This guide has been prepared for operators of gas transportation networks and others who have an interest in how the charging scheme will operate. It explains how charges will be made and gives an indication of the fees which may be payable. The guide has been revised to take account of The Health and Safety (Fees) Regulations 2003 (the Fees Regulations) which came into force on 1 April 2003.
Charging was introduced for the gas transportation industry in October 1999 to recover the cost of HSE's work in certain defined areas. Charging regulations have been made under the Health and Safety at Work etc. Act 1974 (HSWA) which gives HSE the power to charge operators for such work and the enforcement of the relevant statutory provisions. Specifically, regulation 21 of the Fees Regulations gives HSE these powers in relation to gas transportation.
The regulatory regime affecting gas transportation is based on the Gas Safety (Management) Regulations 1996 (GSMR). The general provisions of HSWA are also relevant to regulating operations in the industry. HSE will charge for all its safety case advice and assessment work; inspection to ensure compliance with the safety case in the gas transportation sector; and the enforcement of any of the relevant statutory provisions insofar as such enforcement is for the purpose of protecting persons from risks arising from the manner in which gas is conveyed or used in the network covered by the safety case. (The Relevant Statutory Provisions are defined in HSWA as including the provisions of Part I of the Act and any health and safety regulations).
Further information on the activities covered by the Fees Regulations including commentaries can be found at Annex A
The system of charging in use is based on the amount of resource used in performing its function in relation to any particular network. The charge is calculated by reference to time expended carrying out its functions with regard to that network on any given occasion or occasions and includes all relevant costs. The costs are calculated in accordance with Treasury rules and guidance.
The charges will cover the following functions:
assessing safety cases submitted by gas conveyors and the Network Emergency Co-ordinator (NEC) as provided under GSMR, regulation 3, and communicating the results of the assessment to operators;
assessing material changes to a gas conveyor's safety case as provided by GSMR, regulation 4(2);
providing advice with respect to the preparation of a safety case or revision to a safety case which is proposed to be sent to the Executive pursuant to any provision of GSMR;
assessing whether an exemption from any requirement or prohibition required by GSMR may be granted and the terms and conditions attached to that exemption under regulation 11;
Excluded from any charge made under these provisions are:
Further explanation of exclusions can be found at Annex A
Time spent by an inspector on drafting press notices and attending press conferences is not chargeable as the inspector is not performing a function which relates to the enforcement of any of the relevant statutory provisions.
HSE will not duplicate charges where a fee is already charged under other legislation (for example, under the Control of Major Accident Hazards Regulations 1999 (COMAH)).
These are made on an 'actuals' basis. That is, the recovery of the full costs of the time spent by HSE carrying out a relevant activity for a particular network on any particular occasion or occasions. The way in which HSE has approached the identification of the relevant costs for inclusion in the chargeout rate follows the guidance in HM Treasury's Fees and Charges Guide (see Ref 1).
From 6 April 2009, the charge out rate is £138 per inspector hour.
Charges will normally fall to the duty holder, the person who has responsibility for controlling the risks. For a network this is the person conveying gas or the Network Emergency Controller, the person who is in control of the network. Where the network is to be constructed, persons who commission the design or construction of the pipelines forming the network fall within the definition of "operator" as used in Schedule 18 of the Fees Regulations.
Generally, HSE will notify Duty Holders in advance of the reasons for an inspection and what is to be inspected.
The charge is calculated on the basis of the time spent on that particular chargeable activity multiplied by a predetermined chargeout rate. HSE operates a work recording system to generate the relevant information. The charges are calculated in accordance with HM Treasury's Fees and Charges Guide and include the full cost of all the resources used in carrying out that chargeable activity. These costs are included in the Memorandum Trading Accounts prepared annually (see paragraph 19) and which are set out on the basis of five main headings. The costs included in these headings are as follows:
Some illustrative examples of possible charges are given at Annex B
HSE will issue invoices and receive payments for all chargeable activities (irrespective of who carried out the work, for example, HSE or a contractor). HSE will be responsible for debt recovery. Invoices will identify:
Invoicing and debt recovery functions are carried out centrally; inspectors are not responsible for the issuing of invoices nor for any follow up actions relating to non-payment of invoices. In addition, they are not be well-placed to discuss charging policy. Queries on invoices should be referred to the contact point given in paragraph 29.
