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22nd World Gas Conference June 1–5, 2003 Tokyo, Japan

Report of Working Committee 5

« Distribution »

Rapport du Comité de travail 5

« Distribution »

Chairman/Président

Joël Grégoire

France

ABSTRACT

This report present the work conducted during the 2000-2003 triennium by Working Committee 5 and its three Study Groups:

Study Group 5.1 “Improved procedures for customer connections” • • •

• • •

Study group 5.2 “Evolution of metering in a competitive market” Study group 5.3 “Regulatory safety policies”

The first part of the report explains the context of market deregulation that forms the backdrop to their work. It is followed by a full presentation of the reports of each Study Group. The list of WOC 5 members is given in annex.

RESUME

Ce rapport détaille les travaux réalisés pendant le triennium 2000-2003 par le Comité de travail 5 et ses 3 Groupes d’Etudes :

Groupe d’Etudes 5.1 «Evolution des procédures en matière de raccordement des clients » Groupe d’Etudes 5.2 «Evolution du comptage dans un marché concurrentiel» Groupe d’Etudes 5.3 «Politiques réglementaires de sécurité»

La première partie du rapport explique dans quel contexte de dérégulation du marché les groupes ont travaillé. Elle est suivie par une présentation complète des rapports de chaque groupe. La liste des membres du WOC 5 est indiquée en annexe.

TABLE OF CONTENTS Abstract 1. Foreword 2. Themes of Working Committee 5 3. Report of Study Group 5.1 “Improved procedures for customer connection” 4. Report of Study Group 5.2 “Evolution of metering in a competitive market” 5. Report of Study Group 5.3 “Regulatory safety policies” 6. Conclusion Annex. List of WOC 5 and Study Groups Members

WORKING COMMITTEE 5 REPORT

1. FOREWORD

The issue of deregulation has been a key theme in the work of Working Committee 5 “Distribution”. During Plenary Committee meetings, much time has been devoted to presenting the progress of market deregulation and its consequences in each country, and members have held interesting exchanges and discussions on this question.

During the last three years, many “historical” gas companies have, for the first time, experienced profound upheaval after many years of remarkable stability.

Among the many sectors that make up the gas supply chain (exploration-production, transmission, storage, distribution), it is distribution which is most profoundly affected by natural gas market deregulation, notably in North America, Western Europe and in Argentina.

Distribution lies directly on the fault lines that now divide up the landscape. The obligatory partitioning between regulated and deregulated activities has given rise to legal unbundling of commercial functions and network management, previously handled by a single distribution company. Moreover, the race for size, the need to expand beyond national borders and growing customer demand for multi-energy and multi-service solutions is resulting in a wave of company mergers and takeovers. Lastly, the majority of gas distribution companies that were previously totally or partly state-owned, have now been privatised.

The way in which these companies are regulated and governed has also been radically modified. With regard to “technical” aspects, a new player, the “Regulator”, now gains considerable power. At the very least, he sets the TPA tariff and hence the revenues of the technical operator, with the openly stated objective of slashing costs. In “commercial” terms, this same player is aiming for a rapid and substantial reduction in the historical operator’s market share.

In human terms, the impact of these changes is also strongly felt, with considerable upheavals for gas industry personnel, at management levels especially (new skill requirements, new employers, early retirement, redundancy).

The topics selected by the three study groups, whose results are presented below, focus on some of the most interesting questions raised by deregulation in gas distribution.

The first concerns the issue of safety in this new deregulated environment. Everyone agrees that high safety standards are essential for the success of the gas industry. But while the national or regional gas company previously had sole responsibility for safety, working out common rules, using its high level of expertise and resource allocation, this responsibility is now divided among many different players.

•

•

The other questions concern the two essential interfaces between the technical operator and its customers: customer connection to the network and metering. In these two areas, market opening is leading to a progressive redistribution of roles between the commercial operator and the technical operator. Indeed, at a later stage, the technical operator may no longer retain responsibility of any kind in these areas.

2. THEMES OF WORKING COMMITTEE 5

The three themes chosen by Working Committee 5 “Distribution” for the 2000/2003 triennium were: Theme 1: Improved procedures for customer connections Coordinator: Neil SHAW, Gas, Gas Transportation Company, U.K. Vice-coordinator: Takashi ANAMIZU, Tokyo Gas Co, Ltd, Japan

This study group focused on changes in the customer interface observed in many countries as market opening progresses. Studies being done show that in most cases the same factors are affected: customer information sharing, connection lead times, connection invoicing method (fixed rate or real cost), door to door customer selling, choice of a supplier before or after the connection request, etc.

They also show that the changes observed are very similar from one country to another, and depend above all on the degree of market maturity.

The group has also produced a summary presentation of recent customer connection technologies. Theme 2: Evolution of metering in a competitive market Coordinator: Eric Van INGELGHEM, Fluxys, Belgium Vice-coordinator: Peter CISTARO, Public Service Electricity and Gas, U.S.A.

This study group analysed the changes brought about by deregulation and examined new trends in metering activities.

Regarding the second point, the group reviewed the state of the art in a field where technologies are advancing at a rapid pace (direct energy metering for example). The group also highlights the emergence of new metering services which are broadening the scope of this activity.

With regard to deregulation, the study group examined changes in the “metering” activity itself which, in certain countries, is tending to become independent of the technical operator. Theme 3: Safety regulatory policies Coordinator: Jorge DOUMANIAN, Gas Natural BAN, Argentina Vice-coordinator: Dietmar SPOHN, RWE Gas AG, Germany

This study group first examined how safety is taken into account today and how responsibility for safety is shared among the various players (Gas Companies, Public Authorities, third party Organizations, Regulator….) in each country.

It then sought to measure the real impact of deregulation on safety. Following issues were examined: pressure on costs exerted by the Regulator, new

organisation for the production of safety standards and rules, relative positions of the Regulator and Authorities in charge of safety, changes in safety management.


Report of Study Group 5.1 “Improved procedures for customer connection”

Rapport du Groupe d’études 5.1 “Evolution des procédures de raccordement des clients»

Coordinator / Vice-Coordinator Coordinateur / Vice-coordinateur

Neil Shaw / Takashi Anamizu

United Kingdom/Japan Royaume Uni/Japon

ABSTRACT

The study reviewed and monitored the impacts and trends that deregulation and market liberalization is having on customer connection processes. The report identifies common features that appear to follow to a great extent the level of deregulation and market liberalization achieved.

The report also provides an update on the technology developments since the last paper on this subject at World Gas Conference 2000.

The presentation of conclusions will be supported and enhanced by the input from representatives from Regulators and Gas Companies.

RESUME

L'étude a passé en revue et analysé les impacts et les évolutions que la déréglementation et la libéralisation du marché ont sur le raccordement des clients. Le rapport identifie les caractéristiques communes correspondant au niveau de dérégulation et de libéralisation atteint par le marché.

Le rapport fait également le point sur les développements technologiques intervenus depuis le dernier rapport sur ce sujet présenté lors du Congrès Mondial du Gaz 2000.

La présentation des conclusions sera appuyée et mise en valeur par l'apport de représentants des Régulateurs et des Compangnies gazières.

TABLE OF CONTENTS

1. Introduction 2. Gas Markets – State of Deregulation 3. Driving Demand and Handling of Attachment Requests 4. Attaching Customers

4.1 Regulatory Environment 4.2 Workforce Composition 4.3 Network Characteristics

5. New Technologies for Customer Connection

5.1 Construction 5.1.1 Keyhole Technology

5.1.1.1 Keyhole Technology in Canada 5.1.1.2 Keyhole Technology in France 5.1.1.3 Keyhole Technology in Japan

5.1.2 No-Dig Technology 5.1.2.1 Compact HDD Machine 5.1.2.2 Ultra Compact Mole 5.1.2.3 Bamboo Shoot Mole 5.1.2.4 Pneumatic Steerable Mole Grundosteer

6. Installation Technologies for Customer Connections

6.1 Multi-utility 6.2 Materials and connections

6.2.1 PE-X Piping System 6.2.2 PE Pipe Equal Branching

1. INTRODUCTION

The purpose of this report is to present the findings of the International Gas Union’s Distribution Study Group 5.1. Over the past triennium the group reviewed and monitored the impacts and trends that deregulation and market liberalization is having on the customer connection process.

The study was conducted by gathering relevant information regarding the customer connection process from a variety of jurisdictions that are either embarking on deregulation or have been deregulated for some time. The work was analysed from the perspective of the three stages of deregulation, those being, jurisdictions which are at the very early stages of deregulation, jurisdictions that are at some advanced stage of deregulation, and finally, jurisdictions that are significantly advanced in the stage. The purpose of analysing the work in this manner is to provide instructive trends that are likely to evolve through the stages of deregulation.

In total, nineteen jurisdictions were reviewed. These included jurisdictions within the following countries: Algeria Argentina Canada Czech Republic Denmark France Germany Italy Ireland Japan Malaysia Netherlands

Poland Slovak Republic Slovenia Spain

Sweden United Kingdom United States

The study also presents an update on the latest developments in the area of construction technologies. To the extend that a technical review of customer connections was undertaken in the previous triennium, the purpose of this technical review was largely to focus on the latest developments in this area. 2. GAS MARKETS – STATE OF DEREGULATION

The review of the jurisdictions within the countries studied has revealed that clearly, there are

three stages of deregulation. A number of jurisdictions are preparing, or are at the very early stages of deregulation, while others are at some advance state of deregulation. Only one jurisdiction has advanced deregulation to the stage that would be considered significantly advanced. The breakdown of the jurisdictions is as follows:

State of Deregulation

Early Stage

Some AdvancedStageAdvanced Stage

Early Stage Algeria, Czech Republic, France, Malaysia, Poland, Slovak Republic, Slovenia

Some Advanced Stage Argentina, Canada, Denmark, Germany, Ireland, Italy, Japan, Netherlands, Spain, Sweden, United States

Advanced Stage United Kingdom

In reviewing the stages of deregulation, aspects related to the level of separation between the system operator and it’s marketing affiliates and new market entrants, as well as, the level of sharing of billing data, customer information, attachment sales leads and co-branding or advertising were analysed. This analysis revealed that as jurisdictions move through the more advanced stages of deregulation, the level of separation becomes greater.

In the early stages of deregulation, the trend appears to be that at first, commodity sales to the larger industrial and commercial customers are deregulated. Where separation of commodity sales from the regulated system operator are required, in some cases, it is as basic as separating the internal activities and bookkeeping. Others however, do require the full separation of the marketing affiliate from the regulated system operator. Typically, the system operator has accountability for being the supplier of last resort.

In the area of the level of sharing of consumption data, customer information, attachment

sales leads and co-branding and advertising, there appears to be a wide variation on the restriction of

Level of Separation - Commodity Sales

Full Separation – No Commodity Sales from System Operator

Residential/Commercial/ Industrial Commodity Sales

Large Industrial Commodity Sales

Early Stage Some Advanced Stage Advanced Stage

how this information can be shared with either the marketing affiliate or the new market entrants.

While many variations exist in the early stages of deregulation, as the market evolves to the advanced stage, the trend appears to suggest that significant restrictions are placed on what can be shared. Typically, consumption data related to the specific customers of the gas marketing firms is the only information that is shared. Information relating to attachment sales leads can be shared, however, it must be shared in a non-discriminatory manner. Co-advertising and branding is typically not allowed, however, generic type of advertising that promotes the product as opposed to a specific organization or service is typically allowed.

Sharing of Customer Data


Full Restriction – No sharing

Some Restriction

No restriction

The largest issue that evolves through the stages of deregulation is the issue of who bills the

end consumer for either the delivery or commodity charge. Typically, in the early stages of deregulation, the system operator must accommodate the billing of both the delivery and commodity charges. However, as the market moves through the stages of deregulation, a shift occurs with the billing accountability. In the most advanced jurisdictions, the accountability for billing moves to the gas marketers for both the delivery and commodity charge. Many jurisdictions, however, move to a model that can accommodate three types of billing options. The first is that both the delivery and commodity charges can be billed through the regulated system operator’s bill, the second is the provision of split billing, where the system operator bills for the delivery charge and the gas marketer bills for the commodity charge, or finally, retailer consolidated billing, where both the delivery and commodity charges are billed through the gas marketer’s bill.

Billing Options

Retailer Consolidated Billing

Split Billing

System OperatorBill


3. DRIVING DEMAND AND HANDLING OF ATTACHMENT REQUESTS

Driving demand and handling of attachment requests varies by the degree of deregulation, and some clear trends emerge in this area. Driving demand was reviewed from both the marketing approach taken by system operators to increase attachments as well as the method by which customer attachment sign ups are handled.

In the early stages of deregulation, the trend appears to be that system operators generally use marketing campaigns to drive both demand for the product, as well as, for attachments. Typically, an internal sales force is utilized to facilitate the sign ups. This process results in the vast majority of sign ups facilitated by the company sales force (80-100% of attachments). Customers typically are required to sign attachment requests, although the use of new technologies such as fax or web based applications are beginning to be used to handle these requests. Generally, the customers do not have to sign a commodity contract with a gas marketer prior to the attachment request, as this service is available from the system operator.

In jurisdictions where some advanced level of deregulation has occurred, some trends from the early stages of deregulation begin to emerge. In some instances, the internal sales force is transformed to a sales force that more actively supports the retailers and gas marketers in their attachment efforts, although they also facilitate direct customer connection requests. Marketing campaigns are used, but they are used in such a way so as not to discriminate against any of the market participants. Generally customer sign up forms are still required, however, in some instances where customers can install their own services, installation drawings are required prior to their attachment to the system. Some advances in electronic commerce to facilitate the process are also evident. As in the early stages of deregulation, typically, a signed contract with a gas marketer is not required to process the attachment request.

In the very advanced stage of deregulation, some very evident trends appear. At this stage, the system operator is a wholesale provider of delivery services and as such does not have a strong relationship with the retail customers. The gas marketers or the equipment retailers generally create demand for attachments. As such, the system operator does not utilize a sales force for customer attachments nor does it use marketing campaigns to drive demand. At this stage of deregulation, a signed commodity contract is required prior to the connection of the service to the system. Competition also exists for the connection process, and while this service is available through the system operator, a number of connection service providers emerge. The system operator utilizes web based technologies to help inform and instruct end users how attachments can be handled and what choices they have around this process.

Driving Attachment Demand


No Sales Force – Marketers/Retailers Drive Demand

Sales Force Supports Marketing/Retailers

Internal Sales Force

Attachment Sign-up Request

Early Stage Some Advanced Stage Advance d Stage

Require Commodity Provider and Attachment Drawings

Require Attachment Drawings

Require CustomerSign-up

4. ATTACHING CUSTOMERS

This section of the report reviews the attachment process from the perspective of the physical installation of the facilities required to attach a customer. In trying to identify emerging trends from the stages of deregulation, each element of the process was reviewed from several perspectives, including price regulation, workforce composition and the network characteristics.

