attachment 12.1 asset management plan

ATTACHMENT 12.1 ASSET MANAGEMENT PLAN ATCO 2020-24 PLAN

EIM # 96610842

PUBLIC 31 August 2018

ASSET MANAGEMENT PLAN INCORPORATING THE STRATEGIC

ASSET MANAGEMENT PLAN

INTERNAL 31 August 2018

ii 31 AUGUST 2018 ATCO Gas Australia Pty Ltd Asset Management Plan Internal

Document Information

This document is controlled within the Enterprise Information Management (EIM) System.

Please refer to the electronic version on EIM to confirm you have the latest version.

DOCUMENT INFORMATION

Title Asset Management Plan

Subtitle Incorporating The Strategic Asset Management Plan

AUTHORISATION

Title Title Date

Owner Tim Davies Manager Asset Planning 20/08/2018

Reviewer Kim McArthur Manager Asset Services 20/08/2018

Approver Stevan Green President 31/08/2018

DOCUMENT HISTORY

Rev No Date Amended by Details of amendment

0 18/03/2014 Tim Davies New Document Created

1 30/06/2014 Tim Davies Updated for 2015 to 2019 planning period

2 30/01/2016 Tim Davies Updated for 2016 to 2020 planning period

3 07/07/2017 Sin Wei Lim Updated for 2017 to 2021 planning period

4 30/08/2018 Sin Wei Lim Updated for 2019 to 2028 planning period

TABLE OF CONTENTS

iii 31 AUGUST 2018 ATCO Gas Australia Pty Ltd Asset Management Plan Internal

Table of Contents

1. Document Purpose ................................................................................................................. 1

1.1 Strategic Asset Management Plan .......................................................................................................................... 1

1.2 Asset Management Plan ......................................................................................................................................... 2

1.3 Document Scope ..................................................................................................................................................... 3

1.4 Key Asset Management Documents ....................................................................................................................... 3

2. Executive Summary ................................................................................................................ 4

2.1 Context and background ......................................................................................................................................... 4

2.2 ATCO’s asset management approach ..................................................................................................................... 4

2.3 Strategic asset management: objectives ................................................................................................................ 4

2.4 Strategic asset management: Planning and governance ........................................................................................ 5

2.5 Asset management: Asset classes ........................................................................................................................... 5

Part A – Strategic Asset Management Plan ........................................................................................ 6

3. Background and Context ......................................................................................................... 7

3.1 Network Overview .................................................................................................................................................. 7

3.2 Regulatory Context ................................................................................................................................................. 8

3.3 Asset Management Drivers ................................................................................................................................... 10

4. Strategic Alignment .............................................................................................................. 13

4.1 Overview ............................................................................................................................................................... 13

4.2 Stakeholders ......................................................................................................................................................... 13

4.3 Corporate Strategy ................................................................................................................................................ 15

4.4 Asset Management Policy ..................................................................................................................................... 16

4.5 Asset Management Objectives ............................................................................................................................. 17

4.6 Asset Lifecycle Strategies ...................................................................................................................................... 18

5. Asset Management Planning and Governance ....................................................................... 21

5.1 Overview ............................................................................................................................................................... 21

5.2 Asset management governance ............................................................................................................................ 22

5.3 Asset Lifecycle Management ................................................................................................................................ 27

5.4 Deliverability ......................................................................................................................................................... 36

5.5 Continual Improvement ........................................................................................................................................ 37

Part B – Asset Management Plan .................................................................................................... 39

6. Asset Management Plan ....................................................................................................... 40

6.1 Pipelines, Mains and Services ............................................................................................................................... 41

6.2 Regulating Facilities .............................................................................................................................................. 46

6.3 Metering Facilities................................................................................................................................................. 50

6.4 Supervisory Control and Data Acquisition ............................................................................................................ 54

6.5 Corrosion Protection Systems ............................................................................................................................... 58

6.6 Fleet ...................................................................................................................................................................... 61

6.7 Property, Plant and Equipment ............................................................................................................................. 64

7. Financial Summary................................................................................................................ 67

7.1 Planned Capex Investments .................................................................................................................................. 67

7.2 Planned Opex Investments ................................................................................................................................... 70

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iv 31 AUGUST 2018 ATCO Gas Australia Pty Ltd Asset Management Plan Internal

LIST OF TABLES

Table 4.1: Main stakeholders and identified needs ................................................................................................... 14

Table 4.2: Engagement themes .................................................................................................................................. 15

Table 4.3: Alignment of asset management and strategic objectives ........................................................................ 18

Table 4.4: Asset Performance Indicators .................................................................................................................... 19

Table 5.1: Components of Asset Management .......................................................................................................... 21

Table 5.2: Asset Management Method ...................................................................................................................... 22

Table 6.1: Pipelines, mains and services objectives that support line of sight .......................................................... 43

Table 6.2: Pipelines, mains and services alignment between proposed investments and asset management objective areas ..................................................................................................................................... 44

Table 6.3: Pipelines, mains and services summary of forecast expenditure ($’000) ................................................. 45

Table 6.4: Regulating objectives that support line-of-sight ....................................................................................... 48