Invoicing takes place within thirty working days of the end of a quarter. Invoices will be issued on the pattern of quarters March to May, June to August, September to November and December to February.
Payment is due to HSE within thirty days of the date of invoice. HSE have assumed that duty holders' accounting systems allow part payments to be made. If this is not the case, a note to this effect should be sent to Finance Unit 2 (see contact details below) so that HSE's standing duty holder data can be amended and the appropriate action taken.
HSE will actively pursue outstanding debts in accordance with its own debt recovery procedures.
HSE will prepare annual Memorandum Trading Accounts which will be subject to scrutiny by HSE's Internal Audit and also externally by the National Audit Office.
Disputes procedure - invoices
If a duty holder queries an invoice, the principles of Service First (the new Citizens Charter) will apply. However, in some cases, it will not be possible to reach informal agreement and HSE has introduced a procedure for handling queries and disputed invoices. The procedure has three levels. These are set out in broad terms below but a full description of the procedure can be obtained from HSE Finance Unit (see contact details below) or is available on HSE's internet website. Please note that there are time limits at each level within which queries should be submitted.
Level One
All queries should initially be directed to HSE Finance Unit (see contact details below) who will record receipt on a query record. Progress on clearance of the query will be monitored and, where the query has been referred to the operational Directorate, progress will be checked regularly at intervals of no less than weekly. Finance Unit will be responsible for answering queries relating to the standard information contained in the invoice such as invoice accuracy, chargeout rate, method of payment, VAT, address etc.
Level Two
If the query cannot be resolved at Level One or the query relates to whether the charge properly reflects the costs incurred in carrying out the function or was a chargeable function, the duty holder may refer their query via HSE's Finance Unit to the appropriate member of senior management in that particular HSE Operating Division. The senior manager will consider the query and set out their reasons for the decision in writing.
Level Three
If the duty holder is not satisfied with the senior manager's decision under Level Two, they may refer the matter in dispute to the chairman of the 'Disputes Panel'. The chairman, in consultation with an external member of the panel, will decide whether the case merits convening the full panel comprising senior officials from the relevant HSE Operating Division, the Head of HSE's Planning, Efficiency and Finance Division and an independent member from industry. The 'Disputes Panel' will be chaired by one of the Directors of HSE's Policy Group. The 'Disputes Panel' has the power to uphold or reject the complaint and confirm, vary or cancel the charge in dispute. HSE will commence debt recovery action where an invoice has been disputed under the Level Three procedures and the charge in dispute has been upheld and the invoice has not been settled within ten days of the notification of the 'Disputes Panel' determination.
Where a duty holder's accounting system does not allow part payment of an invoice and there is a dispute over part of the invoice, the original invoice will be cancelled and two invoices substituted - one for the undisputed amount and the other for the disputed amount. The invoice value for the disputed amount will be for a value agreed between the duty holder and HSE's Operational Directorate. The settlement in relation to the undisputed invoice will become payable in accordance with the date of the original invoice. Once the dispute has been resolved, either through agreement between the duty holder and HSE or via the disputes panel, the invoice will be payable within 30 days of the date of the original invoice or, where the original 30 day period has expired, within 10 days of notification of the outcome of the dispute.
Disputes procedure - operational issues
Where matters of dispute arise on operational issues which have implications for the charging regime, these will first be considered by the Gas Transportation Charging Review Group which has the overall responsibility to keep under review the effectiveness and operation of the gas transportation charging regime's financial and administrative arrangements. The membership of the Review Group will comprise representatives from industry and trade associations as well as HSE officials.
If the matter cannot be resolved by the Review Group, it will be referred to senior officials in HSE.