Generally, irrespective of the level of deregulation, the vast majority of system operators who are required to attach customers, contract out the construction activities. There are only a few jurisdictions, which do not contact this work out, and those jurisdictions are in the very early stages of deregulation. A variety of quality assurance audits are used to ensure that proper construction techniques and materials are used for both company and contracted out construction activities. 4.1 Regulatory Environment

Clearly, from a regulatory environment perspective, there are some significant trends that emerge through the stages of deregulation. In the most advanced stage of deregulation, the role of the system operator becomes one of delivery service provider as opposed to commodity and delivery service provider. In order to achieve a greater level of competition both at the commodity and connections level, certain regulatory changes need to occur. These trends are best explored by looking at the stages of deregulation from several perspectives and as demonstrated through the following graphs.

Number of Days Required to Install Residential Attachments

0102030405060708090

100110120130140150160170180190200

Early Stage Some AdvancedStage

Advanced Stage

Free of Charge Residential Connections

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Percent Price Regulated Connections

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Number of Days Required to Install Industrial Attachments

0102030405060708090

100110120130140150160170180190200

Early Stage Some AdvancedStage

Advanced Stage

Percent Standard Price for Connections

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% S

tand

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r Con

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Percent Property Owners Having Rights to Install Connections

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Percent Competing Gas Companies Ability to Build on Network

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Percent Large Users Able to Own Their Pipeline

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Percent Meters Installed at Time of Connection

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4.2 Workforce Composition

This section of the report explores the differences that exist in the workforce composition, related to the attachment process, through the stages of deregulation.

Generally, an increased level of contracting out occurs through the stages of deregulation, as best illustrated in the following table.

x x x x x x x x x x x x x x x x x Final As-Built

8020 80 20 43 57 Restoration (%)

x x x x x x x x x x x x xx

x x x x x x Quality Assurance

xxx x xx x x x xxx x x xInspection802080206436Construction (%)

x x x x x x

x x x x x x x x x x x x x Line Locates

xxx x xx x x x xx xx x x xPermit Approvalxxx x xx x x x xxx x x xEstimatingxx x x x x x x x x x xx x x x Proposal Drawing

x x x x x x x x x x x x x

x x x x x x x

Preliminary Design

ContractIn Contract In House ContractIn

Advanced StageSome Advanced Early Stage

4.3 Network Characteristics

Another area of interest is the trend in the manner in which potential customers are identified and, subsequently, how this marketing information is shared with the market participants.

Generally, in the early and some advanced stages of deregulation, marketing campaigns are

used to identify potential customers. However, this information is not shared with any of the market participants. As the deregulation phase advances, this information begins to be shared in a non-discriminatory manner with both retail and commodity marketers. However, as the deregulation phase further advances, and the system operator becomes more of a wholesaler in the marketplace, this activity ceases. At that stage, the retailers and commodity marketers are engaged in their own market research.

With respect to the data information technologies used to facilitate the exchange of information relating to customer attachments, the trend does not appear to be influenced by the stage of deregulation. Generally speaking, Internet and fax technologies are being implemented to more efficiently facilitate the exchange of this information.

5. NEW TECHNOLOGIES FOR CUSTOMER CONNECTION

It is important that gas companies continuously improve customer service and reduce the cost of connections. This can be accomplished by adopting new technologies. This is particularly important as markets deregulate and competitors and customers increase the pressure on regulators and gas companies.

The WOC5 report during the past triennium presented the results of a multi-country survey that dealt with the introduction of new technologies that help lower the cost of service pipe installations. This report outlines the technological progress made since that time and introduces a number of benchmark construction technologies and installation techniques for improving customer connections.

5.1 Construction 5.1.1 Keyhole Technology

In America, Canada, France, Japan and other countries, a new technology that uses a keyhole (small pit) has been introduced for service pipe construction. Compared with the conventional excavation method, keyhole technology reduces the area of road surface to be excavated, and hence, also the quantities of both excavation and backfill.

As shown below, keyhole technology lowers costs, has less impact on the environment, and improves customer satisfaction. The keyhole technologies used in each country are described below.

1

) Environmental Safeguards

Reduces the cost of purchasing new materials and disposing of waste material Cost Reduction

Reduces the area of the excavation＝reduces the quantities of excavation and backfill

5.1.1.1 Keyhole Technolo

Keyhole Technolobeen recognized as one olabour and excavation rest

The process inclucomposite roadway or coboulevard or lawn.

Vacuum equipmenlong handled tools. In roafilled with a low strength structure by a specializedlawns, the native material

To date, all Keyhocast iron distribution systKeyhole processes that winfrastructure, including ste

Limits the quantity of waste material produced (AS waste material, residual soil

Customer Satisfaction

d

i

e

Mitigates the obstruction of traffic (congestion, road closings)

Fig 1:Benefits of Keyhole Technology

gy in Canada

gy has evolved at Enbridge Consumers Gas since the late eighties. It has f the most promising Construction and Maintenance techniques to minimize oration.

es a method of excavation that cores an 18 inch diameter hole through a ncrete sidewalk, or performs a two foot square excavation in a sodden

t is used to excavate down to the gas plant to perform maintenance using dways, after the maintenance activity is complete, the excavation is back-concrete material and then the original core is bonded to the pavement application grout to permanently reinstate the road. In boulevards and s reused for back-fill purposes.

le tool development activity has focused entirely on the aging low-pressure m at Enbridge Consumers Gas. The future direction is to develop new

ill perform operating and maintenance procedures on the higher-pressure el and plastic gas mains.

At current activity levels, Keyhole Technology results in an approximate annual saving of $700K Canadian for the Toronto, Ontario operations. A major component of this saving is the excavation and restoration cost reduction in composite roads and concrete sidewalks. Enbridge Consumers Gas performs approximately 300 of these road or sidewalk operations annually, resulting in savings of $700 Canadian per job completed in pavement or sidewalk alone. Considering that excavation and restoration of roads and sidewalks cost Enbridge Consumers Gas approximately $6.1M annually, there is great opportunity to reduce these costs even further.

Keyhole has not yet reached its full potential at Enbridge Consumers Gas and one of the reasons for this is its limitation for winter operation. Vacuum technologies are not able to dig into frozen ground but advancements are being made in this area. At this point it is not known if wet-air knife technologies perform well during winter months but development activities in this area may extend the season in which Keyhole operations can be performed. At Enbridge Consumers Gas, there is significant interest in finding ways to reduce winter construction costs and employ new techniques to help reduce these costs. Currently, Enbridge Consumers Gas incurs a 40% premium for work that is performed in winter.

Fig.3: Vacuum Excavator

Fig 2: “Cookie” cutter Fig 3: Vacuum Excavator

Fig 4: Core replacement

5.1.1.2 Keyhole Technology in France

Particularly concerned about protecting the environment and reducing road work sites nuisances, Gaz de France has developed innovative technologies that reduce time and excavation, the main factors of inconvenience suffered by the Public and Local Authorities. Gaz de France Research and Development Division has developed in the "Travaux Rapides et Discrets” (TRD – Rapid and Unobtrusive Works) project, a complete set of tools to install gas mains and services over the ditch through small holes.

In France (GDF), normal square pits are used in addition to circular pits. France has focused

on developing equipment and tools that facilitate service pipe laying and tapping tee installation from above ground, and is now using many of these newly developed devices.

The tools are perfectly operational and improve operator and public safety. Moreover, except for the tool for installation of electrofusion tapping tees, they can be used for every kind of network (water, electricity, telecommunications).

Fig.6: Over the Ditch Tools Fig.5: Drilling Machine

The "TRD" has been very successful as it has been able to reduce the volume of excavation by 60%, the quantity of transported soil and the occupied surface. In the city of Flévy (East part of France) roadwork site, where 3 km of pipes with 50 connections (32 of them crossing the road) were laid, excavation volume was reduced by 93%. The very small holes are protected only by metal plates and the fences disappear. The quantity of materials on the roadwork site is divided by three. The environmental impact of the "TRD" on the public and local authorities is extremely favourable and very much in favour.

Traditional standard payment system to external sub-contractors was not adapted to the new

philosophy. Indeed, this system is based on excavation costs, so it is sub-contractors interest to perform excavations. Therefore, after a very detailed economical analysis, a specific "TRD" pay system was developed. The two last road work sites paid with this new pay system showed an additional cost of 7% and 1% compared with the classic techniques. GDF believes that the "TRD" should be less expensive than classic techniques when an important enough market and a real competition between the service sub-contractors and material manufacturers will develop.

5.1.1.3 Keyhole Technology in Japan

In Japan, keyholes with a diameter of 750 mm or more (which are perhaps too large to be called ‘keyholes’) are excavated. Because the workers can enter these pits, the pits can be used not only for service pipe construction, but also for a wide variety of other construction work. An ultra-compact mole can be put in the pit, and can be used for service pipe laying.

A compact compass type asphalt cutter, called the R-Cutter Machine (which can be used to cut varying diameters), is used to cut the road surface. During the road reinstatement stage, the asphalt waste is recycled on-site and used to reinstate the road.

F Fig 8: ‘R-Cutter Machine’ for Round Cutting

Fi

impactsbased o

ig 7: Keyhole Technology (Japan)

g 9: On-site Recycling Asphalt Fig 10: Special Cold Asphalt

The following Table compares the costs and presents differences in the environmental of the conventional construction method (excavation method) and new construction methods n the results of past work performed by Tokyo Gas.

Table 1: Economical and environmental aspect

Cost Quantity of residual soil produced by excavation

Quantity of waste asphalt produced

(1): Excavation method 100% 100% 100%

(2): No-Dig method

80% 55% 80%

(3):(2)+keyhole technology

50% 20% 10%

(4):(3)+ Recycling asphalt at the site 45% 20% 0%

Finally comparison of the feature of each country is summarized at the following table. Table 2. Keyhole Technologies in Various Countries

Canada､U.S France Japan

Pit Size ・Round Pit ・φ400～600mm

・Rectangle Pit ・Approximately 500mm×500mm

・Round Pit ・φ750～1000mm �A worker can enter the pit.

Pavement Cutting ・Rotary (Coring) Cutter • Normal linear cutter ・Compass type cutter

Excavation •Vacuum Excavator •Vacuum Excavator

・Small Power Shovel ・Manual labour � It is difficult to use the vacuum excavator because of the soil quality in Japan.

Pipe laying is done with a drilling machine.

• It is installed on the customer’s premises. • It is operated on the customer’s premises.

• It is installed in a rectangular pit. • It is operated directly above the pit.

• It is installed in a circular pit. • It is operated inside the pit.

Pipe Installation ・Over the Ditch Tools ・It is operated directly above the pit.

• Over the Ditch Tools• It is operated directly above the pit.

• Normal tools • It is operated in the pit.

Reinstatement • The paving core is reinserted. • Normal hot asphalt

• Special Cold Asphalt • On-site recycling asphalt

5.1.2 No-Dig Technology

Conventionally, main pipes have been laid by the No-Dig method using a horizontal directional drilling (HDD) machine that has been in use for a long time. But in recent years, many kinds of compact HDD machines have been developed for service pipe laying.

A number of specialized devices have been developed for use with the No-Dig method for service pipe and small main pipe laying, as described below.

5.1.2.2 Ultra Compact Mole (Tokyo Gas, Japan)

Tokyo Gas has introduced a super-compact boring machine that weighs only 20 kg. Because streets in Japan are narrow and almost all service pipes are shorter than 10 m, the machine’s specifications have been reduced (only linear execution, semi-automatic) to achieve its compact size.

It is put in a keyhole (diameter of 750 mm) described above, and a worker enters the pit to perform semi-automatic boring work.

(Applicable length: 10 m, applicable diameter: 75 A, power source: AC 100 V)

Fig 12: Ultra-Compact Mole Fig 11: Compact HDD Machine

5.1.2.3 Bamboo Shoot Mole (Kubota, Japan)

The Bamboo Shoot Mole has a jointed rod and so can be used to drill curves with a minimum radius of curvature of 2.5 m. A guide antenna put at the destination precisely guides the drill head to directly below the meter. This is an effective pipe laying system for special locations where there are level differences, such as under stairs.

(Applicable length: 15 m, applicable diameter: 75 A, power source: hydraulic)

Fig 13: Bamboo Shoot Mole

5.1.2.4 Pneumatic Steerable Mole Grundosteer (Tracto-Technik, Germany)

Grundosteer is a revolutionary drill that uses air percussion and the drilling direction can be corrected (in the past, only linear drilling). A beacon is mounted on its head so the head position can be detected, making this a simple drilling device similar to an HDD machine.(Applicable length: 60 m, applicable diameter: 50 A, power source: air compressor)

Fig.14: Grundosteer 6. INSTALLATION TECHNOLOGIES FOR CUSTOMER CONNECTIONS 6.1 Multi-utility

Multi-utility connections are used in Germany. The supply industry in Germany is undergoing a period of drastic change. The intense pressure of competition resulting from deregulation and privatisation is requiring supply utilities and system operators to optimise operating procedures in order to cut costs and raise customer loyalty. Multi-service domestic connections are an interesting option in this context: they permit customer- and cost-orientated solutions of the supply function, from the connecting point in the roadway or pavement area, via common conduit trenches, up to and including the transfer point within the customer's premises.

Country Comments

Germany Multi-utility devices for either electricity, water or gas are used.

Germany Multi-service domestic connections are used.

Fig.15 shows the multi-utility device. This device has four ports for connecting electricity, water and gas. 6.2 Materials and connection

Country Comments

Germany Multi-layer PE pipes are used instead of PEX.

Cross-linked polyethylene (PE-X) pipes are used instead of PE.

Japan Equal-branching methods in PE pipes which reduces the cost and the amount of the work to be done

Denmark PE coated Metal pipes are used.

UK PE100 and colourless PE pipe with a peelable yellow PVC coating are used.

USA Some companies are looking at Polyamide 11 because of its excellent resistance to temperature and the environment.

6.2.1 PE-X piping system

Polyethylene (PE) is the most commonly-used material for gas distribution pipes. For service lines, cross-linked polyethylene (PE-X) is increasingly being used instead of PE. With its high resistance to slow cracks, PE-X can be used without sand bedding. The characteristics of PE-X give additional value concerning safety and no-dig construction techniques.

There are two main methods of connecting PE-X pipes: electrofusion or connection with mechanical fittings. The first method was originally used for PE pipes, and has been used for PE-X pipes for gas and water distribution after extensive studies. The second method was originally used for connecting PE-X pipes for underfloor heating. Long-term positive experience in that field led to application to gas and water distribution systems.

Connecting PE-X pipes with mechanical fittings At present, there are at least two methods of connecting PE-X pipes, which are offered by

European fitting manufacturers and work in the same way in principle. Both systems are recognized by the DVGW(Germany).

Figure.16 shows an outline of the mechanical fitting. To mount the fitting, first the pipe is expanded and an additional PE-X ring is mounted. The expanded pipe is fitted onto the nipple of the fitting. Then the pipe and the ring will shrink onto the nipple, making a tight joint. The tool for mounting the fitting is shown in Figure.17

Fig 16: Outline of mechanical fitting Fig 17: The tool for mounting the

fitting

This method of making connections is much faster than welding, and there is almost no possibility of making mistakes provided the components are all right.