Table 6.5: Regulating alignment between proposed investments and asset management objective areas ............. 49

Table 6.6: Regulating summary of forecast expenditure ($’000) ............................................................................... 49

Table 6.7: Metering key objectives that support line-of-sight ................................................................................... 52

Table 6.8: Metering alignment between proposed investments and asset management objective areas ............... 53

Table 6.9: Metering summary of forecast expenditure ($’000) ................................................................................. 53

Table 6.10: SCADA objectives that support line-of-sight ........................................................................................... 56

Table 6.11: SCADA alignment between proposed investments and asset management objective areas ................. 57

Table 6.12: SCADA Summary of forecast expenditure ($’000) ................................................................................... 58

Table 6.13: CP Key objectives that support line-of-sight............................................................................................ 59

Table 6.14: CP alignment between proposed investments and asset management objective areas ........................ 60

Table 6.15: CP Summary of forecast expenditure ($’000).......................................................................................... 61

Table 6.16: Fleet Key objectives that support line-of-sight ........................................................................................ 63

Table 6.17: Fleet Alignment between Proposed Investments and Asset Management Objective Areas .................. 63

Table 6.18: Fleet Summary of forecast expenditure 6 years (2019-2024) ($’000) ..................................................... 63

Table 6.19: PP&E Key objectives that support line-of-sight ....................................................................................... 65

Table 6.20: PP&E Alignment between proposed investments and asset management objective areas ................... 65

Table 6.21: PP&E Summary of forecast expenditure between 2019 and 2024 ($’000) ............................................. 66

Table 7.1: Total Capital Expenditure by Category ($’000) .......................................................................................... 68

Table 7.2: Total Capital Expenditure by Asset Class ($’000) ....................................................................................... 69

Table 7.3: Total Opex by Expenditure Category ($’000)............................................................................................. 71

Table 7.4: Total Opex by Asset Class ($’000) .............................................................................................................. 72

LIST OF FIGURES

Figure 1.1: Purpose of the SAMP .................................................................................................................................. 2

Figure 1.2: Asset Management Document Framework ............................................................................................... 3

Figure 3.1: Our role in the gas value chain ................................................................................................................... 7

Figure 4.1: Elements of our Strategic Alignment Framework .................................................................................... 13

Figure 5.1: Annual planning process .......................................................................................................................... 23

Figure 5.2: Risk Management Process (ISO 31000:2009) ........................................................................................... 26

Figure 5.3: Asset Management Lifecycle .................................................................................................................... 28

Figure 6.1: Coastal Supply Area (GDS) network summary ......................................................................................... 40

Figure 7.1: Total Capital Expenditure by Category ($’000) ......................................................................................... 69

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v 31 AUGUST 2018 ATCO Gas Australia Pty Ltd Asset Management Plan Internal

Figure 7.2: Total Capital Expenditure by Asset Class ($’000) ..................................................................................... 70

Figure 7.3: Total Opex by Expenditure Category ($’000) ........................................................................................... 71

Figure 7.4: Total Opex by Asset Class ($’000) ............................................................................................................. 72

GLOSSARY

1 31 AUGUST 2018 ATCO Gas Australia Pty Ltd Asset Management Plan Internal

Glossary

AHI Asset Health Index – An index used to monitor and improve the health of

ATCO’s assets.

ALARP As Low As Reasonably Practicable - The ALARP principle is that the residual

risk shall be reduced as far as reasonably practicable.

ALS Asset Lifecycle Strategies – Describe the managing assets throughout the

lifecycle from acquisition to disposal. This allows a rational approach to capital

acquisition and renewal and the adoption of a risk management approach to

asset management and for business driven maintenance

AM Asset Management - coordinated activity of an organization to realize value

from assets.

AMP Asset Management Plan - documented information that specifies the

activities, resources and timescales required for an individual asset, or a

grouping of assets, to achieve the organization’s asset management

objectives

AMS Asset Management System - measures that are to be taken by the licensee

for the proper maintenance, operation and expansion or reduction of the

distribution system.

APA APA Group - transmission pipeline owner/operator of the Parmelia Pipeline.

AVT Accuracy Verification Test

Capex Capital Expenditure – ATCO incurs capital expenditure for new assets

CAR Corrective Action Requests – Requests received from Building and Energy to

update a practice or process.

CBM Condition Based Maintenance – Maintenance performed on an asset

depending on the condition of the asset.

CBP Corporate Business Plan – A plan describing the overall direction for the

business.

DBNGP Dampier Bunbury Natural Gas Pipeline - the Dampier to Bunbury Natural Gas

Pipeline stretches almost 1600 kilometres, linking the gas fields located in the

Carnarvon Basin off the Pilbara coast directly to mining, industrial,

commercial customers and via other distribution networks to residential

customers.

DBYD Dial Before You Dig – A system to provide information to prevent third party

strikes on underground assets.

DMIRS Department of Mines, Industry Regulation and Safety – a regulating entity in

Western Australia

FMECA Failure Mode Effects and Criticality Analysis – An approach for performing

maintenance requirements analysis.

