Wales and West Utilities has claimed that the proposed cuts to its irons mains replacement work pose an “unacceptable” risk to safety and will ultimately increase costs to consumers by adding to repair bills.
The gas distribution network issued the warning in its response to Ofgem’s draft determinations on the RIIO2 price controls beginning in April 2021, claiming the Health and Safety Executive (HSE) will be unwilling to sign off on the plans as currently proposed.
The company’s primary concerns are the replacement of so-called tier 2B pipes as well as iron mains located more than 30 metres away from a building.
As part of the Iron Mains Risk Reduction Programme, led by the HSE, pipes are banded by size into three main tiers, with the second covering those between 8 and 18 inches in diameter. The second tier is further divided between category A pipes, which gas networks are mandated to replace under the programme, and category B pipes, the replacement of which is discretionary and must be justified to Ofgem on the basis of cost benefit analysis.
However, Wales and Wales Utilities (WWU) said it must still meet the HSE’s Pipeline Safety Regulations and that “disallowing all workload” on 2B pipes and irons mains more than 30 metres from a building “leaves us at risk with compliance”. It said the HSE “will not accept a safety case where no work is undertaken on these categories of pipe.”
WWU said the disallowance of this work could be expected to lead to more than 6,600 additional gas leaks by 2030, of which almost 600 would be “gas-in-building” events and therefore present a “significant safety risk”. It said the Grenfell incident in 2017 has shown that such dangers are “unacceptable to society”.
The company noted that Ofgem’s decisions are partly based on a shortening of the required payback period for investments from 24 years to 16 years. WWU acknowledged that there is uncertainty over the future of gas networks but said: “There is no scenario in which the gas network is mothballed by 2037.”
“Reduced demand has zero impact on reducing leaks or emissions to atmosphere, so we would challenge the logic that we should stop assessing the impact of leakage beyond 2037,” it added.
WWU said the cuts to its discretionary workload would also result in more than 1,300 extra repairs by the end of the mandatory replacement programme in 2032. These repairs would cost the typical consumer £5 during RIIO2, whilst the reduced replacement expenditure would save them just £1.25 over the same period: “It is clear that the best outcome for customer bills is the allowance of our planned programme.”
It said Ofgem’s decision on discretionary work is also “inconsistent” across the gas distribution networks (GDNs): “Taking tier 2B as an example, four networks have had workloads allowed in full whilst four have had them disallowed in full.
“It is not credible that tier 2B pipes constructed of the same material and laid in similar periods are performing significantly differently in different regions. We have discussed with all GDNs who have similar concerns.”