For connecting the pipe to a house entry, special fittings are available. For connecting the pipe to a tapping saddle made of steel, special saddles are available. For a service line out-bound from a steel pipe, no welding is necessary at all (Figure.18).

Fig.18: Connection of the service line to the main line and the house entry A mechanical joint cannot be used for connecting PE-X pipes with PE pipes or fittings. In this case electrofusion is used. If the distribution network consists mainly of PE, mechanical

joints can still be used to connect the service line with the house entry, but to connect the service line

with the main one, electrofusion must be used. The benefits of the mechanical joint can be used much better in a distribution system consisting at least partially of steel.

Fig.19: Equipment for customer connection (excluding pipe) 6.2.2 PE pipes equal-branching

When working with polyethylene pipes, each country uses one of the following two methods when running a new pipe branching off from a main pipeline with the same diameter.

The main pipeline is cut at the branching point, and EF tee is connected to the point which was cut to create a new branch.

When branching off a service line, when the flow is greater than a given limit, Method 1 is used, but if the flow is less than the limit, EF service tee and EF socket having a different diameter are used to create a branch with a larger diameter. (In order to allow for loss of pressure to the service line, the amount of flow of the main line is limited and a larger branch is used.). However, when cutting a live pipe, it is necessary to install a bypass line, to shut off the gas flow, or to take other measures, which increases the area to be excavated and the amount of work and time required. Enlarged-diameter branching also can only be used in certain situations, so several countries are using equal-diameter PE branching method which reduces the cost and the amount of the work to be done, and
eliminates restrictions on the situations where the method can be used.

Gas Main

Branching pipes Branching direction

gas main Tapping

PE fitting for equal-branching

Fig 20: Outline of equal-branching methods in PE pipes


Report of Study Group 5.2

“Evolution of Metering in a Competitive Market”

Rapport du groupe d’études

“Evolution du comptage dans un marché concurrentiel”

Coordinator / Vice-Coordinator Coordinateur /Vice-coordinateur

Eric Van Ingelghem / Peter Cistaro

Belgium/U.S.A.

Belgique/Etats-Unis d’Amérique

ABSTRACT

This report details the work undertaken by SG 5.2 of Working Committee 5 during the triennium 2000-2003.

The subject is the evolution of gas metering in a competitive market, with focus on three main topics:

Automated meter reading • • •

• • •

Added value services Energy conversion and metering.

Surveys are also conducted on this subject and the results are included in this report.

Additional information on this subject will be discussed during the technological forum.

RESUME

Ce rapport présente le travail réalisé par le Groupe d’Etudes SG 5.2 du Comité de travail 5 pendant le triennial 2000-2003.

Le sujet est l’évolution du comptage du gaz dans un marché compétitif, en mettant l’accent sur les 3 principaux aspects suivants :

lecture automatique des compteurs services à valeur ajoutée comptage et conversion de l’énergie

Les résultats d’études de veille conduites sur ce sujet sont inclus dans ce rapport. Des informations complémentaires seront apportées pendant le Forum Technologique.

TABLE OF CONTENTS

1. Foreword 2. Executive summary 3. Introduction

3.1 Study goals 3.2 Survey of SG 5.2. 3.3 Analysis

4. Actual situation of the metering process

4.1 General 4.2 Effects of liberalisation on meter reading costs 4.3 Meter reading frequencies

5. State of the art in AMR

5.1 General 5.2 Technologies available 5.3 Automated Meter Reading – Final remarks

6. Additional value-added services, using the gas meter

6.1 Objectives of the study 6.2 Key subjects for ‘increasing the value of gas metering services’ 6.3 Needs of the existing gas companies 6.4 Ownership of gas meter 6.5 Possibilities for ‘additional value-added services using gas meters’ 6.6 Added value services by gasmeters: the conclusion

7. Evolution in Energy Metering 7.1 General Principles 7.2 Volume measurement 7.3 Calorific value measurement 7.4 Energy determination methods and techniques 7.5 Gas companies practices 7.6 Future standard and recommendation 7.7 Technologies and equipment under development 7.8 Evolution in energy metering: conclusion

Appendix A - Volume measurement A.1 Volume measurement devices A.2 Measurement volume correction methods

Appendix B - Calorific value measurement B.1 Direct Measurement B.2 Inferential Measurement B.3 Correlation Techniques

Appendix C - Energy determination techniques and methods C.1 Energy determination techniques C.2 Energy determination methods Appendix D - Analysis of IGU WOC5 SG 5.2 Questionnaire: Volume to energy conversion

TABLE OF FIGURES

Figure 1: Illustration of a liberalisation process

Figure 2 : Dial-up by telephone line

Figure 3 : Radio Frequency Communication (I)

Figure 4 : Radio Frequency Communication (II)

Figure 5 : Meter Reading & Metering Service Business

Figure 6 : The different possibilities for implementation

Figure 7 : Additional services

Figure 8 : The different possibilities of practical realization

TABLE OF GRAPHICS

Graphic 1 : Cost of meter reading (I)

Graphic 2 : Cost of meter reading (II)

Graphic 3 : Different reading systems by the companies

Graphic 4 : Automatic meter reading in Industrial Market

Graphic 5A : Meter Reading Domestic customers

Graphic 5B : Meter Reading Commercial customers

Graphic 5C : Meter Reading Industrial customers

Graphic 6 Ownership of gasmeters worldwide

Graphic 7 : the number of customers for which AMR has been made available

Graphic 8 : Number of companies offering additional services via the gasmeter

TABLE OF TABLES

Table 1 : The number of companies that implemented AMR

Table 2 : Number of customers that are implemented AMR

Table 3 : Number of interfaces per company

Table 4 : Volume conversion application per type of customer

Table 5 : Volume conversion parameters

1. FOREWORD

The gas industry is currently undergoing dramatic changes in its business climate in different parts of the world, including market liberalization, industry deregulation, business globalization, etc. Under these circumstances, external pressures are mounting towards existing gas utilities for lowering gas distribution costs. For gas companies, it has now become a critical issue to realize optimization of investments while maintaining higher level of safety. With such awareness in the background, SG5.2 in WOC5 has conducted a study on metering systems and services in the competitive energy market under the theme ‘Evolution of Metering in a Competitive Market.

2. EXECUTIVE SUMMARY

This report covers three main topics: automated meter reading (AMR), additional value-added services using the gas meter and energy conversion.

Automated meter reading

AMR is seen as:

technologically available, • • of limited application at the present cost levels

The case for the investment and deployment of an AMR system purely for meter reading is not

proven, some utilities will go further and say that it is not financially justifiable. Competition has and will continue to drive down the cost of manual meter reading partly as a result of economies of scale and by the emergence of specialised meter reading agencies.

Our results show that meter costs are being driven down which could result in a lack of investment by meter manufacturers in the area of communications. This is likely to stall impact is on the development of metering technology.

Value-added services using the gas meter

Three possibilities of additional value-added services using gas meters are shown. Each of

these requires some means of electric supply and/or data communication.

The survey shows that neither the electric supply nor the communication function is used in connection to a gas meter in most of the countries.

Therefore, companies who want to offer value-added services using gas meters will have to invest heavily.

AMR systems are expected to reduce metering cost, but also these are known to induce high initial cost. These systems need some electric supply and some communication means as well.

By combining the strengths and weaknesses of AMR and value-added services, the conclusion has to be that both issues have to be examined together.

Volume to energy conversion It becomes crucial to be able to evaluate better the quantities of energy exchanged and the

variations in gas quality, with the view to having more accurate and more equitable billing: the variation over time in the CV at a point in the grid can be as high as a few percents.

In terms of energy conversion, the majority of gas companies make energy evaluations based on volume measurements and an average calorific value calculation. In order to evaluate the quantities of energy more accurately, to respond to customer demands and to anticipate the evolution

of regulatory environment concerning energy conversion, it is necessary to take into account the variation in gas quality when billing the product.

In order to reach this aim, current trends to improve energy calculation are as follows:

Reducing the energy calculation time period: the current trend with the gas companies is to reduce these periods, moving from monthly, even annual averages, to weekly, daily and even hourly averages, according to the consumption of the customers.

•

• • •

Increasing the frequency of gas. Increasing the number of measurement points. Improving instrument quality in terms of accuracy.

It is in the manufacturers' interest to improve the measurement equipment. They continue to

develop less costly devices (costs reduced by a factor of 4 in certain cases), with better performance (uncertainty less than 1% for energy and 0.5% for CV), that are quicker (response time less than a minute) and more compact (micro-chromatographs).

Furthermore, some manufacturers are developing integrated systems with volume

measurement, CV measurement, PTZ correction, energy calculation and data transmission.

Finally, no harmonised legislation exists currently at an international level concerning energy conversion. For this reason, both the OIML with theTc8/Sc7 "Gas metering" technical committee and the ISO with its TC193/SC2/WG4 Working Group are working respectively on projects for a recommendation and a standard specifically related to energy determination and energy metering systems. The OIML is preparing the text "Measuring systems for gaseous fuel" and the ISO is preparing the ISO15112 "Energy determination" standard.

Doubtless, the forthcoming recommendation as well as the ISO 15112 standard will be translated into national legislation that should facilitate contractual exchanges between the various actors.

Over the next five years, the deployment of energy metering by gas companies will be one of the major challenges for this industry.

3. INTRODUCTION 3.1 Study goals

The gas meter plays an important role regulating the supply to customer premises and as a basis on which both supply and transportation charges are calculated.

In many countries there are signs of increasing convergence between gas and electricity. This is raising the possibility of some form of combined metering, which could be linked to other services such as home security, carbon monoxide monitoring etc.

There have long been proposals for a significant development in the field of automatic meter reading. In many cases the costs have outweighed the benefits though there are some solutions which appear to be highly effective. What scope is there for introducing significant degrees of automatic meter reading? How could this assist the development of competition?

The development of open access regimes for gas transportation, coupled with gas on gas competition, has placed increasing focus on daily metering and data logging for entry to the system and for large loads. What is best practice in these areas and what new technologies could have an important influence?

In some countries, especially the UK, there has been a move towards unbundling the meter service and assets from the rest of the distribution activities and to establish metering as an entirely separate service. This service would be provided on a competitive basis to gas consumers. Is this a

realistic option for the industry going forward and what implications would this have on the technical and commercial issues referred to above?

Today metering has tended to concentrate on volumetric measurement. In some countries, measurement of energy has not been pursued due to the high cost. It would now appear that there is potential for low cost energy metering. What would the implications be of a large scale switch to energy metering in distribution?

3.2 Survey of SG 5.2

First step was to issue a questionnaire all WOC 5 members in order to obtain information on the existing metering process in different countries. It was quickly made clear that due to the abovementioned situation, changes in the metering-billing chain were imminent and various initiatives, plans and evolutions could be detected and explained. This study focuses on a certain number of subjects of which it became clear that a majority of WOC 5 members was undoubtfully interested.

Following companies sent a useful answer:

Europe: BG Centrica (U.K.), Czech Republic, Electrabel (Belgium), Gas Natural (Spain), Gaz de France (F), HNG (Denmark), Italgas (I), Mazovian Gas Works (Poland), Naftogas (Ukraine), Naturgas Midt Nord (Denmark), Novi Sad Gas (Yugoslavia), Nutsbedrijven Eindhoven (Netherlands), EDON (Netherlands), Polish Oil and Gas (Poland), Sydgas (Sweden), Transco (UK), Bord Gais (Ireland), 10 Gas companies in Switzerland, DVGW (Germany), Naturgas Fyn (Denmark)

•

•

•

•

• • • •

Africa: Sonelgaz (Algeria)

Asia: Gas Malaysia, Sabu Gas (Japan), Toho Gas (Japan), Tokyo Gas (Japan), Osaka Gas (Japan), Korea Gas

America: Atlanta Gas Light (USA), Consolidated Edison (USA), Enbridge Consumers (Canada), Gas Natural BAN (Argentina), Keyspan Energy (USA), Manitoba (Canada), Metrogas (Argentina), Montana Dakota (USA), Northern Indiana (USA), PSE&G New Jersey (USA), Sask Energy (Canada)

All major gas countries in America, Asia and Europe have sent back the questionnaire. In total

it covered the situation of about 110 million natural gas customers, which is almost half of the total number of gas customers in the world.

Therefore the overall respons to the questionnaire was believed to be satisfactory and allowed to proceed the work in an objective and fruitful way.

3.3 Analysis

The information gathered from the survey was extremely abundant. Therefore, it was decided

to limit the analysis to some major topics, in accordance with the priorities set forward in 1.1:

The actual situation of the metering process and the short term evolution State of the art of automated meter reading Value-added services using the gas meter Evolution in energy metering

4. ACTUAL SITUATION OF THE METERING PROCESS 4.1 General

Liberalisation of the Worlds Gas/Energy markets is having a profound effect on how organisations are structured. Companies are being forced to look closely at there businesses with a view to making choice’s regarding the type of business they might wish to have in the future.

Figure 1: Illustration of a liberalisation process shows an example of the degree of separation required by the Regulator and the markets, at an organisational level to facilitate a move from regulated to a deregulated market.

Pre 1990 Post 1998

Electricity Gas Water Electricity Gas Water

Production / GenCO Oilfield

Producers

7+ Generators

Oilfield

Producers

Production / Generation

Generation

Water

Service

Companies Grid

Grid Company

Transco

Transmission Transmission

Regional Electricity Companies

GasCo Gas

C

Water Service Companies

Regional ElectricityCompanies

Distribution

Distribution

Public

Electricity

Suppliers

60+ Shipper / Suppliers Water

Service Companies

Supply Supply

However, this separation goes deeper into incumbent market participants in areas such as service provision. Our focus will concentrate on the services of Metering and the effects that the liberalising process will have on costs and the development and application of technology.

In a liberalised market, meter reading has an added significance, as it is associated to supplier switching.

The model that is emerging in the provision of metering services is one of unbundled offerings, thus separated from the energy transportation charges. (In fact, only in 11% of the cases, meter reading is already a separate business). Therefore the first prerequisite has clearly identified services and establishes costs for the discrete operations.

Following the initial competition enforcement by the Regulators, the process of competition in

services will develop naturally as organisations decide on their future business shape. For example natural economy of scale would be obtained by the use of one organisation to read both gas and electricity meters, and to continue that approach into Billing together with Meter Operator Services, separated into Meter Asset Provision and Meter Asset Maintenance.

Our analysis of the data obtained from our questionnaire highlights the different stages that respondents are at in this unbundling/competitive process.

4.2 Effects of liberalisation on meter reading costs

The range of meter reading costs in non-liberalised markets is very wide: from 0.38 to 30 US$ per year per customer. This can be attributed to several causes:

not all the respondents have included the same cost items in the final cost •

• • •

personnel costs may be quite different from one country to another local conditions the frequency of meter reading

The average cost is 9 US$ per year per customer (Graph. 1), but in most of the cases (54%)

the cost is not higher than 5 US$ per year per customer.

