Asset Management Plan (AA4) 2014-2019 Document Code: AST PL00018
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Asset Management Plan (AA4) 2014-2019 Document Code: AST PL00018 This document is controlled within the EIM Document Management System. Please refer to the electronic version on EIM to confirm you have the latest version. Title Name Date Owner: Asset Planning Manager Tim Davies Reviewer: Asset Services Manager Mas Marsuki 14/03/2014 Approver: Chief Operating Officer Pat Donovan 14/03/2014 Document History Revision Date Amended By Details of Amendment 0 25/06/2012 Tim Davies New Document Created 1 31/09/2013 Tim Davies Updated with 2014 Business Plan approved projects 2 1/11/2013 Tim Davies Removed Non-RAB detail for Access Arrangement submission 3 14/03/2014 Tim Davies Finalised for Access Arrangement submission Page 1 of 114 Asset Management Plan (AA4) 2014-2019 EXECUTIVE SUMMARY ATCO Gas Australia (AGA) owns, operates and maintains the largest reticulated natural gas infrastructure in Western Australia. The gas reticulation networks serve Geraldton, Bunbury, Busselton, Harvey, Pinjarra, Brunswick Junction, Capel and the Perth greater metropolitan area, including Mandurah. These combined networks extend greater than 13,000km, connecting about 683,000 end users to natural gas. ATCO Gas Australia’s Gas Distribution System (GDS), covered by the Access Arrangement, operates in the Coastal gas supply areas under the conditions defined in Gas Distribution Licence 8 (GDL8). Natural Gas (NG) is distributed through the GDS from the Dampier Bunbury Natural Gas Pipeline (DBNGP) and APA Group’s (APA) Parmelia gas transmission pipeline via gate stations and Pressure Regulation Stations (PRS), designed to limit pressures in the GDS to within the Maximum Allowable Operating Pressures (MAOP) for each section of the various lower pressure networks. AGA must provide for management of safety on the GDS via a Safety Case as required by the Gas Standards Act 1972 and Gas Standards (Gas Supply and System Safety) Regulations 2000. The safety case has been prepared to comply with the requirements of AS/NZS 4645.1: 2008 Gas Distribution Networks Part 1: Network Management and where the requirements of the following standards apply to the GDS, compliance to: • AS2885.1: 2007 Pipelines – Gas and liquid petroleum Part 1: Design and construction • AS2885.3: 2001 Pipelines – Gas and liquid petroleum Part 3: Operations and maintenance AGA operates and maintains its growing GDS in accordance with the Safety Case, accepted by Energy Safety, to provide safe, reliable, cost competitive, environmentally sustainable and customer friendly natural gas delivery service to AGA customers. To enable implementation of the Safety Case this Asset Management Plan (AMP) sets out the plans, programs and strategies for the management of the network assets, presented by asset class, to meet the strategic objectives of AGA. The plan is designed to manage network assets throughout their lifecycle to deliver current and future service levels and performance targets, and to provide assurance that AGA investment in the network is prudent, efficient and appropriate to manage the risks associated with owning and operating the asset. Levels of service to be provided by AGA in operating the GDS are grouped into those affecting customer requirements and expectations, legislative compliance, organisational and strategic objectives and the Asset Management System (AMS). Metrics are tracked to monitor the performance of these service levels and reported at appropriate intervals to the relevant interested parties. The targets for these metrics are expected to be reviewed during this reporting period along with an initiative to move towards using the KPIs suggested in AS/NZS 4645. Demand drivers affecting the residential, commercial and industrial market segments in WA are based within two categories; new customer connections drivers and customer consumption drivers. Particular drivers for new residential connections are population and housing growth, interest rates and building codes for homes. Whereas for new industrial and commercial connections the primary driver is delivered energy cost as compared to nearest alternative. Drivers for residential consumption are weather, retail gas price, microeconomic factors, appliance efficiency and alternative energy appliances. Drivers for commercial and industrial consumption are retail gas price, micro- and macro-economic factors and appliance efficiency. AGA is experiencing a decline in average consumption per customer, which is similar to the experience of most natural gas utilities worldwide. Also of note is that, on average, customers on the AGA Network consume less gas than those on most other Australian gas distribution networks and their usage continues to decline. The decline in usage results partly from Customers choosing competitor products, especially electricity, in greater numbers due to the: • reduced marketing focus of gas retailers as a result of many of those gas retailers also being electricity retailers • erosion of the natural gas space heating market share and benefits of gas