Please note: This is an extract from Hansard only. Hansard extracts are reproduced with permission from the Parliament of Western Australia.

Date: Wednesday, 14 June 2006

GAS AND ELECTRICITY SAFETY LEGISLATION AMENDMENT BILL 2006

Introduction and First Reading

Bill introduced, on motion by Mr F.M. Logan (Minister for Energy), and read a first time.
Explanatory memorandum presented by the minister.

Second Reading

MR F.M. LOGAN (Cockburn - Minister for Energy) [12.21 pm]: I move -
That the bill be now read a second time.
The bill seeks to amend the Energy Coordination Act 1994, the Gas Standards Act 1972 and the Electricity Act 1945, to improve the technical and safety regulation provisions in the existing energy industry legislation. Amendments are required to the legislation to ensure there is an effective technical and safety regulatory framework for the now fully privatised and competitive gas supply industry, as well as the increasingly competitive electricity supply industry. This is necessary for the protection of the community.
The sale of AlintaGas resulted in a number of structural reforms occurring within the gas industry in Western Australia. Organisations other than Alinta are now able to build, own and operate gas distribution systems in direct competition with Alinta, through the acquisition of a distribution licence. It is probable that these changes will see gas being supplied to new areas in the state, and that the overall availability of gas will become more widespread. There are also cost pressures on the operators of gas distribution networks. To reduce operating costs in line with regulated transport tariffs, the majority of the work associated with the construction, operation and maintenance of the gas distribution system is now outsourced.

The government has also embarked on a path that will result in a number of important structural changes in the electricity supply industry, and the establishment of a truly competitive electricity supply industry with third party access to transmission and distribution systems. Network operators in the electricity supply industry are also under pressure to reduce operating costs in line with regulated transport tariffs. Thus many of the changes associated with a competitive energy industry, while desirable, have the potential to impact on the technical and safety performance of energy network operators as they come under pressure to manage costs, if the regulatory framework is not correspondingly reformed. A competitive industry environment therefore requires a legislative framework that will adequately ensure the safety of the public, energy consumers and energy workers from the hazards associated with energy, and that will also adequately ensure energy supplies conform to acceptable standards of reliability, quality and metering accuracy. Regulations already exist under the Gas Standards Act 1972 and the Electricity Act 1945 to cover the activities of electricity and gas network operators, as well as the work of gasfitters, electricians and electrical contractors working on consumers’ installations.

This legislation is administered by the Director of Energy Safety, of the EnergySafety division of the Department of Consumer and Employment Protection. However, for the regulations to be effective within a highly competitive industry environment, amendments are required to be made to the Energy Coordination Act 1994, the Gas Standards Act 1972 and the Electricity Act 1945, to provide adequate enforcement powers. The principal purpose of this bill is to make these amendments. In particular, the bill makes the following seven improvements to existing legislation.

Firstly, the powers of electricity and gas inspectors, who are designated by the Director of Energy Safety, are made clearer in respect of their application to electricity or gas supply networks. Secondly, the general powers of electricity and gas inspectors are consolidated into one part of the Energy Coordination Act 1994, for clarity. Thirdly, the powers of gas inspectors are being expanded to deal with dangerous things in relation to gas, such as undesirable encroachment on gas pipelines through excavation. Their powers are to now also cover the safety of gas work practices. Fourthly, the order-making powers of inspectors will be improved in respect of their ability to deal with specific safety or non-conformance problems on an electricity or gas supply network. At present, the order-making powers of inspectors are not suitable for application to networks; they are suitable only for application to consumers’ electric or gas installations. The improved order-making powers of inspectors in respect of networks will also allow an inspector to require a network operator to take remedial action at other locations where the same problem exists. This order-making power will be subject to prior consultation with the network operator, and will only be able to be used if agreement on corrective action cannot be reached and the director approves the subsequent order. Before the director may approve such an order, the director must also consult with the network operator. Hence, substantial safeguards will exist to ensure inspectors cannot be over-zealous in the use of this power to require wider remedial action on a network.