Graphic 1 : Cost of meter reading (I)

Cost of meter reading (I)

0

5

10

15

20

25

30

35

Not Lib Part Lib Fully Lib

Level of market liberalisation

US$

/yea

r per

cus

tom

er

Maximum value Minimum value Average

That cost range is narrower in fully liberalised markets: from 2 to 9 US$ per year per

customer, probably because of a better knowledge or allocation of the costs. It is interesting to notice that the average (different companies in different countries) meter reading costs become reduced to a value of 6 US$ per year per customer. This cost reduction is more evident if the number of readings per year is taken into account. The average cost per reading drops from 4.31 US$ in non-liberalised markets to 1.30 US$ in fully liberalised markets (Graph. 2).

Graphic 2 : Cost of meter reading (II)

Cost of meter reading (II)

0

5

10

15

20

25

30

Not Lib Part Lib Fully LibLevel of market liberalisation

US$

/read

ing

Maximum value Minimum value Average

The meter reading methods used are shown in Graph 3. In general the method most

frequently used is the reading by “own personnel only”. “Third party only” accounts for half the number of cases of “own personnel only”. However, in fully liberalised markets, the usage of “third party only” equals that of “own personnel only”, probably due to the need of cost reduction.

Graphic 3 : Different reading systems by the companies

Use of the different reading systems by the companies

0 5 10 15 20

Own personnel only

Own personnel + customer

Third party only

Own personnel + Third party

OP +TP + CU

Customer only

Third party + customer

Mostly Third Party

Num ber of responses

Not liberalised Partially liberalised Fully liberalised

There are not examples of “customer only” meter readings in fully liberalised markets,

probably because in these conditions it is more difficult to make adjustments or corrections in case of an unacceptable reading.

The meter reading methods may have an influence into the costs reported by the respondents: the reading by the Company’s own personnel may difficult a correct identification of all the costs. The reading by third party companies may facilitate that, but it may introduce disruptions (excessive costs) if there is no competition in the meter reading market. Anyway, the liberalisation process may force the meter reading to be considered as a business unit even if it is performed by the company’s own personnel.

The possible relationship between the meter reading costs and the size of the company has been investigated as well, but without any clear result.

4.3 Meter reading frequencies

The lowest frequency occurs in the domestic market, where the most used reading frequency is one time per year. For commercial customers, the most used reading frequency is twelve times per year. For industrial customers the reading frequencies may reach values of 365 x 24 times per year (every hour).

Although even in the industrial market the reading frequency of 12 times per year is the most frequently used, the frequencies over 12 readings per year increase from the not liberalised markets (6%) to the partially (11%) or fully liberalised markets (around 30%). In fully liberalised markets, meter reading frequencies of 365 times/yr or higher appear in around 30 % of the responses.

From the results above it becomes clear that the meter reading frequency increases in proportion to the quantities of energy to be measured and trends to be higher in countries where the liberalisation process is very advanced or already completed.

5. STATE OF THE ART IN AMR 5.1 General

Automated-meter reading (AMR) is not only an electronic replacement for reading by personnel but also a key strategic and tactical technology in the deregulating gas industry. Gas companies can get detailed information about customer’s gas usage that can help them meet customer satisfaction and develop additional value-added services from powerful communication systems between gas companies and customers used on the operation of AMR. Therefore, gas companies can extend their business field by use of AMR systems in the liberalised and deregulated environment.

A communication system must be flexible and dynamic and affects many operational aspects of a Utility. For this reason it has to be approached in an appropriate way in order to ensure that all possibilities for increasing both revenue and efficiency are maximised. The benefits in creating a well-planned and integrated communication system include the following:

Efficiency

Cost and time reduction in the read-to-bill process, both in regular scheduled meter reading operations as well as unscheduled or special readings.

•

• • • • • • •

Easier attainment of initial and final meter readings for opening and closing accounts. Improved data allowing efficiencies in load and demand control Possibility to provide consumption information to customers Reduction of bill adjustments. Possibility of more frequent meter readings with little additional cost. Availability of data to improve gas purchasing and distribution system planning. Improved control providing increased accuracy in the running of traditional functions.

Financial

Improvement in cash flow. •

•

•

•

Profitability

Optimisation of performance ratio’s - price/costs

Improved morale in workforce

Using modern, efficient, easy to use systems with enhanced features reduces the time taken on mundane tasks. Employees can devote time to extending and improving the services offered to the utility and its customers.

5.2 Technologies available

AMR systems are categorised according to the communication technology used between meters and the next points of communication. Several systems are used in commercial applications. The most common are dial-up and wireless (RF).

5.2.1 Dial-up by telephone line

Figure 2 : Dial-up by telephone line

Telephone Line

Safety Unit Meter Module

Line

Telephone Gas Meter

The meter module is plugged into a phone line in the customer premises. The utility interrogates the meter module by accessing the phone line through equipment located in the Telephone Company without ringing the phones on that line.

5.2.2 RF: Radio Frequency Communication

Gas Meter

Radio Terminal

Cell Master

To Center System

Figure 3 : Radio Frequency Communication (I)

A radio receiver located on a cell master near the meter receives transmissions from the radio terminal and re-transmits them either by radio or telephone line to the utility office. The transmission range between a radio terminal and a cell master could be from 100 m to 3,000 m. Environmental factors could affect radio propagation.

In the other solution, a meter reader with a master terminal radio walks or drives around a neighbourhood of the radio terminal placed at the meter. The radio terminal sends a signal to the mobile transceiver by using public frequency bands or licensed bands. Spread-spectrum technologies permit each meter to be read separately, keeping individual account information.

Gas Meter

Radio Terminal

Master Radio Terminal

Worker

Figure 4 : Radio Frequency Communication (II) 5.2.3 Other types 5.2.3.1 Broadband cables

Broadband technology uses fibre optic or coaxial cable to carry signals. Broadband systems can deliver several applications that make effective use of the bandwidth although difficult to justify for meter reading alone. 5.2.3.2 PLC: Power Line Carrier

With an installed base of more than 100,000 Meter Interface Units with full 2-way communication in high frequency PLC.

The PLC technology, developed and refined in co-operation with a number of major utilities, exceeds the requirements of the CENELEC standard in every respect. The system is robust, reliable and delivers consistent performance in the most demanding environments and for the most demanding customers.

5.2.3.3 Internet

The meter module has an Internet address and uses Internet Protocol to transmit the data to the utility computer.

5.2.4 Evolution of AMR in a liberalised market

In a market open to the competition, the first consequence is the freedom for the gas user to choose the supplier. In general this means the possibility to switch from one supplier to another as many times as necessary and at any time. But every time a customer changes from a supplier to another it is necessary to know the gas meter reading to duly assign the gas consumption to the right supplier. We will analyse the current situation by market, (During the survey, the terms “domestic”, “commercial” and “industrial” were not defined. Therefore they can cover different types of customers in different countries, which could explain discrepancies in the answers we have got) and by geographical area.

5.2.4.1 By market

In the industrial market, where the gas consumption per customer is very high, it pays the cost of installing automatic meter reading. This can be seen in Graph. 4 : In 66% of the cases, RMR/AMR is implemented at levels above 5% of the market and in 29% the levels are between 95 and 100%.

Graphic 4 : Automatic meter reading in Industrial Market

% o

f res

pons

es

Domestic Commercial IndustrialLevel of implementation

05

101520253035404550

95 to 100 60 40 to 50 20 to 30 5 to 10 < 5 Other

In the domestic market, however, the situation is just the opposite: 60% of respondents have less than 5% of the domestic market read by means of RMR/AMR, and 20% have higher levels (from 5% to 60%). See also Graph. 4.

The degree of AMR implementation is also related to the meter reading frequency.

The relations between AMR-implementation rate and the meter-reading frequency are shown in Graph. 5A, B and C. For any customers, there is a remarkable tendency that AMR-implementation rate increases with increasing meter-reading frequency. At the frequency of twelve times and over a year, the rates for domestic customers are 67%, 31% for commercial customers, and 56% for industrial customers, respectively. At the frequency of once or less a year, no company implements AMR. The tendency would be caused by the cost-efficiency in meter reading by use of AMR

(A) Meter Reading Domestic Customers

0% 20% 40% 60% 80% 100%

1 or less

2

3 or 4

6

12 and overFr

eque

ncy

[tim

e/ye

ar]

Rate

YesNo

(B) Meter Reading Commercial Customers

0% 20% 40% 60% 80% 100%

1 or less

2

3 or 4

6

12 and over

Freq

uenc

y [ti

me/

year

]

Rate

YesNo

(C)Meter Reading Industrial Customers

0% 20% 40% 60% 80% 100%

1 or less

2

3 or 4

6

12 and overFr

eque

ncy

[tim

e/ye

ar]

Rate

YesNo

Table 1 The number of companies that have implemented AMR.customer Area

type Europe and NorthAfrica

Asia North and SouthAmerica

Total

Number Rate Number Rate Number Rate Number RateYes 25 66% 4 57% 9 82% 38 68%

Domestic 2 5% 4 57% 5 45% 11 20%Commercial 4 11% 2 29% 4 36% 10 18%

Graphic 5A : Meter Reading Domestic customers Graphic 5B : Meter Reading Commercial customers Graphic 5C : Meter Reading Industrial customers

5.2.4.2 By geographical areas

It is interesting to examine de status of AMR implementation by geographical areas. The number of companies that have implemented AMR by areas and customer types such as domestic, commercial and industrial is summarised in Table 1. Thirty-eight of fifty-six companies (68%) have implemented AMR. Overall the rate of 58% for industrial customers is highest though there are some differences in customer types by areas.

Table 1 : The number of companies that implemented AMR

Industrial 24 63% 1 14% 8 73% 33 59%No 13 34% 3 43% 2 18% 18 32%Total 38 100% 7 100% 11 100% 56 100%

In Europe and North Africa, the rate of 63% for industrial customers is highest. In Asia, on the other hand, the rate of 14% for industrial customers is lowest but the rate of 57% for domestic customers is highest. In North and South America, every one of the rates is higher than the total average.

The number of customer and the rate of AMR implementation by customer types and by areas are summarised in Table 2. The rate is also widely different in customer types and areas.

Table 2 : Number of customers that are implemented AMR

Table 2 Number of customers that are implemented AMR.Customer Area

type Europe andNorth Africa

Asia North andSouth

America

Total

Number of Domestic 74,611,000 23,077,000 10,915,000 108,603,000customers Commercial 1,782,000 1,157,000 797,000 3,736,000

Industrial 260,000 56,000 35,000 351,000Total 76,653,000 24,290,000 11,747,000 112,690,000

Number of AMR Domestic 125,000 830,000 1,557,000 2,393,000implementation Commercial 5,000 5,000 62,000 72,000

Industrial 30,000 30 4,000 35,000Total 160,000 835,030 1,623,000 2,500,000

AMR- Domestic 0.2% 3.6% 14% 2.2%implementation Commercial 0.3% 0.4% 8% 1.9%rate Industrial 12% 0.05% 11% 10.0%

Total 0.2% 3.4% 14% 2.2%

Overall, the rate of implementation of AMR is 2.2 %. However, that for industrial customers is

as much as 10%.

In Europe and North Africa, the rate is as small as 0.2% because the implementation for domestic and commercial customers that account the majority of customers is low. However, the rate for industrial customers is highest, which is characterised the current state of AMR implementation in the area.

In Asia, to the contrary in Europe and North Africa, the rate for domestic customers is

extremely high compared with that for commercial and industrial customers. The reason is that some major companies in Japan are promoting charged additional value-added services besides AMR by using a two-way communication between an intelligent gas meter and a customer, see chapter

According to the received responses, about one third of the cases of AMR implementation are located in areas where the market is not liberalised.

About 24% of the respondents use telephone lines only, with the dial-up calling system, but the majority use several communications technologies, like mobile/cell phone or RF. 5.3 Automated Meter Reading – Final remarks

Meter reading is seen as an activity: that may become separated of the distribution activity, •

• • • •

subject to strong pressure to reduce costs, to be progressively outsourced, not to be left on the hands of the customer only to be considered a separate business unit

AMR is seen as:

technologically available, • •

• •

•

•

of limited application at the present cost levels

The case for the investment and deployment of an AMR system purely for meter reading is not proven, some utilities will go further and say that it is not financially justifiable. Competition has and will continue to drive down the cost of manual meter reading partly as a result of economies of scale as previously mentioned and by the emergence of specialised meter reading agencies. Clearly this has a negative impact on the case for AMR; a further aspect to be considered is the meter itself. Our results show that meter costs are being driven down which could result in a lack of investment by meter manufacturers in the area of communications. This is likely to stall impact is on the development of metering technology. 6. ADDITIONAL VALUE-ADDED SERVICES, USING THE GAS METER 6.1 Objectives of the study

Under the continuing trend of deregulation towards full liberalization of the gas markets, the study has been intended to examine the status of metering services and to present proposals for their future development on ‘additional value-added services using gas meters’.

These services are considered being means of improving the competitiveness of existing gas companies in the liberalized gas markets. This can be achieved through R&D and quality improvement of the metering services

6.2 Key subjects for ‘increasing the value of gas metering services’

The following items have been listed as key areas for examination in this study:

Improving the quality of the metering service Diversification of a tariff menu:

Peak/off-peak tariffs with time and calendar functions: hourly, daily, monthly,

seasonal Remote controlling of tariffs Surveying the consumption profile for each customer for to allow gas

company’s to propose an appropriate tariff Future possibilities of an interactive communication system:

Remote controlling Safety surveying and warning, shut-off service Automatic meter reading (AMR) service Gas consumption profile service for customers Information service for customer: energy balance analysis, optimum tariff

information, etc.

Safety functions:

Misuse of appliances by customer Accident prevention External interlocking with security system

In the following chapters, these items will be analysed using the data obtained by the

international survey conducted by SG 5.2.

6.3 Needs of the existing gas companies

Although the needs are different, many companies desire (according to our survey) additional functions on the gas meter in the future.

The reason for that is that gas companies believe that these additional functions could

strengthen their marketing abilities, for two main reasons:

By realizing greater competitiveness of gas through an increase of the value of gas supply

•

•

• • • •

By improving the competitiveness of gas companies by reducing the costs associated with meter reading services

To illustrate how this can be achieved in a liberalized society, with distinct functions of the

local distribution company, the marketer and eventually the meter reading company, the scheme hereafter has been drawn. This scheme takes into account several of the key issues under discussion in all the countries where liberalization has been realised or is on its way:

Unbundling of the gas business Market entry by new marketers and suppliers, pipeline access by new players Switching of suppliers Possible splitting of metering services

Not shown in this scheme, but certainly a point of discussion all over the world is the

ownership of the gasmeter. This will be treated in the next chapter.

Figure 5 : Meter Reading & Metering Service Business

Metering Services

Compet

Compet

Compet

Offer of Different on Services

Reduction of Gas Price

Meter ReadingCompany

Additional Service

Meter Reading

Marketer(New Entry)

LDC(Gas Company)

Meter Reading & Metering Service Business

6.4 Ownership of gas meter

The ownership of the gas meter, as well as the processing of the information provided by the gasmeter, up to the invoicing of transport, distribution, metering, billing services and the “commodity” (gas) is under discussion in many countries.