given the penetration of reverse cycle air conditions in the residential market • ongoing subsidisation of electricity prices, which the State Government has confirmed is $554 million annually Population growth rates since 2001-02 have ranged from 1.4% to 3.3% with an average of 2.2%. Investment in major resource projects has slowed, but many projects will move into an operational phase providing stable Document No.: AST PL00018 Page 2 of 114 Revision: 3 Issue Date: 14/03/2014 Asset Management Plan (AA4) 2014-2019 medium to longer term employment. Growth is being inhibited by high living costs and poor housing affordability. Connection rates have steadily improved since the last half of 2012 and are expected to increase until June 2014 when expansion will slow to long term population growth rates of less than 2% a year. Lifecycle management of the GDS has been divided into logical asset classes based on functional requirements, technical specifications and risk profile. Each of these major asset groups contains detailed information about the lifecycle management strategies and plans with their associated forecast capital expenditures summarised in Table 1. Table 1: Summary of ATCO Gas Australia Network Capital Expenditure by Regulatory Asset Class Asset Class Growth Sustaining Total ($'000s) Gate Stations $18,961 $18,961 High Pressure Polyethylene Pipelines $1,860 $11,031 $12,891 High Pressure Steel Pipelines $62,362 $91,559 $153,921 Medium & Low Pressure Mains $52,753 $99,984 $152,737 Metering & Service Pipes $108,619 $76,568 $185,186 Regulating Facilities $2,942 $8,136 $11,079 Telemetry & Monitoring $5,051 $5,051 Total ($'000s) $228,537 $311,289 $539,827 The growth capital expenditure forecast in the table above will provide service to more than an additional 101,000 end use customers over the five and a half year Access Arrangement period. It also includes high pressure extensions to the network to ensure the secure, long term natural gas supply to the expanding North West metropolitan, Peel, Baldivis and Busselton regions as well as Elizabeth Quay. The sustaining capital expenditure forecast is required to ensure network safety and reliability in accordance with the accepted Safety Case, and includes replacing the remaining 224km of cast iron and unprotected metallic mains and services, replacing GDS infrastructure within multistorey buildings, installing 33km of main to reinforce its GDS as well as interdependency and interconnections with transmission suppliers, to ensure sufficient and appropriate hydraulic capacity exists for reliable natural gas distribution service. In recognition of the increased risk of encroachment to buildings of public occupancy in the CBD, the Company shall reduce the operating pressure of the network in this area to mitigate the consequences of pipeline rupture. To meet regulatory obligations, AGA will replace approximately 150,000 domestic meters that have reached their end of life over the Access Arrangement period. In addition, the Company proposes to use that routine meter change opportunity to replace non-temperature compensated meters with temperature compensated meters as part of its overall strategy to improve metering accuracy for customers and to focus efforts to reduce unaccounted for gas (UAFG). The total cost of the routine meter change program is forecast at $30M and the incremental cost of installing temperature compensated meters with this program is approximately $575,000. Table 2 summarises the forecast capital growth and sustaining expenditure. 2014 has been split into halves due to the change from fiscal year reporting to calendar year reporting in the upcoming Access Arrangement so that the second half of 2014 can be added to the upcoming five and a half year access arrangement. Table 2: Summary of ATCO Gas Australia Network Capital Expenditure by Category CAPEX Category 2H 2014 2015 2016 2017 2018 2019 Total ($'000s) GROWTH CAPEX $18,715 $39,203 $51,814 $42,645 $41,457 $34,704 $228,537 Customer Initiated $15,677 $28,724 $27,766 $27,742 $28,173 $28,232 $156,314 Demand $3,038 $10,479 $24,048 $14,903 $13,283 $6,472 $72,224 SUSTAINING CAPEX $17,718 $42,007 $51,532 $64,149 $63,295 $72,589 $311,289 Asset Replacement $15,182 $33,025 $29,101 $29,872 $35,398 $35,110 $177,687 Network Safety and Performance $2,536 $8,982 $22,431 $34,277 $27,897 $37,479 $133,603 Total ($'000s) $36,433 $81,210 $103,346 $106,794 $104,752 $107,292 $539,827 Document No.: AST PL00018 Page 3 of 114 Revision: 3 Issue Date: 14/03/2014 Asset Management Plan (AA4) 2014-2019 Table 3 below shows the forecast operating expenditures for the Access Arrangement period. “Projects – non- recoverable” reflects forecast project expenditures for the operations, maintenance and inspection of the AGA’s reticulated natural gas network in accordance with its Safety Case and its AMP. Examples of activities included in the cost category would be inline inspections of high pressure pipelines, vegetation clearance, safety awareness and Dial Before You Dig (DBYD) Programs and includes other support type costs including communications, fleet, property, training and health, safety and environment.