The need for this wider power was underlined by the events following two electrocutions, one in Port Hedland in 1996 and the other in Coolgardie in 2000, as a result of which inadequacies were found in the construction of the network. In each case there was a need to deal with identical problems elsewhere in the network. The coroner conducting the Coolgardie incident inquest subsequently recommended that the director’s office be given more appropriate powers. This is proposed by the bill. A similar recommendation was made by the State Coroner when he handed down his findings at the conclusion of the Tenterden inquiry in March 2005.

To summarise, once a network problem has been identified, if it is likely that the problem also exists elsewhere on the network, the director’s office should be able to require the network operator to make the effort to identify and deal with the wider problem. The director’s inspectors should not be required to search the state far and wide to identify each such incident by individual on-site inspections, as is the case at present.

Fifthly, these improved order-making powers of inspectors and the related review powers of the director will be subject to independent review by an expert panel of engineers, or if a question of law is involved, by the State Administrative Tribunal. This will ensure that network operators have available a fair process for review. Substantial safeguards will therefore exist in respect of these improved regulatory powers.

Sixthly, the level of the maximum general penalty for a breach of the Energy Coordination Act 1994, the Electricity Act 1945, and the Gas Standards Act 1972 is raised to $50 000 for an individual and $250 000 for a corporation. Currently, the Gas Standards Act 1972 has a maximum general penalty of only $2 000; similarly, the Electricity Act’s maximum penalty is only $20 000, and this is grossly inadequate for today’s industry environment containing major corporations. Other specific penalties will also be raised by the bill, and imprisonment will be deleted as an option where it currently exists.

Lastly, the Director of Energy Safety will be able to authorise the release of information about the safety performance or compliance of energy industry participants, for the purpose of increasing public safety or increasing compliance with technical and safety requirements. This overcomes the current problem whereby the director is excessively bound by confidentiality provisions that have more relevance to information of a commercially sensitive nature. The director will be required to consult with possibly affected parties about information that may be commercially sensitive or confidential, before authorising any information releases.

In addition to these improvements in enforcement measures and information availability, the bill will also provide for the making of regulations under the Energy Coordination Act 1994 to require gas network operators and certain gas pipeline licensees to submit gas supply system emergency management plans. The plans will provide assurance about the integrity of gas distribution systems in the event of damage or upstream loss of gas supply. In the wake of Longford and other utility incidents, it is evident that a coordinated approach to emergency planning is necessary.

A number of amendments are also planned to the Gas Standards Act 1972, to improve specific gas-related technical and safety regulation outcomes. Firstly, the requirements for the safety inspection of consumers’ gas installations by gas network operators are restated in a way that recognises the earlier successful implementation of sample inspections under the inspection plan concept. This amendment eliminates reliance on an administrative arrangement based on a ministerial exemption and formalises the safety inspection obligation.

Secondly, the approval requirements for both domestic - type A - and industrial - type B - gas appliances are restated in a manner that recognises the former as production line articles and the latter as mostly individually engineered products. The significance of this is that the two types of appliances will then be able to be treated differently in respect of safety compliance assessment and approval, which is necessary. The amendments being undertaken have the support of the Joint Standing Committee on Delegated Legislation.

Thirdly, provisions are made for the director to issue non-mandatory guidelines to industry for safe work practices and technical standards in relation to gasfitting work. This will allow guidelines to be issued promptly, as issues arise. Such a power has existed for many years in relation to electrical work and it has been very useful.

In conclusion, this bill deals with some important improvements to the electrical and gas technical and safety regulation regime, especially for enforcement. The satisfactory operation of this regulatory regime is essential as the state’s energy industry expands and becomes increasingly competitive. Indeed, many of the gas-related sections of this bill should have been enacted as part of the legislation dealing with the sale of AlintaGas so that they were in place concurrently with its privatisation. However, they were excised after the AlintaGas sale bill was introduced and, as the then minister said, time was needed for further industry consultation. That consultation has taken place and a number of improvements have been incorporated as a result of industry input. Given the many changes to the energy industry, there is now a need to enact these provisions without further delay.

I commend the bill to the house.

Debate adjourned, on motion by Dr S.C. Thomas.