What is the current situation in the world regarding the ownership of gasmeters ? The results are shown in the next graph.

50

50

44

0

2

4

5

3

7

1

1

1

0 10 20 30 40 50 6

domestic

commercial

industrial

Cus

tom

er ty

pe

Number of company

Gas company Gas companyor Customer

Customer Other

0

* 56 companies’ replies

Graphic 6 Ownership of gasmeters worldwide

It seems that most of the gasmeters are actually owned by the gas company, but what are the options for the future? Many parameters will have to be checked: accuracy of the meter, lifetime, ownership of the information, confidentiality of the information etc. The following points will be under consideration:

Accuracy: certainly, in most countries accuracy has been regulated by legal metrology. However, the interest in accuracy is different, depending on the party involved. Customers will certainly continue to be interested in accuracy: it will influence the invoice directly. So will be the transportation network and distribution network operators: they will have to bare cost related to the differences between incoming and outgoing flows of gas in the network. Knowing that the cost of transport and distribution is only a fraction of the commodity cost, inaccuracy of meters can have substantial influence on the net margin. Producers will of course be interested in accuracy, but only on the delivery side of the transport network. Strangely enough, marketers, shippers etc. are far less interested in

•

accuracy: they will be paid a gross margin on the delivered quantities to their customers, so small inaccuracies will only have small effects on their income. Therefore, it seems not wise to allow shippers to become owners of the meters of their customers.

•

•

• • • • • • • • • •

There is a tendency with some regulators to try to separate the meter business from the other activities in the gas chain. It is even possible to separate the physical ownership of the meters from the treatment of the data contained in the meter. However, both activities will normally be regulated. This implies that the meter companies will have carry out their business under regulated tariffs and of course the regulator will make sure that these tariffs will tend to go downward every year thanks to a “better performance” of the operator. It is even possible that several meter companies could work on the same network. Competition should then lead to the same downward trend in cost. However, one could have doubts about the relation between lifetime accuracy of the meter (especially for domestic customers) under continuous pressure of the market.

By all means, the total cost of the meter and metering service is only a small fraction of the overall gas invoice for each customer. Therefore, it should be carefully examined if a marginal decrease in the meter cost by putting pressure on the meter operator is really worth the effort, compared to the value of the gas flow measured by each meter.

When studying the possibilities for “Additional service on the gas meter”, the ownership of gas

meter is of course important. Issues related to ownership need to be studied carefully, particularly when meters could be seen as an instrument for LDC’s (= local distribution companies, thus mainly the existing gas companies) to diversify into high value-added services. According to the different modes of ownership, partnerships have to be different.

6.5 Possibilities for ‘additional value-added services using gas meters’

There are several additional functions possible on gas meter. In this report, 3 additional value-

added services using gas meters will be explained, because they are believed to be effective to strengthen the marketing abilities for LDC’s.

6.5.1 Diversified tariff menu

In order to make it possible to use the gasmeter for offering a diversified tariff, the following functions are possible, interesting or necessary to add (depending on the tariff menu to be made available):

Data transmission on gas consumption (pulse signal) A setup of a pulse rate (Pulse rate and e.g.10 l/1P or 1m3/1P) Interface (customer data retrieval by PC) Selection of a pulse interval (data reading interval) (Hz) Clock, calendar function Peak/off-peak tariffs with time and calendar functions: hourly, daily, monthly, seasonal Built-in or separate installation Various calculation functions The charge calculation function according to the tariff menu Billing centre

The following figure shows the different possibilities for implementation.

Figure 6 : The different possibilities for implementation

Customer

Pulse

TransferUnit

Meter Calculator Pulse

Transfer Unit Meter

Charge Customer

Dial-up

Wireless

Dial-up

Wireless

Billing Center

Calculation

Billing Center Charge

Customer Charge

Meter

TransferUnit

Calculator

G

Meter

Pulse Generator Transfer

Unit

Dial-up

Wireless

Calculation

Billing Center

Charge

Customer

Wireless Billing

•

6.5.2 Interactive communication

This includes following additional service • •

Interactive Communication of meter Availability of metering service informfor each customer)

Meter state (safety) information for s

The following figure shows how this can b Figure 7 : Additional services

Interactive Communication

Meter Transfer Unit

Telephone Wireless

Customer PC

Dial-up
Pulse enerator
s:

information (consumption, meter status, etc) ation (energy balance, optimum tariff menu, etc.

ecurity services

e realized.

LDC(or Marketer) Customer Service Center

Security Service Company/ Department

6.5.3 Use of the gasmeter for enhancing customer safety It is possible to use the gasmeter and its external connection to enhance safety. Three

possibilities have been studied: • Misuse of appliances by customer. The unsafe situation can be eliminated by means of an

automatic shut-off on excessive gas flow or on continuous abnormal gas flow • Accident prevention. The gasmeter can be used to shut-off on excessive gas flow such as

house pipe breakage, etc., as well as in case of earthquake detection or leak detection (shut-off or alarm)

• External sensor linkage. The gas meter shut-off valve can be interlocked with a CO sensor, fire alarm with gas leak alarm.

The following figure shows the different possibilities of practical realization.

Figure 8 : The different possibilities of practical realization

LDC (or Marketer)Customer Service Center

Meter Safety

Function Transfer Unit

Safety Service CompanySecurity Service

Meter Safety

Function

Customer PC

Alarm display

Customer’s Telephone Call to SS Company

Dual CommunicationDial-UP/Wireless

Information

Customer

Customer

Safety Service CompanySecurity Service Company

Safety Service CompanySecurity Service Company

Safety Service

Meter Safety

Function

Customer Customer’s Telephone

Call to SS Company

6.6 Added value services by gasmeters: the conclusion

Three possibilities of additional value-added services using gas meters are shown above.

Each of these requires some means of electric supply and/or data communication. On the other hand, the survey shows that neither the electric supply nor the communication

function is used in connection to a gas meter in most of the countries.

Therefore, companies who want to offer value-added services using gas meters will have to invest heavily.

AMR systems are expected to reduce metering cost, but also these are known to induce high

initial cost. These systems need some electric supply and some communication means as well.

By combining the strengths and weaknesses of AMR and value-added services, the conclusion has to be that both issues have to been examined together. Indeed, by focussing on only one of both, the investment seems to be too high in order to be able to generate enough profit, at least for domestic customers. This is also illustrated by the following graph, showing the ratio of application of AMR. As can be seen, almost 80 % of the companies in the survey do not apply AMR for domestic customers at all, 95 % uses AMR for less than 5 % of their customers.

*The number of effective replies: 52 companies

The following graph shows the number of customers for which AMR has been made available

Graphic 7 : the number of customers for which AMR has been made available

Ratio of application of AMR (number of customer)

0,0%2,0%4,0%6,0%8,0%10,0%12,0%

domestic commercial industrial

customer(thousand)

ratio(%)

domestic 108,603 2.2%

commercial 3,736 1.9%

industrial 351 10.0%

*total of 52companies' customers

Although there are 7 companies applying some form of additional services via the gasmeter, it has to be clear that by number of customers these services are almost not offered outside of Japan.

Graphic 8 : Number of companies offering additional services via the gasmeter

Yes13%

No87% company ratio

Yes 7 13%No 49 87%

Japan: 4 comp. Korea: 1 comp. Poland: 1 comp. Switzerland: 1comp.

7. EVOLUTION IN ENERGY METERING General Principles

The quantity of energy contained in a given quantity of gas is given by the general equation:

E = CV x Vcorrected

where : E is the quantity of energy, CV is the calorific value of the gas (to be defined: upper or lower

calorific value), Vcorrected is the corrected volume of the gas.

Vcorrected

BILLING

Gas flow

E : ENERGY

Other properties (p,T,Z)

Vmeasured

CV

The energy conversion (or volume conversion) is the calculation of energy based on the CV of the gas, the volume and other physical properties.

In the majority of cases, the quantity of gas is expressed in m3(n), the calorific value in

MJ/m3(n) (respectively in kWh/m3(n)), the energy being the product of the volume and the CV in MJ (respectively in kWh).

For calculating the energy, both the volume and the CV need to be expressed under the same

conditions, known as reference conditions. These conditions are defined by the ISO 13443 standard : 288.15 K for temperature and 101.325 Pa for pressure. However, they vary from one country to another, depending on local legislation.

7.2 Volume measurement

The volume is measured under operating conditions, then corrected into reference conditions by using an appropriate correction method.

Four types of correction are following:

correction as a function of temperature only (called T correction), • •

•

•

• • •

• •

correction as a function of the pressure and of the temperature with constant compressibility factor (called PT correction),

correction as a function of the pressure, the temperature and taking into account the compressibility factor (called PTZ correction),

correction as a function of the density (density correction)

For details, see appendix A.

7.3 Calorific value measurement

The calorific value of gas can be measured by several methods. The methods can be grouped into three families:

Direct measurement. Inferential measurement. Correlation techniques.

For each one of these methods, determining the calorific value always includes an analysis of

a sample of the gas to be measured. For details, see appendix B.

7.4 Energy determination methods and techniques

To our knowledge, no technique exists providing direct energy measurement without going through the stages of volume (or mass) and CV measurement.

The indirect energy determination technique consists of obtaining the energy value from

previously quoted parameters such as the gas volume and its calorific value, as well as other factors such as pressure and temperature.

However, it is necessary to differentiate between two separate circumstances (cf. ISO/CD 15112):

Local calorific value measurement. Remote calorific value measurement.

For details, see appendix C.

7.5 Gas companies practices

The analysis of the gas companies' practices is based on the results of two questionnaires: one is a general questionnaire conducted in 2001 by the Working Committee WOC5, SG 5.2, as mentioned before, and the other is a more specific questionnaire on energy conversion, drawn up by Gaz de France in 1999 and sent to six European and four US major gas companies.

7.5.1 Operated networks

The companies questioned are Transmission Companies and are the interface with various actors: production companies, other transmission companies, local distribution companies and end customers.

Each interface gives rise to transactional metering. The diagram below illustrates the four mean possible interfaces with the said transmission

companies.

4 3 2

1

End Customer

Local Distribution Company

Transmission Company

Transmission CompanyProduction / Storage / Transmission Company

Key:

Interface 1: interface between a production, storage or transmission company and the

transmission company, Interface 2: interface between another transmission company and the transmission

company, Interface 3: interface between a local distribution company and the transmission company, Interface 4: interface between an end customer and the transmission company.

Interface 1:

The number of supply points is between 6 and 50 for the 6 European companies questioned

and between 300 and 7,000 for the three American companies questioned. Interface 2:

The number of delivery points is up to 750. Interface 3:

The number of delivery points is between 140 and over 9,000. Interface 4:

The number of delivery points is up to 12,000.

The table below gives the detail of the number of supply points and delivery points for each company.

CO

MPA

NIE

S

EU 1

EU 2

EU 3

US

1

EU 4

EU 5

US

2

US

3

US

4

Interface 1 18 22 6 6 700 25 50 375 750 687

Interface 2 0 1 20 0 750 0 57 20 78

Interface 3 138 700 3 000 ? 100 3 400 261 200 9 000

Interface 4 0 400 950 12 000 250 3 400 51 100 207

Table 3 : Number of interfaces per company

7.5.2 Data from IGU questionnaire on application of volume conversion

The tables below gather the information obtained through the IGU questionnaire. Table 4 : Volume conversion application per type of customer

Typical meter size Customer

type Min Max

T conversion(mechanic)

T conversion(electronic)

PT conversion(mechanic)

PT conversion (electronic)

PTZ conversion (mechanical)

PTZ conversion(electronic)

Domestic G4 G10 19% 0% 2% 0% 0% 0%

Commercial G6 G100 15% 17% 6% 40% 0% 40%

Industrial G10 G1000 11% 13% 6% 60% 0% 70%

Figures are related to the number of answers to the questionnaire and not to the number of

customers. Moreover, a company can do different corrections: PT and PTZ, or T and PT… Percentages indicate the number of companies applying the indicated type of conversion for each type of customer. Since a company can apply several different types of conversion for the same type of customer (e.g. for historical or cost reasons), the total number can exceed 100 %.

Table 5 : Volume conversion parameters

PT PTZ PT PTZ Volume conversion

Lowest minimum Highest minimum

Capacity > 40 m3/h > 40 m3/h > 16.000 m3/h > 16.000 m3/h

Yearly sales > 170.000 m3/year

> 170.000 m3/year

> 100.000.000 m3/h

> 100.000.000 m3/h

Pressure > 0,1 bar > 0,1 bar > 2,5 bar > 68,9 bar

Other factors Pressure fluctuations

Calculation method for the compressibility factor AGA 45% ; GERG 19%

Most commonly, for each area of the network, a gas composition is defined to be

representative of the type of gas of said area. It is then programmed in the correction device for the compression factor determination.

Additional corrections may be made afterwards based on averaged composition measured by

chromatography.

7.5.2.1 Calorific value measurement

The majority of the gas companies perform CV measurements on their grid in order to calculate the energy exchanged with the various actors in the gas chain.

It should be noted that some gas companies do not perform CV measurements (in Japan,

Malaysia, Poland, Iran, Yugoslavia, Argentina, the Netherlands, United States or Canada). In some cases, the companies billing is based on volume information and not on energy

information. Several reasons can explain this. First, it can be for economical reasons. A complete CV measurement station consists in a measurement device, often a chromatograph currently costing 30.000 €, and also a shelter (against sun and rain), a supply of gas bottles (calibration gas and vector gas) and periodically calibrating the measurement device, representing a global cost of around 60.000 € per station. Therefore, some companies prefer to bill by volume, their choice being even more justified by the exchanged gas quality remaining constant and known and legislation does not force fiscal energy metering.

Some companies do not need to measure the CV on their grid. For example, this is the case

in Asia and South America where the quality of gas is constant: so it is considered that a volume charge is almost equivalent to the energy charge.

CV measurement is commonly performed in accordance with two techniques : direct

measurement by calorimeters (the amount of energy released by the combustion of a gas sample is measured), but this technique is used less and less in favour of indirect CV determination from the gas composition analysed by chromatography in its gaseous phase. The chromatographs can be used on process, i.e. CV measurement is performed on-line, or in a laboratory, i.e. a gas sample is taken and then analysed off-line by a laboratory.

The chromatographs in current use provide CV information every 20 minutes, and with the most recent equipment, every 3 minutes. The greater the frequency of measurements is, the better variations in gas quality will be taken into account and thus billing will be more accurate. For this reason, manufacturers are offering, increasingly, chromatographs known as "rapid gas chromatographs" providing significant reductions in gas analysis time.

Some statistics from the questionnaire related to the energy determination can be quoted:

Number of chromatographs: between 37 and 2000 chromatographs per company. • • •

•

•

•

Number of chromatographs / number of supply and delivery points : between 2.5% and 30%.

Most of time, the chromatographs are installed at strategic points where the gas flow rate is

considerable. For example, the companies install chromatographs at the nodes of the network, on borders, storage and also in some industrial customers, which gas consumption is considerable. In this way, the number of chromatographs is optimised and the costs are reduced.

The table in Appendix D lists a certain number of gas companies and their practices in terms of CV measurement and/or calculation.