The HSE Procedure for Queries and Disputes can be found at
http://www.hse.gov.uk/charging/disputes.htm.
Should you need advice on the operation of the charging system or have a specific query, please telephone or write to HSE at:
FinU2
Planning, Efficiency and Finance Division
St Hugh's House
Trinity Road
Bootle L20 3QY
Tel: 0151 951 4326
Fax: 0151 951 4141
1. A priced publication available from HMSO Books: ISBN 0 11 560043 4
This Annex sets out the activities which the HSE undertakes in respect of gas safety and provides information on the nature of the activities for which a charge will be made.
Assessment of Safety Cases
GSMR regulation 3 - Assessment and acceptance of Gas Conveyor and Network Emergency Co-ordinator safety casesfor the purposes of these Regulations, a Network Emergency Co-ordinator is, subject to paragraph (3), a person who has prepared a safety case containing the particulars specified in Schedule 2 and has had that safety case accepted by the Executive.
All persons conveying gas in a network must prepare a safety case, submit it to HSE and have it accepted before beginning operations (unless they have been granted an exemption). The time taken for the assessment will depend on the quality, completeness and complexity of the submitted safety case, and can be affected if resources are diverted by the need for reactive work on incidents. Duty holders should take this into account when submitting cases. HSE will normally attempt to complete the assessment process within three months of the receipt of the case.
Assessment of the safety case is to see if it addresses adequately the particulars in Schedule 1 to the Regulations (or Schedule 2 in the case of the Network Emergency Co-ordinator) and thereby provides a demonstration of safe operation. A safety case will not be considered for acceptance unless it contains all of the particulars specified in Schedule 1 to the Regulations.
Assessment will be undertaken by considering the information provided in the safety case and will not involve site visits. The work will be carried out in accordance with procedures set out in the Safety Case Handling and Assessment Manual (SCHAM). How much time is spent on the assessment will depend on the quality and completeness of the submitted case and the complexity of the duty holder's operation. Assessment is an iterative process which may involve assessors requesting further explanations and information from the duty holder.
Safety case assessment can be assisted by advance discussion between duty holders and HSE on key safety issues. Duty holders are encouraged to discuss and resolve such matters with HSE in advance of safety case submission, thereby avoiding any difficulties imposed by the tight timescales for the assessment process. General advice on what a safety case should contain will not be charged for so that, in practice, most requests for general advice which can be resolved quickly through a telephone call are likely to fall in the non-chargeable category. However, advice in connection with the preparation of a specific safety case prior to its submission will be chargeable; for example where it is to the benefit of both the duty holder and HSE to discuss how the information is to be presented within the safety case or what specific features are or are not likely to be acceptable.
Currently there is only one Network Emergency Co-ordinator, Transco plc. However, if someone else was to take on this role, the process for assessing their safety case would be the same as for a gas conveyor's safety case.
Material changes to Safety Cases
GSMR regulation 4(2) - Assessment of material changes to a Gas Conveyor's safety case
Where a revision proposed to be made under paragraph (1) will render the safety case materially different from the last version accepted by the Executive pursuant to these Regulations, the revision shall not be made unless the Executive has accepted the revision, and for the purposes of this paragraph in determining whether a proposed revision will render the safety case materially different from the version referred to above, regard shall be had to the cumulative effect of that proposed revision and any previous revisions made under paragraph (1) but not subject to this paragraph.
Where proposed modifications have a material effect, the safety case, or relevant parts of it, should be resubmitted to HSE for assessment. Changes should not be implemented until the new safety case (or parts) has been accepted by HSE.
The time taken for the assessment will depend on the nature and complexity of the revision, but HSE will normally attempt to complete the process within three months of the receipt of the material revision.
Exemptions from the requirement to produce a Safety Case
GSMR regulation 11 - Assessment associated with the issue of exemption certificates
The Executive may, by a certificate in writing, exempt any person or class of persons from any requirement or prohibition imposed by these Regulations, and any such exemption may be granted subject to conditions and to a limit of time and may be revoked at any time by a certificate in writing.
