Changes ahead for gas transmission technical and safety regulation

The gas transmission industry’s technical standard, AS2885, has been developed over a period of 20 years and has served the industry well. It is recognised by all state regulators and is well regarded internationally.

In July last year, the Ministerial Council on Energy (MCE) established the Energy Technical and Safety Leaders Group – in which APIA was represented – to explore options for the harmonisation of energy technical and safety regulation. Energy technical and safety regulation is currently run on a state jurisdictional basis, and the MCE feels that there is a significant opportunity for efficiency gains in standardising (or harmonising) this regulation where possible.

The Energy Technical and Safety Leaders Group comprises industry, regulators and unions, and is tasked with developing a harmonisation implementation plan for the MCE by early 2010. The first phase of consultation has recently concluded, with the group seeking comment on options for the high level regulatory framework that might apply to a harmonised technical and safety environment for the energy supply industry.

A generic standard

As the first step toward harmonisation, a key feature of the proposed new regulatory framework is to develop a generic standard for safety management systems of both gas and electricity networks. This is being labelled the “˜energy network safety system’ (ENSS). The term ENSS is being used in place of “˜safety case’, “˜safety operating system’ and other terms used by state-based regulators in order to avoid confusion with any state’s existing approach to performance-based management systems.

The concept of a standard ENSS across the energy supply industry could be a positive development for the gas transmission industry. However, the technical and safety aspects of the four segments of the energy industry – gas transmission, gas distribution, electricity transmission and electricity distribution – means that any standardisation of an ENSS would result in such a generic template that it could be applied to any industry that relies on performance-based safety management systems. APIA’s view is that establishing such a generic system would be an unnecessary effort for industry and regulators, as well as a duplication of existing management system standards.

A single legislative mechanism

The other key feature of the high level harmonised regulatory framework is the development and application of a single enabling legislative mechanism for safety and technical regulation of the energy supply industry. A single piece of legislation for energy supply safety and technical regulation would replace the numerous existing pieces of state legislation. This could remove the potential for unnecessary differences between jurisdictional regulators for the four segments of the energy supply industry.

While it is important to remember that there are significant differences between gas and electricity transmission and distribution that should remain in place, nationally consistent legislation could provide some benefits. For example, it could help to mitigate the differences between states in their approach to gas transmission regulation while retaining the differences between regulation of gas transmission and gas distribution. In negotiations on the development of legislation, APIA will insist that appropriate reference to AS2885 is incorporated into the legislation, and to ensure that existing best practice regulation is adopted.

The APIA preference

APIA’s preferred mechanism to ensure that this occurs appropriately is to have the national legislation reference national standards for each of the segments of the energy supply industry. For the gas transmission industry, AS2885 would fit easily into such an approach, but the other segments, particularly the electricity networks, would have to undertake significant work to develop standards approaching an equivalent of AS2885. The Leaders Group has acknowledged that AS2885 represents the benchmark that other segments should work toward.

The harmonisation process needs to be monitored closely. In any “˜nationalisation’ process where state jurisdictions have different regulatory approaches, each state will argue that its approach is the best and the one that should be applied nationally. The danger in this is that the gas transmission industry could end up with a national regulatory approach that picks up some of the less desirable aspects of each jurisdiction’s gas transmission regulation. There is also the seemingly ever present danger that the differences between gas and electricity networks will be blurred or misunderstood, and that attempts are made to apply regulatory mechanisms for electricity networks to gas networks.

The Energy Technical and Safety Leaders Group will release a Draft Harmonisation Implementation Plan in July for stakeholder comment. For further information visit the MCE website: www.mce.gov.au, or call the APIA secretariat on 02 6273 0577. APIA’s submission to the Leaders Group is on the APIA website: www.apia.net.au

Send this to a friend