First, it can be noted that 35 % of the companies questioned by means of the two IGU questionnaires do not practice energy conversion.

Around 70 % of the companies practice energy conversion, of which:

- 69 % calculate a reference CV value per month. - 28 % per day, only for industrial customers, - 6 % per hour, only for industrial customers, - 22 % use a network simulation to determine the CV.

Comment:

Some companies calculate both monthly reference CV value and daily reference CV value, it depends on the areas and the type of customers.

Only five companies perform numerical simulation to determine the CV, but a greater number

are currently developing reconstruction software programmes.

7.5.3 Energy determination method

Several methods exist to determine the energy exchanged at the interfaces between the various actors:

The first consists in equipping each energy calculation point with a CV measurement device: for example, a chromatograph with each volumetric meter.

For obvious economical reasons, the first method is generally unachievable and only applies to transit or delivery points for large volumes of gas (e.g. major industrial customers). It is then possible to employ the method consisting of measuring and/or calculating a reference CV value, which could be called "Declared Calorific Value" in compliance with the future ISO 15112 standard. This value is used as the basis for calculating the energy over a defined area and time period. This is the method of Fixed Assignment which is described into the paragraph 1.4.1.1.

The third method (little used, but in expansion) consists of reconstructing the grid a posteriori from CV, temperature and pressure data at various points in the grid by means of a simulation software programme.

Moreover, the billing in energy is differently established: it depends on the type of

customers.

For domestic customers, billing from 4 to 6 times a year. • • •

• •

• •

• • •

For commercial customers, billing from 4 to 12 times a year. For industrial customers, monthly billing.

7.5.4 Regulatory environment

At the international level, the gas companies are awaiting two principal texts:

The ISO 15112 "Energy Determination" standard. The OIML "Measuring systems for gaseous fuel" recommendation.

The OIML recommendations generally serve as a basis for drafting legislative texts at national

levels. For details: see 5.6. 7.5.5 Future trends

The most common fields of interest are:

Low-cost chromatograph or low-cost Calorific Value measurement device. Improving the assignment of the correct CV to the correct volume.

For details, see 5.7.

7.6 Future standard and recommendation 7.6.1 ISO15112 Standard

In a competitive context where energy calculation is becoming an increasingly major issue, it has become absolutely necessary to establish a standard specifically treating the problems of energy determination at the interfaces such as "Production / Transport" and "Distribution / Users".

The ISO/TC193/SC2/WG4 Working Group is working on the future ISO 15112 "Energy Determination" standard that could be published before the end of 2003, as the final text is now being drafted.

This standard will supply the methods for the determination of the energy of natural gas by calculation or by measurement and will describe the various techniques to be used. It will provide guidelines for the gas companies in terms of energy calculation based on measurement and/or calculation of the volume and calorific value. The final goal is more accurate billing for each one of the parties.

The standard will cover the various stages in energy determination and will clarify:

Volume measurement CV measurement Energy conversion (or volume conversion)

And above all it will clarify the energy determination methods: assignment methods, CV

reconstruction software programmes. On this point, it should be noted that the future standard will approve a posteriori grid reconstruction software programmes but will not probably approve the use of dynamic simulation software (i.e. in real time) for billing.

Finally, it will provide indications relating to calculating energy uncertainties.

7.6.2 OIML Recommendation “Measuring Systems for Gaseous Fuel”

The “Organisation Internationale de la Métrologie Légale” (OIML) is preparing a new recommendation, expected for the beginning of 2004, with its scope of application covering the entire billing chain.

The Tc8/Sc7 "Gas Metering" Sub-committee is working on the "Measuring systems for gaseous fuel" recommendation, with the secretaries being France and Belgium.

This recommendation will serve as a model for national regulations.

Today, billing is not based solely on volume measurement but is very complex and depends on numerous parameters such as, naturally, the gas calorific value, its composition, pressure, temperature and installation conditions.

The OIML recommendation seeks to take all these parameters into account for billing and thus introduce the notion of "measurement system". It takes an overall view of the entire measurement chain, by using a modular approach: the measurement system is considered as the sum of its constituent parts: the meter(s), the CV determination and volume correction devices and the ancillary equipment (display, memory…).

Each one of these elements as well as their connections must comply with the metrological legal requirements.

The recommendation will apply to the global energy measurement system of outputs greater than 100 m3/h and will concern all types of meters (turbine, rotating pistons, ultrasonic and diaphragm).

It reviews each one of the devices and equipment involved in the measurement chain.

But above all, this recommendation defines the A, B and C accuracy classes in accordance with criteria left to the appreciation of the metrological legal authorities in each country (e.g. the flow rate level). It clearly specifies the Maximum Permissible Errors (MPE) for each one of the measurement devices in the metering chain.

The recommendation gives the values for the MPE, both for the entire measurement system and for each constituent part of the system.

Thus, it gives the MPE for energy determination and also the MPE for calorific value determination, for volume measurement in real conditions, for conversion in reference conditions, and the MPE for determination of temperature, pressure, density and the compressibility factor.

The OIML recommendation will also address the issue of uncertainty calculations.

Doubtless, both the future ISO15112 standard and the OIML recommendation will contribute to improvements in national legislation in terms of energy metering. On the other hand, the application of these standards and recommendations has to be evaluated in a global economic context, taking into account the interests of all stakeholders. 7.7 Technologies and equipment under development 7.7.1 Equipment under development

Manufacturers are developing equipment capable of measuring a gas CV by basing themselves on the measurement method families:

Direct measurement (by calorimetric or catalytic combustion). •

• •

Inferential measurement (by chromatography or by spectroscopy). Correlation technique (between the CV and the gas physical characteristics).

7.7.1.1 Direct Measurement

The development of a catalytic combustion calorimeter was started. The principle of this device was to compare the gas's flameless catalytic combustion energy with that of a reference gas

•

• •

• • •

• • •

• • •

• • •

• • •

However, this project did not reach a successful conclusion. In the same manner, a development based on energy measurement by rapid oxidation of the flameless gas at 850°C has been stopped.

7.7.1.2 Inferential Measurement

A micro-chromatograph has been developed, with the following announced performance: Chromatographic analysis time : 5 minutes CV measurement uncertainty : ± 0.5 % Target price without computer : < 15,000 €

A “Smart” energy meter is under development. This is the association of a gasmeter with a

micro-chromatograph, a PTZ compensation device and a computer.

The announced performance of such a device would be as follows:

Analysis time : 4 minutes CV uncertainty : ± 0.5 % Complete device target price : 15,000 €

A European project, the GLADIS project, focuses on developing a CV device with its

operating principle based on optical spectroscopy in the near infrared. This long term R&D project will result in a marketable device around 2007. 7.7.1.3 Correlation Techniques

A CV measurement device, presented at the International Gas Research Conference (IGRC) 2001 is based on measuring the speed of sound and thermal conductivity. A correlation between these values and the CV of a gas has been demonstrated.

The announced performance would be as follows:

Analysis time : < 1 minute CV uncertainty : ± 0.5 % Target price of the device : 9,000 €

A new method for CV determination based on a correlation between three physical

characteristics of the sampling gas and the CV has been developed. The three used characteristics are the following:

Dielectric constant, CO2 content measured by Infra-Red, Total hydrocarbon measured by Infra-Red.

The expected performance is as follows:

Analysis time : continuously CV uncertainty : ± 0.4 % Target price with the calculator : 20,000 €

A newly developed method for CV determination that was presented at the IGRC 2001.

It is based on a correlation of three physical amplitudes:

Dielectric constant, • • •

Speed of sound, CO2 content.

Laboratory or field tests conducted by the two companies in question have revealed a relative

uncertainty of around 0.05 % on the CV in relation to measurements obtained by chromatography.

This panorama is obviously not exhaustive and is just the reflection of an extremely active and innovative market at this moment. The market is so changing that the given information can change too. 7.7.2 Other projects 7.7.2.1 GERG WG1.43

This European project's objective is to develop a reference calorimeter capable of determining the calorific value of any pure gas with a degree of uncertainty below 0.05 %.

It brings together four gas companies (Enagas, Ruhrgas, RGI (ex SNAM) and Gaz de France), a national laboratory (the LNE – France) and a German laboratory (the PTB) that are working together to develop the construction. It will be then operated by the PTB.

With greater accuracy than that achieved today, this calorimeter will provide CV measurements for pure gas and/or gas mixtures. Today, accuracy does not exceed 0.12 % for the CV's of pure gases, the CV values being those used for the determination of the total CV in the ISO 6976 standard, based on work dating back to the 30's and 60's, and never updated.

This will enable benchmarking direct or indirect CV measurement methods, for applications such as field calorimeters, laboratory or process chromographs, used for transactional purposes and thus reduce the uncertainty of these devices.

In this way, the project is not directly focused on developing a field calorimeter, but it will contribute to improving CV measurement, either by calorimeter or by chromatography. GERG WG1.36

The GERG WG1.36 European project "Rapid gas chromatography for natural gas analysis" is a project bringing together six gas companies: Dong (Denmark), Ruhrgas (Germany), Snam Rete Gas (Italy), Gasunie (Netherlands), Fluxys (Belgium) and Gaz de France (France).

This research project's objective is to identify and evaluate quick chromatographs capable of performing natural gas chromatographic analysis in under 5 minutes, enabling the principal physical properties to be calculated (CV, Wobbe index, volumetric mass…). 7.8 Evolution in energy metering: conclusion

In a context of markets opening up to competition, the number of participants in the gas chain is increasing, exchanges are intensifying and then gas supply sources are multiplied for some parts of the world, notably in Europe where the networks are more and more interconnected.

Therefore, it is crucial to be able to evaluate better the quantities of energy exchanged and the variations in gas quality, with the view to having more accurate and more equitable billing: the variation over time in the CV at a point in the grid can be as high as a few percents.

In terms of energy conversion, the majority of gas companies make energy evaluations based on volume measurements and an average calorific value calculation. In order to evaluate the

quantities of energy more accurately, to respond to customer demands and to anticipate the evolution of regulatory environment concerning energy conversion, it is necessary to take into account the variation in gas quality when billing the product.

In order to reach this aim, current trends to improve energy calculation are as follows:

Reducing the energy calculation time period: the current trend with the gas companies is to reduce these periods, moving from monthly, even annual averages, to weekly, daily and even hourly averages, according to the consumption of the customers.

•

•

•

•

Increasing the frequency of gas analysis: commonly used devices enable measurements to be obtained every 20 minutes or so, with the latest devices performing an analysis every 5 minutes. The objective is to increase the use of "rapid" devices to follow variations in gas quality more closely.

Increasing the number of measurement points: the ideal would be to have measurement instruments at a greater number of measurement points. Increasing the number of energy metering points, linked with use to a posteriori CV reconstruction software programmes, will enable the accuracy of the CV over space and time in the grids to be improved.

Improving instrument quality in terms of accuracy.

In such a context, it is in the manufacturers' interest to improve their measurement equipment. They continue to develop less costly devices (costs reduced by a factor of 4 in certain cases), with better performance (uncertainty less than 1% for energy and 0.5% for CV), that are quicker (response time less than a minute) and more compact (micro-chromatographs).

Furthermore, some manufacturers are developing integrated systems with volume measurement, CV measurement, PTZ correction, energy calculation and data transmission.

Finally, no harmonised legislation exists currently at an international level concerning energy conversion. For this reason, both the OIML with theTc8/Sc7 "Gas metering" technical committee and the ISO with its TC193/SC2/WG4 Working Group are working respectively on projects for a recommendation and a standard, specifically related to energy determination and energy metering systems. The OIML is preparing the text "Measuring systems for gaseous fuel" and the ISO is preparing the ISO15112 "Energy determination" standard.

Doubtless, the forthcoming recommendation as well as the ISO 15112 standard will be translated into national legislation that should facilitate contractual exchanges between the various actors.

Over the next five years, the deployment of energy metering by gas companies will be one of the major challenges for this industry.

APPENDIX A - VOLUME MEASUREMENT A.1 Volume measurement devices

All supply and delivery points of the network are usually equipped with volume measurement devices.

The frequency of the cumulated volume data storage is most of time: hourly and daily, only for industrial customers, •

•

• •

•

•

weekly and monthly, for smaller customers (commercial or domestic customers). A.2 Measurement volume correction methods

Most of gas companies use volume correction or volume conversion. Four type of conversion (already named in the first part of this document) are treated:

conversion as a function of temperature only (called T conversion), conversion as a function of the pressure and the temperature with constant compressibility factor (called PT conversion),

conversion as a function of the pressure, the temperature and taking into account the compressibility factor (called PTZ conversion),

conversion as a function of the density (density conversion). A.2.1 T conversion

In the case of a T conversion, the conversion device consists in a calculator and a temperature transducer and the volume V is converted at operation conditions and temperature T to the reference conditions (pressure PR, temperature TR, compressibility factor ZR). The volume VR in the reference conditions is obtained by the formula:

VT

KVR ××=1

with K a fixed value : Z

ZTPPK R

RR

××= .

The pressure P and the compressibility factor Z are not measured but can be included as fixed values in the processing conversion. A.2.2 PT conversion

In the case of a PT conversion, the conversion device consists in a calculator, a temperature transducer and a pressure transducer. The compressibility factor is considered as a value fixed by the operator depending on the gas and the metering conditions.

The volume at reference conditions is obtained by the formula:

VTPKVR ××′= with K' a fixed :

ZZT

PK R

RR

××=′ 1

The compressibility factor Z is not measured but can be included as a fixed value in the processing conversion. A.2.3 PTZ conversion

In the case of a PTZ conversion, the conversion device consists in a calculator, a temperature transducer, a pressure transducer and a measuring system calculating the compressibility factor: the deviation from the ideal gas law is compensated by the calculation of the compressibility factor using an appropriate equation as a function of pressure, temperature and gas properties.

The volume at reference conditions is obtained by the formula:

VZ

ZTT

PPV RR

RR ×××=

The methods for the compression factor determination are either AGA8, AGA-NX19 or

GERG 88. A.2.4 Density conversion

In the case of the density conversion, the conversion device consists in a calculator and a density transducer.

The volume VR is obtained by the formula:

RR

VVρ

ρ×=

with p the density in the metering conditions and �R the density in the reference conditions.

APPENDIX B - CALORIFIC VALUE MEASUREMENT B.1 Direct Measurement

Direct measurement of the calorific value is typically the calorimetry: natural gas at a constant flow rate is burned in an excess of air and the energy released is transferred to a heat exchange medium resulting in an increase in its temperature. The calorific value of the gas is directly related to the temperature increase.

ISO/CD 15971 gives details of measurement of combustion properties.

The principle of the catalytic combustion (combustion without flame) can be used. B.2 Inferential Measurement

With inferential measurement, the calorific value is calculated from the gas composition according to ISO 6976.

The most widely used analytical technique is gas chromatography. Procedures for the determination of the composition with defined uncertainly by gas chromatography are given in ISO 6974. B.3 Correlation Techniques

Correlation techniques make use of the relationship between one or more physical properties and the calorific value of the gas.

Also the principle of stoichiometric combustion can be used.