The type of exemption under consideration here is where the duty holder applies to be exempted from the requirement to produce a safety case. The time taken to process an application for an exemption will be related to the complexity of the duty holder's operation. Like the assessment of safety cases, the work will follow SCHAM procedures. In effect, inspectors will have to consider and judge a mini safety case submission to assure themselves that an exemption is appropriate and that the risks to health and safety will be properly controlled.
Enforcement of the relevant statutory provisions includes all regulatory and directly linked activity, assessment, inspection, and investigation, for the purpose of protecting persons from risks arising from the manner in which gas is conveyed or used. GSMR and the Pipelines Safety Regulations 1996 are the main provisions relating to this. Also included in the chargeable activities are preparatory activities such as planning and reviewing inspections; reading relevant documentation; and the carrying out formal enforcement activities such as the preparation and serving of improvement or prohibition notices.
Inspection and Assessment
HSE will carry out inspections and assessments to verify that the duty holder is controlling the risks arising from the conveyance or use of gas in the network. Inspection and assessment will consider the adequacy of:
This work will usually involve visits to the site from which the network is controlled, but may also include visits to other locations, for example, the duty holder's head office.
All duty holders will be inspected following assessment and acceptance of their safety case. In practice, the nature and extent of inspection undertaken by HSE will be dependent upon the scale and complexity of the duty holder's operation. The assessment and inspection programme will be determined as part of HSE's rolling three-year gas strategy which is published on HSE's website. Inspection may also be triggered by other events such as incidents which indicate that compliance with the procedures set out in the accepted safety case is in question.
HSE will not duplicate charges where a fee is already charged under other legislation (for example, a charge made under COMAH).
Inspection - Contractors
Inspection of the activities of contractors working on or in connection with a network are chargeable to the duty holder, insofar as such inspection is for the purpose of protecting persons from risks arising from the manner in which gas is conveyed or used. For example, if an inspection of a contractor responsible for laying gas services involves checking that the design, construction and installation complies with the procedures set out in the duty holder's safety case, this would be chargeable. However, checking the standards of general site safety for the contractor's employees carrying out the work would not be chargeable.
If, during an inspection, it becomes clear that it is necessary to commence an investigation with a view to its being ascertained whether a contractor (or both the contractor and the duty holder) should be prosecuted for an offence under the relevant statutory provisions, this will be chargeable.
Inspections of contractors which do not relate to a specific network or a specific duty holder will not be chargeable. This would include, for example, the corporate audit of a contractor (even if this involved visits to one or more sites) or to the general application of the law to a contractor's activities concerning various networks which are not operated by a single duty holder.
Investigations may commence as a result of notifications made under RIDDOR or GSMR, or where HSE becomes aware of any other incident which has caused or is liable to cause injury to persons. Investigations may also arise from complaints received. The word "incident" may describe any accident, dangerous occurrence, incident or complaint.
When a possible offence comes to the attention of HSE, any activities carried out to enable HSE to decide whether to prosecute will be chargeable. These activities may include:
Investigative work is reactive in nature and cannot be pre-planned. It is therefore difficult to give an estimation of typical cost. However, experience has shown that such work may utilise significant resources resulting in a serious impact upon HSE's planned work.
Subject to the exclusions in paragraph 6 below the cost connected with investigation activities will be recovered from the duty holder who is required to have their safety case assessed by HSE and who is the subject of the investigation.
HSE may take formal enforcement action, that is serve an improvement or prohibition notice, to secure compliance with the relevant statutory provisions. Duty holders who contravene the relevant statutory provisions may be prosecuted. Subject to the exclusions outlined below the costs connected with enforcement activities will be recovered from operators.
All work associated with formal enforcement of the relevant statutory provisions which impose duties on:
insofar as such enforcement is for the purpose of protecting persons from risks arising from the manner in which gas is conveyed or used will be chargeable.
