8. Proposed Amendments to Ensure that Pipeline Owners Provide an Appropriate Level of Security of Supply
8.1 Disclosure of Asset Management Plans
8.1.1 Proposed Requirements
78. The Ministry proposes that pipeline owners be required to disclose asset management plans for their gas networks. In summary, the Ministry proposes that asset management plans contain information on:
- the background and objectives of the plan (including relationships with other corporate goals, and accountabilities and responsibilities for asset management);
- the assets covered;
- the proposed service levels;
- network development and lifecycle asset management action plans including planning assumptions, demand forecasts and policies on non-asset solutions;
- risk policies and mitigation; and
- performance measurement, evaluation and improvement.
79. Details of the asset management plan disclosure requirements that now apply to electricity companies are attached in Annex 3.8 It is envisaged that requirements for gas pipeline owners would be based on the electricity model.
8.1.2 Rationale for Proposal
80. Ensuring the security of gas networks is a matter of legitimate public interest. The Ministry considers that disclosure of asset management plans would help promote strong incentives to put in place and maintain good practices by pipeline owners, and help pipeline owners demonstrate that they follow high standards. Disclosure of asset management plans should enhance the quality of discussions between pipeline owners and those parties who have the ability and incentive to review the plans, e.g. users. A strong measure of peer review within the industry would also be possible. The Ministry expects that disclosure of asset management plans would help interested parties analyse the reasonableness of pipeline owners' ODVs, and forecasted service reliability targets (see section 8.2).
8.2 Disclosure of Reliability Performance Standards and Targets
8.2.1 Proposed Requirements
81. The current reliability performance measures for pipeline owners do not give a full picture of reliability performance. It is proposed to add provisions requiring pipeline owners to disclose targets for each existing (see Part 4 of Schedule 1 of the Regulations) and proposed new reliability performance measures. The targets would be required to relate to:
- the coming year; and
- the average target for the coming 5 years.
The Ministry has also received a submission proposing a number of new reliability performance measures from which we have developed proposals to:
- Rename the existing distribution system interruption measures (Clause 2, Part 4, Schedule 1) to "SAIDI" (system average interruption duration index) and
- Change the unit of the measure from customer-hours to customer-minutes; and
- Add a requirement for a breakdown of SAIDI for interruptions caused by 3rd party damage to the distribution system (as currently disclosed by NGC and Wanganui Gas);
- Introduce new reliability performance measures :
- SAIFI (system average interruption frequency index) to indicate the average number of consumers affected by interruptions to a distribution system during the year;
 (Number of consumers affected by each interruption) |
|
| Total consumers |
- SAUCI (system average utilised interruption capacity index) to indicate how much gas was not delivered as a result of interruptions to a distribution system (designed to measure the impact of the interruptions rather than simply the duration or number of consumers affected);
| (Interrupted capacity × Interruption duration) × Capacity utilisation factor |
|
| Total installed capacity |
- The number of incidents where delivery pressure drops below acceptable levels (distribution systems only); and
- The number of occasions that remedial action was taken to stop escapes of gas.
82. We welcome comments on these proposals and on whether reliability performance measures should be disclosed on an overall basis (i.e. all distribution assets treated as one "system"), or on a disaggregated basis, as per Enerco's 1996/97 and 1997/98 disclosures. (Disaggregated disclosure is not contemplated for financial statements or financial performance measures.)
8.2.2 Rationale for Proposal
83. The Ministry recognises an increase in general public awareness of and interest in network reliability following events affecting electricity supply to the Auckland CBD, water supply to Sydney and gas supply to Victoria. The rationale for the above proposals is:
- Prospective information about pipeline reliability would allow retailers and consumers to monitor and benchmark reliability management. Reliability targets could be compared to asset management plans and, retrospectively, to capital and operating expenditure to determine whether planning of and spending on system reliability was appropriate.
- Interruption duration disclosures are typically small numbers of customer-hours accurate to four decimal places. Changing to customer-minutes will make the information easier to readily understand. Disclosing interruptions caused by third parties would usefully separate that class of interruptions over which pipeline owners have no direct control.
- SAIFI would complement the existing duration index by indicating how many consumers, on average, are affected by interruptions, giving a fuller picture of the effect of interruptions.
- SAUCI would add a further dimension to reliability performance disclosure by providing a measure of the economic impact of interruptions. Measures based on the duration of interruptions or the number of customers affected are useful measures of reliability, but are insensitive to whether affected customers are major users or households.
- The disclosure of the number of pressure drops and gas escapes would extend the measure of reliability beyond just interruptions. Pressure drops may disrupt metering and supply to consumers, and possibly affect commercial operations without causing an interruption and thereby appearing in the interruption-based performance measures. An undue number of these events could reflect an inadequate quality of service.
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