APPENDIX C - ENERGY DETERMINATION TECHNIQUES AND METHODS C.1 Energy determination techniques C.1.1 Measurement of volume and calorific value at the same station

CV and volume measurements can take place at the same location: this is known as local calorific value measurement.

At the same measuring station

Volume correction Calorific value determination

Volume determination(flow meter)

Gas flow

⇒ ENERGY

Parameters such as volume, CV and other physical properties of the gas are measured in the

same measurement station.

The measurements are taken individually with the appropriate devices, calibrated in accordance with metrological laws.

The energy can then be calculated at the point of measurement.

Comments:

This calculation can be carried out on the spot or the data can be transmitted to another central station that performs the energy calculation for the measurement station in question, as well as for a certain number of other measurement stations.

•

• Moreover, for technical and/or economical reasons, the CV measurement can take place "off-line", i.e. a gas sample is taken at the measurement station and sent to a laboratory for analysis. Then CV determination is performed in this associated laboratory and sent thereafter to the central station for energy determination.

C.1.2 Measurement of volume and calorific value at different stations

The CV measurement can take place in a location different to that of the volume measurement. This is known as remote calorific value measurement.

At different measuring stations

Volume conversion Calorific value determination

Volume determination (flow meter)

Gas flow

⇒ ENERGY

The volume measurement is performed at the "Production/Transport" or "Distribution/Users"

delivery points by a metering system.

The relatively high cost of a CV measurement installation obliges operators to optimise the number of CV measurement points to be taken into account for converting the volume into energy at their points of delivery.

Naturally, the difficulties of such an energy determination system are to take into account the transit times between the CV effective measurement point(s) and the energy calculation points, as well as taking into account the effects of mixing gases.

For this system to be effective, it is preferable for the CV measurement to be performed in a gas area where CV variation is not too fast over a too large area. Typically, this means a relatively simple meshed grid with a limited number of inlet points, all equipped with appropriate instrumentation. C.2 Energy determination methods

The underlying problem for bipartite energy determination (on the one hand, measuring volume, and on the other measuring CV) is assigning the right CV to the right volume.

In fact, CV measurement is often performed remotely - for economical reasons - and in a discontinuous manner - for technological reasons. Now, changes in gas composition (linked to mixing gases of different compositions in a meshed grid or a change of origin of the distributed gas) lead to fluctuations in the CV value, and thus in the consumed energy value, which can be generally expressed as:

Eq(1) : ∫ ∫==n

0

n

0

t

t

t

t

n dt)t(q)t(CVdt)t(e)t(E

where q(t) is the instantaneous flow rate and CV(t) is the instantaneous CV.

Therefore, it is necessary to establish methods for calculating the average or reference CV, as well as methods to assign the CV to a volume, and also to define notions such as “Energy determination grid” and “Energy determination period” as described in the future ISO/CD 15112 standard.

The energy determination grid is made up of a certain number of gas areas, in which a reference CV value is computed and applies to energy conversion.

The energy determination period is the total time length for the integration of Eq(1).

C.2.1 Fixed and variable assignment C.2.1.1 Fixed assignment

The method of fixed assignment consists of assigning to the volumes measured for a same gas area (energy determination grid area) a constant CV equal to the CV measured at the entry to this area, and this, over a given period of time.

This is only possible if the area in question fulfils the following conditions (in compliance with the ISO/CD 15112 standard):

There is only one inlet point at a time. •

•

•

The CV variation in this area and the gas transit time between the measurement points for CV and volume are limited.

The direction of gas flow between the CV and volume measurement points is constant.

The CV thus assigned, can be called reference CV or single calorific value or even declared calorific value.

Thus, the energy determination period can be split into sub-periods during which the CV is constant and known. Then the energy becomes:

∑ ∫=

⋅=

+n

i

t

ticonstn

i

i

dttqCVtE0

,

1

)()(

C.2.1.2 Variable assignment

The variable assignment method consists of assigning a CV, that is variable in time and space, to the measured volumes.

The calculated CV can be an hourly, daily or monthly average, an arithmetical average or an average weighted by the quantity of gas being transmitted.

When the CV value changes significantly, account must be taken by re-adjusting the variable assignment. This method suits rapid and significant CV value changes.

Assignment to a volume can be improved by taking into account the transit time between the CV determination point and the volume measurement point. No standard exists at the present time. C.2.2 Grid simulation and State reconstruction

Grid simulation software programmes already exist, and others are being developed. They

enable the CV value to be extrapolated at any point in the grid in order to determine the energy exchanged at any point.

The software programmes fall into two different categories:

Grid reconstruction software. • • Dynamic grid simulation software.

The grid reconstruction programmes perform grid reconstruction a posteriori. From CV

measurements at certain points in the grid and from additional data, the programme is capable of calculating the CV values taken at any point in the grid.

Therefore, it is possible to use these computations to determine better the energy a posteriori.

On the other hand, the aim of dynamic simulation programmes is the real time calculation of the CV at any point in the grid.

Analysis of IGU WOC5 SG 5.2 Questionnaire: Volume to energy conversion

Volume without energy conversion Standard caloric value per month Standard caloric value per day

TokyoGas Co Ltd (Japan) Sonelgaz (Algeria) Gas Natural SDG (Spain) Saibu Gas (Japan) Electrabel (Belgium) British Gas Centrica (formula conversion) (GB) TohoGas (Japan) Naturgas Fyn I/S (Canada) Gaz de France (France) OsakaGas (Japan) Naturgas Midt-Nord (Denmark) Transco (GB) Gas Malaysia SDN BHD (Malaysia) Italgas (Italy) Consolidated Edison Co of NY (USA) Mazovian Gasworks (Poland) Essent Netwerk Noord NV (Netherlands) Duke Energy (USA) Wielkopolska Gas Company (Poland) Montana-Dakota Utilities Co (USA) Reliant Energy Gas Transmission (USA) Nutsbedrijf Regio Eindhoven (Netherlands) Sydgas AB (Sweden) SNAM (Italy) National Iranian Gas Company (Iran) Bord Gais Eireann (Ireland) Service du gaz et chauffage à distance (Switzerland) KeySpan Energy Delivery (USA) Public Service Electric & Gas (USA) Enbridge Consumers Gas (Canada) Gaz de France (decreasing) (France) MetroGas (Argentina) MetroGas (factor correction) (Argentina) SaskEnergy (except industrial) (Canada) HGN Greater Copenhague Natural Gas (Denmark) Novi SAD-GAS (Yougoslavia) Gas-, Wasser- und Fernwärmeversorgung der Stadt Bern (Switzerland) Manitoba (Canada) Duke Energy (USA) Naftogas (Ukraine) Transcontinental Gas Pipeline Corporation (USA) Energetika Ljublana (Slovenia) Enagas (Spain)

SNAM (Italy) Erdgas Zurich (Switzerland)

Naftogas (Ukraine) Service du Gaz et Chauffage à distance (Switzerland) Wanesworke Zug AG (Switzerland)

Standard calorific value per hour Computer model of network Individual conversion

Ruhrgas (Germany) Public Service Electric & Gas (USA) Montana-Dakota Utilities Co (USA) Gasunie (Netherlands) Northern Indiana Public Service Company (USA) SaskEnergy (only for industrial) (Canada) Korean Gas Corporation (Korea) Gas Natural SDG (Spain) Services Industriels de Genève (Switzerland) Gaz de France ( > 5 GW/h per year) (France) Transco (GB) Public Service Electric & Gas (tariff agreement) (USA) Erdgas Zurich (Switzerland) British Gas Centrica (at exit points) (GB) Kinder Morgan (USA) Bord Gais Eireann (Ireland) Transco (> 1,46 GWh) (GB) Italgas (Italy) Gas-, Wasser- und Fernwärmeversorgung der Stadt Bern (Switzerland) Services Industriels de Genève (Switzerland)


Report of Study Group 5.3

“Safety regulatory policies”

Rapport du groupe d’études 5.3

«Politiques réglementaires de sécurité»

Coordinator / Vice-Coordinator Coordinateur /Vice-coordinateur

Jorge Doumanian / Dietmar Spohn

Argentina/Germany

Argentine/Allemagne

ABSTRACT This report details the work undertaken by Study Group 5.3 of Working Committee 5 during the triennium 2000-2003. The subject is “Regulatory Safety Policies” and their influence (either actual or perceived in the future) on the main activities of gas distribution companies in IGU countries The study will list the different approaches in the various countries and analyse the actual and foreseen processes and organizations put in place for ensuring safety Surveys were also conducted on this subject and the results are included in this report. Additional information on this subject will be discussed during the technological forum.

RESUME Ce rapport présente le travail effectué par le groupe d’études 5.3 du Comité de travail 5 pendant le triennium 2002-2003. Le sujet concerne les politiques réglementaires en matière de sécurité et leur influence (actuelle ou perceptible dans le futur) sur les principales activités des compagnies de distribution de gaz dans les pays de l’U.I.I.G. L’étude indique les différentes approches dans les pays et analyse les procédures et les organisations actuelles et futures, mises en place pour assurer la sécurité. Les résultats des études de veilles faites sur ce sujet sont mentionnés dans ce rapport. Des informations complémentaires sur ce sujet seront apportées pendant le Forum Technologique.

TABLE OF CONTENTS 1. Foreword 2. Introduction 3. Safety Policies and Strategies. 4. Current Status of Deregulation – Liberalization in I.G.U. Countries. 5. Effects of Deregulation on Organizational Structure. 6. Influence of Deregulation on Safety. 7. Regulation Questionnaire. 8. Conclusions. 9. Recommendations.

1. FOREWORD 1.1 The International Gas Union WOC5 Distribution Committee in its “Triennium Action Plan” (2000-2003) agreed a programme of work which involved examining specific subjects of particular interest for distribution companies. 1.2 Three Study Groups (SG’s) were set up and SG 5.3 was asked to examine “Regulatory Safety Policies” and their influence (either actual or perceived in the future) on the main activities of gas distribution companies in IGU countries. 1.3 The objective of SG5.3 was to analyse the impact of regulation on safety, particularly from three different angles or perspectives, namely:

Impact on new scenarios / liberalization, deregulation, mergers, company’s re-organization.

•

•

•

Consequences of these changeable scenarios - pressure to reduce cost, allocation of resources in a more efficient way. Organizational issues/downsizing of companies, contractors’ safety responsibility, corporate culture.

1.4 It is important to bear in mind at the outset, that deregulation is at an early stage of development in the IGU countries and that a lot of the answers we received to our questionnaire were based upon perceptions and not actual experience. The Study Group feels, however, that even though many answers are based upon assumptions that it is interesting and of considerable value to underline the expected trends in the particular area.

The Study Group would like to thank all those associations, companies, authorities and individuals who answered the questionnaire and thus contributed to the findings of this report.

2. INTRODUCTION 2.1 In order to carry out the task, SG 5.3 designed a questionnaire seeking to establish the current position and expected position on the areas as identified in 1.3. 2.2 From the answers we received the Study Group has tried to identify the expected tendencies that have been experienced or are perceived to come about due to regulation, summarize the conclusions and suggest recommendations.

A questionnaire on safety related issues was also prepared for discussion with national

regulators.

2.3 131 questionnaires were sent to companies, associations and institutions and 31 responses were received. They were from the following continents.

Europe 16 South America 3 North America 3 Near East 2 Far East 3 Australia / Indonesia 4 Total 31

2.4 The above represented a return rate of 22%, 13% were received from WOC5 members and 8% from IGU.

2.5 It was obvious that some questions were not understood and that some organizations answered on a national level. 2.6 Notwithstanding the above, this report contains an analysis by SG 5.3 of the answers to the questionnaire. 3. SAFETY POLICIES AND STRATEGIES 3.1 In this section questions were asked regarding certain aspects of the Safety Policy and Strategy in each company / country and the following is a list of the findings.

Safety Criteria

8

2

16

13

02468

1012141618

Regulator driven RiskManagement

Regulator driven+ Risk

Management

Others No answer

3.2.1 In relation to the above graph it can be noted that currently Safety Policy and Strategy is Regulator driven in 27% of the companies. 3.2.2 7% of companies have solely Risk Management as the basis for their Safety Policy and Strategy. 3.2.3 53% have a combination of both the Regulator and Risk Management. 3.2.4 13% did not respond. 3.2.5 It is, therefore, deduced that Risk Management Techniques combined with Regulatory Directives is the perceived method that will be used to guarantee delivery of the required safety levels, whilst at the same time concentrating on reducing costs. Audits

3.3 In response to the question on who carries out audits in each company / country to ensure compliance with Safety Policies and Procedures the following were the findings: 3.3.1 In 30% of cases, the audits were carried out solely by the companies using internal auditors. 3.3.2 In 7% of cases, external auditors alone carry out the function. 3.3.3 In 30% of cases audit is carried out by both internal and external audit groups.

3.3.4 In 67% of the companies, audit is carried out equally by either a combination of internal and external audit or internal audit alone (30% in each case). 3.3.5 The level of external audit involvement combined with internal audit suggests that Regulatory Commissions will be readily able to monitor that directives are been followed as external audit groups are currently well established.

Internal Procedures/Policies 3.4 On the question of Internal Procedure and Policies being stricter than national requirements, 53% of companies said that Internal Procedures / Standards were more stringent, 7% said they were less stringent, and 40% did not answer the question. 3.4.1 The findings in 3.4 suggest that companies already have strict procedures on safety in place which largely ties in with the findings of Section 3.3 where external audit is established to ensure compliance. 3.4.2 It was noted in Germany there is a national set of codes of practice and standards related to gas supply systems.

The Energy Supervisory Authority is fully satisfied with the safety policy but it is seeking to have some additional aspects of safety to be covered.

For example: in all new service lines in Germany excess flow valves have to be installed, and

within built-up areas the minimum intervention time in responding to an emergency call is now fixed to 30 minutes. 3.4.3 In Belgium each company is responsible for its own Safety Regulations and Policies on top of the existing national law. All companies are now coming together to develop a common set of regulations and it is intended to present these to the Regulator for his approval. 3.4.4 Minimum required national standards pertaining both to safety and financially related issues are dictated currently in Argentina and Japan by one National Authority.

Production of Standards 3.5 On the question relating to who produces the standards and procedures within each company, 59% of respondents said that it was done by a central unit within the company.

In 24% of cases it was done by each individual operating unit and in 10% by a combination of both central unit and individual operating units.

3.5.1 In almost 70% of cases, responsibility for production of standards and procedures lies in a central unit or has central unit involvement. Downsizing and decreases in management is not expected to change this situation. 3.6 It was noted that 90% of respondent companies have currently a safety statement.

Training 3.7 In relation to training, and particularly to the issue of training operating personnel, both direct labour and contractors, an analysis of questionnaire findings shows that 68% of companies provide training for both direct and contractor employees, whilst 13% provide training for direct staff alone. The frequency of training ranged from once per year to every three years.

3.7.1 45% of training provided was certified by an outside body. 3.7.2 From the findings it can be demonstrated that distribution companies place a high emphasis on training and again it is expected that they will continue to do so, even when they may be separated into different business units after deregulation. 3.7.3 The emphasis on safety is therefore ensured even in the backdrop of company restructuring brought about by deregulation.