This includes all communications to ensure compliance between HSE and operators or contractors, for example the preparation, service, and checking compliance of improvement and prohibition notices.
Chargeable formal enforcement activity will start as soon as HSE decides that action is necessary to ensure compliance and will finish either when HSE is satisfied that the operator complies with the relevant regulation or at the commencement of legal proceedings. The costs associated with following up that remedial measure and improvements have been undertaken will be recovered in appropriate charges.
Formal enforcement work is reactive in nature and cannot be pre-planned. It is therefore difficult to give an estimate of typical costs. However, experience has shown that such work may utilise significant resources resulting in a serious impact upon HSE's planned work.
In England and Wales, no charge will be made for work done after a summons has been obtained from a Magistrate's Court. HSE may, however, apply to the court to recover its prosecution costs at the end of the trial.
In Scotland, no charge will be made for work done after the inspector undertaking a criminal investigation or prosecution refers the case to the Procurator Fiscal or the Procurator Fiscal intervenes in the investigation, whichever is the sooner. In Scotland, unlike in England and Wales, HSE is not given the power to recover its prosecution costs at the end of the trial.
Appeals Against Notices
The costs of HSE incurred in connection with the service of improvement or prohibition notices are recoverable, including those cases where an appeal is successful. However, the costs incurred by HSE from the date on which a notice of appeal has been received by the Employment Tribunal are not recoverable.
This Annex contains examples of chargeable and non-chargeable activities and, where possible, indications of the resources that may be required for the assessment of safety cases, inspection, assessment, investigation and formal enforcement in the gas transportation industry.
Where an estimated time is given in the following examples it was based either on practical experience or an assessment of typical resources which may be required. For charging purposes one day is equivalent to 7.4 hours. Duty holders are asked to bear in mind that these examples may not be typical of their own business and the effort expended by HSE will be dependent on the quality of the safety case submitted or the type and depth of inspection, investigation or formal enforcement required.
A gas conveyor who is a licensed gas transporter installs piped distribution systems operating at low pressure only. Typically, these systems will be supplying gas to new housing estates and will be connected to Transco's or another upstream conveyor's distribution system. Assessment of the safety case submitted under GSMR would be expected to take five days.
A small gas transporter, who has previously conveyed gas at low pressure only, wishes to move to a two-tier pressure system. This requires a material revision to their accepted GSMR safety case. Assessment of this revision would be expected to take two days.
A large gas transporter operating extensive transmission and distribution systems wishes to make a change to the way it odorises gas. This requires a material revision to their accepted GSMR safety case. Although the revision would be very small in terms of content, perhaps only a few lines of text, it would have to be justified by a detailed hazard and risk assessment document. The assessment process would be expected to take 60 days.
A large gas transporter plans to carry out a significant re-organisation of its structure and management arrangements. This requires a material revision to their accepted GSMR safety case. The assessment process would be expected to take 30 days.
A large gas transporter proposes a restructuring which involves selling major parts of its distribution network business. This would require a material revision to the gas transporter's existing safety case and submission of new safety cases for the new operators. This would require a detailed assessment looking at compliance with all requirements within GSMR. The assessment process for each type of safety case would be expected to take 70 days.
The NEC carries out a test of its arrangements for preventing a network supply emergency. The test is done with inspectors observing at several sites to verify compliance with the procedures and arrangements set out in the NEC's accepted GSMR safety case. The inspection time would be expected to amount to three days. However, this period would also include time spent on checking gas transporters' compliance with their safety cases and would therefore not all be chargeable to the NEC.
A gas conveyor who is a licensed gas transporter, installs piped distribution systems operating at low pressure only. Typically, these systems supply gas to new housing estates and there are several hundred of them scattered around the country. An inspection is made to verify compliance with the procedures and arrangements described in their accepted GSMR safety case. Pre-planning, site visits and post-visit action would be expected to amount to seven days in total.
