at the previous week's CCRG meeting, there were mixed feelings as to whether significant resource should be committed to further development of the scheme at this stage, not least because some members feared that it might adversely affect the distribution of charges across the industry.

7.2 GCRG members reiterated their view that they they do not regard component charging as appropriate for the gas transportation regime, and would prefer a tax or levy arrangement.

8 Any other business

8.1 There was no other business.

9 Date of next meeting

9.1 It was agreed to hold the next meeting on Tuesday 9 April 2002 in London.

10 Evaluation of Charging

10.1 Denbigh Cowley from Deloitte and Touche explained the proposed approach for evaluation of the Gas Transportation charging regime which took account of lessons learned from the COMAH charging evaluation. The GRCG meeting provided an opportunity for members to contribute to the proposals before they were developed into a formal project initiation document for approval by the HSE Project Board. The following particular points were noted:

10.2 It was agreed that:

Updated 2008-12-05