National Organizations 3.8 It is perceived that deregulation will not have any influence on national organizations involved in safety or law making. The exception is possibly in the Czech Republic where there has been a history of state controlled industry.

3.8.1 Nearly all countries have a national organization involved in the development of rules and regulations and almost 50% of them currently have statutory rights.

3.8.2 In most instances the gas companies are represented in this national organization and have influence to change rules/regulations.

3.8.3 In most countries an adherence to rules / regulations are mandatory (exception: Germany, The Netherlands). 4. STATUS OF DEREGULATION / LIBERALIZATION IN IGU COUNTRIES

Status of Deregulation

6

4

20

0

2

4

6

8

10

12

14

16

20

Finnished Ongoing Planned No answer

4.1 The above chart describes the current status of deregulation and liberalization in the countries that responded to the questionnaire. 4.2 As it can be seen from the above it is on going in 66% of the respondent countries, planned in a further 20% and there was no answer to this question from 14% of the respondents. 4.3 It is noted that the process is either only on-going or planned in 86% of the respondent countries and this does impact on quite a few of the questions and answers we received. However, as stated previously it is useful to comment on perceptions and assumptions, as they are indicative of current thinking in the industry.

5. EFFECT OF DEREGULATION ON ORGANIZATIONAL STRUCTURE 5.1 In graphical terms the perceived effect of deregulation on organizational restructuring can be seen below.

Effect on Organizational Structures

Yes57%

No8%

No answer35%

5.1.1 As can be seen above 57% of respondents foresee changes occurring in organizational structures. 35% of respondents did not answer, whilst 8% thought that there would be no change. 5.2 The graph below indicates companies responses to deregulation.

Tendencies

75

16

2

0

2

4

6

8

10

12

16

Split betweenBroker –Distribution Co.

Merger of small gascompanies

Merger with othercompanies (electric)

Unknown /No answer

5.2.1 24% predicted mergers, a similar percentage predicted a split between the broker and the distribution company, whilst 55% did not have any view. 5.3 There were many opinions expressed on the influence of deregulation and company structures and the effects of deregulation on the industry in general. Not all of these opinions had a particular bearing on safety but it is worth mentioning some points that were raised in answers to the questionnaire. 5.3.1 The opinions put forward could be broadly broken into three categories, namely Neutral, Negative and Positive effects of deregulation. Those not relating directly to safety issues are mentioned below while those with a safety connotation are described in the next section.

5.3.1.1 Neutral Effects

(a) Cost reduction will cause changes in organizational structures. (b) Distribution companies will split into two companies, one for trading and one for

distribution. (c) Slimmer organizational structures with fewer levels and fewer employees will emerge. (d) There will be division between technical and commercial sections. (e) Number of gas companies will be reduced due to mergers.

5.3.1.2 Negative Effects

(a) Smaller companies taken over by larger ones. (b) Prohibition for employees to integrate upward / downward in a company. (c) Outsourcing of many functions currently handled from within. (d) Cost reduction capability of smaller companies is questionable.

5.3.1.3 Positive Effects

(a) Inefficient state owned companies forced to increase efficiency. (b) Efficiencies in industry will lead to cost reductions. (c New business opportunities will open up in the market place particularly in the area of gas purchasing. (d) Competition in metering and connection services will occur. (e) Marketing and Sales departments will be strengthened.

6. INFLUENCE OF DEREGULATION ON SAFETY 6.1 Below is a pie chart detailing the perceived influence of deregulation directly on safety related issues. Perceived Influence of

Deregulation on Safety

28%

17%34%

14%7%

no answer negative influence no influenceneutral positive influence

6.2 Some observations on the above are that 42% of respondents saw deregulation as having either “no influence” or a “positive influence” on safety issues. This opinion might be based on respondents impression / knowledge of the current safety sate of the networks. 6.3 17% of respondents saw deregulation as having a negative effect on safety.

6.4 14% were neutral on the issue and stated that they were not yet qualified to give an opinion as it was early days as yet to formulate a qualified opinion. 6.5 Because of the complex nature of the replies to this section of the questionnaire it was felt that a typical reply in each bracket of response would be helpful in identifying the particular views or reservations people had to justify their position on the issue. 6.6 Typical views are documented below as follows: 6.6.1 “Negative Viewpoint”

“Decisions are strongly influenced by the Regulator and his first priority is cost cutting, and managing benefits of the network operator. Focusing on safety is not the first priority of the Regulator so the risk is high that safety matters are not excluded from the general cost cutting policy of the Regulator”

6.6.2 “No Influence”

“In the short term safety is being delivered through the skills and knowledge of a well trained

workforce. In the longer-term safety performance will depend much more on establishing risk/ performance based systems and processes. Loss of experienced workforce through retirement without ongoing employment of new staff (through continuous downsizing) is still a business risk that has to be addressed to ensure the long term outcomes of a safe and reliable business”.

“The main task for gas companies in the beginning of the liberalization process will be financial survival. Cost must be reduced. It will be one of the major jobs of associations to maintain safety standards. If they are not successful in doing so, politicians will ask for additional state regulations. This will influence the financial result or reduce the market chances of the gas compared to other energies. If deregulation has a significant impact on the safe operation of gas systems, someone got it wrong, either the gas companies, associations or the politicians. Should there be an unexpected increase in accidents, authorities will strengthen National Safety Requirements”. 6.6.3 “Positive Viewpoint”

Things are better. There is more ownership of issues and more opportunities to be innovative in solving

problems. Resources are targeted to areas of greatest need”.

6.7 Cost Consideration

If there is cost implication, all areas (leakage survey, renewal, investment, and audits) are nearly all equally affected. 7. REGULATOR QUESTIONNAIRE 7.1 This questionnaire was put together by the Study Group with a view to meeting with the Regulator in each country and asking him his views on the issues raised.

7.2 The questions had the following focus, namely:

Main priorities of the Regulator? • • • •

Where does safety rank in the list of priorities? How will Regulatory Office communicate with the industry? How will compliance be assured?

7.3 A summary of responses are as follows: 7.3.1 Four countries responded to our questionnaire, namely, Canada, U.S.A., Spain and Argentina. Their responses are summarised below: 7.3.1.1 In response to the question related to the main priorities in their approach to regulating the gas industry, they replied as follows: Canada

- Public safety issues always come first. - Seek to find innovative public safety solutions. - Managing risk with technical skills. - The creation of fair, safe and open environment that supports a competitive economy and

a level playing pitch.

U.S.A. - Approaching pipeline safety from a risk management perspective and the development of

appropriate National Standards. Spain - Development of legislation that supports safety requirements and guarantees the

protection of people’s welfare and environment. - Providing for security of supply by developing homogeneous and coherent gas structures

throughout Spain.

Argentina - Creation of a safe and efficient gas industry. - No discrimination between consumers or carriers. - Development of fair prices for gas users and attractive rates of return for investors.

7.3.1.2 Question: “How do you propose to talk to the parities interested in safety issues within the gas

industry”? Answer: Canada

- By ongoing discussion at Industry Advisory Council meetings, particularly with Risk

Reduction Groups. Answer: U.S.A. - By communication with all major industry organizations. - Participation in energy conferences, seminars, and training programmes. - Pipeline Safety Advisory committees approve all regulations imposed. These committees

include representatives from all interested parties. Answer: Spain

- The Hydrocarbon Consultant Council consults with the National Energy Commission. Gas

companies and other interested groups are represented on the council.

Answer: Argentina - Licenses can participate at the review stage of a regulation.

7.3.1.3 Question: “How do you see safety best handled in the industry”?

The response to this question can be summarised by saying that there was common agreement that pipeline operators are the first line of safety. This is will be assured through audits which attract penalties such as fines or cancellations of the “licence” to operate.

7.3.1.4 Question: “Are existing standards and regulations adequate”? Answer:

Existing standards are perceived as being adequate at present, but do require constant

review, in light of changing circumstances and experiences. Reporting on accidents and incidents in the industry needs to be improved so that safety regulations can be formulated, agreed and implemented that address the real problem areas. 7.3.1.5 Question: “Any negative impact on safety issues, as a result of increased operating costs?

Answer: No regulatory body agreed that there was any negative impact on safety due to regulatory

requirements. They all experienced increases in safety matters as a result of regulation and proper enforcement. 8. CONCLUSIONS 8.1 Deregulation is not perceived as having a major influence on Safety Policies, but rather on the means to handle or cope with a required or defined safety level. 8.2 Deregulation of the distribution segment of the Gas Industry is at an early stage of development with 20% of respondents saying it was planned in the future and 66% saying it was ongoing. 8.3 There were both positive and negative views, as well as neutral views on the effect that deregulation would have on company structures and tendencies. These are detailed in Section 5 of this report. 8.4 The effect on Safety Policies and Strategies of companies are detailed in Section 3. 8.5 It is concluded that the area of standard production will not be largely affected even if there are changes brought about in companies in other areas not related to safety. Downsizing and reduction in management levels are mentioned. 8.6 Particular concerns on safety issues are detailed in Section 6. 8.7 In the future the Regulator may have to assume a role of a controller, influenced particularly by public opinion and not necessarily get involved in the formation of safety standards. It is suggested that he may, however, have to get involved in both. 8.8 There is general concern that deregulation would have the effect of minimising investment in the network as a result of financial targets imposed by the Regulator. These targets would restrict monies being available for other things such as Leak Survey, Replacement / Renewal Programmes. These would affect safety. 8.9 Because of the restrictions on the availability of monies there would be greater leaning towards “no dig” techniques and the use of electronic equipment to reduce personnel in companies.

8.10 It was also felt that after a period of restructuring that the parent company will be left to deal with the portfolio of business and the subsidiaries with operation activities. It was not suggested, however, that this of itself would necessarily have any detrimental effect on safety issues. 9. RECOMMENDATIONS 9.1 As distribution managers and engineers become more familiar with the effects of deregulation, they will be better qualified to give their opinions in the future on the questions we asked. They must be encouraged and facilitated to do this through their appropriate National Associations.

Since deregulation in the distribution segment of the Gas Industry is at a very early stage of development, its effect on safety in the industry will need to be studied on an ongoing basis into the future. A questionnaire such as SG 5.3 devised or another approach should be embarked upon in five years time again to examine what happened, compared to what this report concluded. The I.G.U. is a very suitable forum to carry out such a study on an international basis.

9.2 Where more than one Safety Authority exists in a country it is recommended that national and local authorities will adapt a common approach and jointly work with the Regulator to resolve various issues as they arise. 9.3 Safety regulatory bodies (where they exist) and gas distribution companies should jointly agree on minimum safety parameters. Risk assessments should be carried out based on these parameters. Funding must be provided for necessary training programmes and pipeline refurbishment projects to achieve these agreed parameters, and they should be based upon mutual agreement on risk management and assessment.

In the absence of such a safety regulatory authority, each company or gas association should

base their safety parameters on best practice and international or national norms in the industry, whilst at the same time lobbying for the establishment of such an authority on a national level.

In each case it is necessary to keep a balance between commercial restrains and safety

aspects.

9.4 It is recommended that there shall be a formal communication process between regulatory authorities and gas companies or associations. This should include regular participation in conferences, seminars, and assisting in the implementation and formulation of safety standards and training programmes. 9.5 It is suggested by SG5.3 that ongoing developments in different countries are closely monitored so that the deregulation process can be used to its maximum advantage in each country. Any aspects of the process that have a detrimental affect on safety issues must be avoided. It is of paramount importance that safety is not compromised as a result of the deregulation process.

6. CONCLUSION

The work of the Working Committee 5 "Distribution" during this triennium has enabled its members to share their experience of deregulation in the gas industry. WOC 5 hopes that the reports presented above, which represent a summary of this work, will give our Gas Industry colleagues and other Partners a clearer picture of the far-reaching changes now under way and that the forthcoming Tokyo Conference will provide an opportunity for more in-depth exchanges on these issues.

ANNEX : LIST OF WOC 5 AND STUDY GROUPS MEMBERS

Joël GRÉGOIRE, Gaz de France, France, WOC 5 Chairman Peter CISTARO, Public Service Electricity and Gas, USA, WOC 5 Vice Chairman, SG 2 Vice-Coordinator Daniel HEC, Gaz de France, France, WOC 5, WOC 5 Secretary Cherif OUALLOUCHE, Sonelgaz, Algeria Samia FERGANI, Sonlegaz, Algeria Jorge DOUMANIAN, Gas Natural BAN, Argentina, SG 5.3 Coordinator Walter KRECHT, EVN AG, Austria Mark MASSCHELIN, Electrabel, Belgium Eric VAN INGELGHEM, Fluxys, Belgium, SG 5.2 Coordinator Louis VAN HOEYMISSEN, Electrabel, Belgium Jos DEHAESELEER, Electrabel, Belgium Salih SELMANOVIC, Sarajevo Gas, Bosnia and Herzegovina Mel YDREOS, Union Gas Ltd, Canada Milienko SUNIC, Gradska Plinara Zagreb, Croatia Petr STEFL, STP, Czech Republic Libor CAGALA, SMP, Czech Republic Stepan AMBROZ, VCP, Czech Republic Svend BOMHOLT, Naturgas Fyn, Denmark Finn MORSING, Naturgas Mid-Nord I/S, Denmark Pekka LAAKSONEN, Vattenfall, Finland Jean-Max BAILLARD, Gaz de France, France Abderraouf BEN HADID, Gaz de France, France Frédéric VULOVIC,Gaz de France, France Andreas HENNIG, Thüga AG, Germany Dietmar SPOHN, RWE Gas AG, Germany, SG 5.3 Vice Coordinator Gerhard MOELLEMANN, Ruhrgas, Germany Zoltan CSALLOKOZI, FOGAZ, Hungary Azizollah RAMEZANI, National Iranian Gas Company, Iran Fergal GEOGHEGAN, Board Gais, Ireland, Alessandro SORESINA, AEM SpA, Italy Takashi ANAMIZU, Tokyo Gas Co Ltd, Japan, SG 5.1 Vice Coordinator Takahiro SHIMO, Osaka Gas Ltd, Japan Tsuyoshi KAWASHIMA, Tokyo Gas Co Ltd, Japan Hidemi INAMORI, Saibu Gas Co Ltd, Japan R.van AKKEREN, Essent, The Netherlands Torstein INDREBO, Norsk Hydro, Norway Elzbieta DZIRBA, PGNIG, Poland Miroslav DUJNIC, SPP, Slovakia Juraj POLACEK, SPP, Slovakia Franc CIMERMAN, JP Energetika Ljubljana, Slovenia Juan PUERTAS, Gas Natural SDG, Spain Jordi Canet, Gas Natural SDG, Spain Sigvard TRÖNELL, Sydgas AB, Sweden Lars Ake ANDERSSON, Sydgas AB, Sweden Walter GIRSBERGER, SVGW, Switzerland Neil SHAW, Gas Transportation Company, U.K, SG 5.1 Coordinator Roger HUNT, U.K. Janez SEDEJ, NIS-Gas, Yugoslavia

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