A large gas transporter operating extensive transmission and distribution systems and employing several thousand people is subject to a rolling three years inspection strategy which, among other things, is intended to verify compliance with the accepted GSMR safety case. Inspection work will be carried out by regulatory and technical specialists and will, in each year, address selected topics, for example, network analysis, management of contractors, dealing with supply emergencies. Some of this work may be done as part of wider, audit activity. The amount of work will vary from year to year but is likely to be of the order of six days.
An inspector is reviewing a notification under the Pipelines Safety Regulations 1996 [PSR], regulation 20, concerning a proposal to construct a new major accident hazard pipeline which will be part of a network for which a GSMR safety case has been accepted. Any work involving assessment of the proposal, which is likely to include discussions with the operator or the person who has commissioned the design and construction of the pipeline if they are different, would be chargeable. This may typically take six days but the actual time spent will vary considerably depending on the notification being assessed.
An inspector reviews an operator's emergency procedures (required under PSR regulation 24) concerning a major accident hazard pipeline forming part of a network. This may include overseeing an emergency exercise. In preparation, a site visit and reporting, this would be expected to take two days.
An inspector visits a gas compressor site which forms part of a GSMR network. The inspection involves assessing the measures for minimising the risks from a fire or explosion from a gas leak on the plant. Specifically it includes checking compliance with the Dangerous Substances and Explosive Atmosphere Regulations 2002. Costs would be recoverable for this work and the time taken in preparing for the visit, on-site activities and reporting may take three days.
An audit of an operators permit-to-work system for controlling risks from a gas network is undertaken. Typically this would involve two inspectors, include a review of documentation, interviews with management and staff and a report with a follow-up visit. For a complex network, this could result in ten days of chargeable work.
An employee is carrying out a non-routine operation on a pipeline forming part of a GSMR network. There is a failure in the system of work which results in a release of gas, exposing the employee to a risk of injury. An inspector investigates the incident, looking at operating procedures, standards of supervision, training and competence. The time spent on the investigation would be subject to charges. The costs would vary significantly depending on the extent of the failings and action taken by the Inspector.
A major investigation is undertaken into a release of gas from the network and subsequent explosion which resulted in an injury to a member of the public. The cost of HSE's investigation would be recoverable subject to the exclusions described earlier in this guide.
A member of the public makes a complaint about a persistent smell of gas from a network. The complaint is investigated by an Inspector. This may be done through a phone contact with the operator, requesting an investigation and report back. Alternatively, a site visit and interviews may take place. Where there was a risk of injury from gas, this work would be chargeable. The costs would vary dependent on the extent of the investigation.
An employee's representative makes a complaint relating to issues which affect the way gas is conveyed or used. An example would be shortcomings in the procedures for responding to a gas incident. A proportion or all of the time investigating the complaint (dependent on the findings) would be chargeable.
A contractor is laying new gas pipes. There are deficiencies in the way the trench is supported which puts employees at risk from a trench collapse. This risk is not related to a risk from the gas and therefore any work done in inspecting or investigating the situation is not cost recoverable.
An operator of a point-to-point pipeline conveying gas from the national transmission system to a power station has been granted an exemption from the requirement to produce a safety case. Any time spent by an inspector considering aspects of the way the gas is conveyed or used in relation to that pipeline would not be cost recoverable.
An inspector is looking at the measures to minimise the risks to employees of sustaining an injury from hand arm vibration from the use of percussive tools whilst excavating gas mains. This is a serious occupational health risk but is not concerned with the risk to the employees from gas and is therefore not chargeable.
Time spent ensuring compliance with the Control of Substances Hazardous to Health Regulations 1999 in so far as they relate to the risks from substances to which employees may be exposed to during, for example, ground works, would not be cost recoverable.
Time spent inspecting employers compliance with the Manual Handling Operations Regulations 1992, for example concerning the risk of injury to employees from handling gas pipes, would not be cost recoverable.
An investigation is conducted into a release of gas from downstream of the emergency control valve and a subsequent explosion. The investigation does not relate to operations on the network and hence work on this investigation would not be chargeable.