GLOSSARY


FSA Formal Safety Assessment – A risk management tool to manage safety risks

as per requirements of AS2885 and AS4645.

GDL8 Gas Distribution Licence 8 – Licence to operate issued from ERA

GDS Gas Distribution System - The Mid-West and South-West Gas Distribution

Systems (MWSWGDS) - the natural gas distribution networks that serve the

Geraldton, Perth metropolitan, Bunbury, Capel and Busselton areas. The

MWSWGDS is a covered pipeline subject to the National Gas Access (WA) Act

(2009) (NGL) and the National Gas Rules (NGR). The MWSWDGS is subject to

an Access Arrangement that is approved by the ERA

HPR High Pressure Regulator – A facility that regulates network pressures to

particular design set-points above 500kPa.

IAP2 International Association for Public Participation - IAP2 is an international

member association which seeks to promote and improve the practice of

public participation or community and stakeholder engagement,

incorporating individuals, governments, institutions and other entities that

affect the public interest throughout the world.

IVR Interactive Voice Response - a technology that allows a computer to interact

with humans through the use of voice and DTMF tones input via a keypad.

LTIFR Lost Time Injury Frequency Rate – the number of lost time injuries occurring

in a workplace per 1 million hours worked.

MAOP Maximum Allowable Operating Pressures – The maximum pressure the

pipeline or main can be operated at.

MGL Mandurah Gas Lateral - The Mandurah Gas Lateral (MGL) has been prepared

by ATCO Gas Australia for the Pipeline Operation of the class 600 Section of

the MGL as defined in Pipeline Licence 83 (PL83), granted to ATCO Gas

Australia by the Western Australian Department of Mines and Petroleum

(DMP).

MP Medium Pressure – Pressure less than 500kPa.

MPa Mega Pascals – measure of pressure

MPR Medium Pressure Regulator – A facility that regulates network pressures to

particular design set-points below 500kPa.

MWSWGDS Mid-west and South West Gas Distribution System – gas network covered

under the Access Arrangement

NG Natural Gas - flammable gas, consisting largely of methane and other

hydrocarbons, occurring naturally underground (often in association with

petroleum) and used as fuel

OPSO Over Pressure Shut Off – safety devices installed on regulating sets to prevent

downstream overpressure

PGP Parmelia Gas Pipeline – connected transmission pipeline to the GDS

PMBoK Project Management Body of Knowledge – An organisation with an objective

to standardise and improve project management knowledge worldwide.

GLOSSARY


PRS Pressure Regulation Stations - A facility that regulates network pressures to

particular design set-points above 1900kPa.

RCM Reliability Centred Maintenance – a process used to determine what must

be done to ensure that any physical asset continues to do what its users want

it to do in its present operating context.

SAMP Strategic Asset Management Plan

UAFG Unaccounted for Gas – The difference between metered inflows and metered

outflows of gas.

VoC Voice of Customer – ATCO’s customer engagement program

ABBREVIATIONS

iv 31 AUGUST 2018 ATCO Gas Australia Pty Ltd Asset Management Plan Internal

Abbreviations

ALS Asset Lifecycle Strategies

AMP Asset Management Plan

AMP Asset Management Plan

AMS Asset Management System

APA APA Group

AVT Accuracy Verification Test

BR Boundary Regulators

C&I Commercial and Industrial

CBP Corporate Business Plan

CP Corrosion Protection

DBNGP Dampier Bunbury Natural Gas Pipeline

DBYD Dial Before You Dig

DMIRS Department of Mines, Industry Regulation and Safety

EPR Earth Potential Rise

ERA Economic Regulation Authority

ERP Enterprise Resource Planning

FMECA Failure Mode Effects and Criticality Analyses

GDL8 Gas Distribution Licence 8

GDS Gas Distribution System

HPR High Pressure Regulator

IGC Investment Governance Committee

LFI Low Frequency Induction

LNG Liquefied Natural Gas

MAOP Maximum Allowable Operating Pressures

MGL Mandurah Gas Lateral

MPa Mega Pascals

MPR Medium Pressure Regulator

MWSWGDS Mid-west and South West Gas Distribution System

NG Natural Gas

NGA National Gas Access (WA) Act 2009

OPSO Overpressure Shut-Off Device

ABBREVIATIONS

v 31 AUGUST 2018 ATCO Gas Australia Pty Ltd Asset Management Plan Internal

PGP Parmelia Gas Pipeline

PMBoK Project Management Body of Knowledge

PMM Project Management Manual

PRS Pressure Regulation Stations

RCM Reliability Centred Maintenance

SAMP Strategic Asset Management Plan

SAP ATCO ERP System

SM Scheduled Maintenance (Preventative Maintenance)

TRU Transformer Rectifier Unit

UAFG Unaccounted for Gas

DOCUMENT PURPOSE


1. Document Purpose

This Asset Management Plan (AMP) outlines ATCO’s long-term strategy for managing its Gas Distribution System (GDS). The AMP is a component of ATCO’s governance framework, which ensures the prudent and efficient investment in and operation of the networks. The AMP describes the asset management processes, explains how these will help ATCO to achieve its asset management objectives and how ATCO will meet its stakeholder expectations.

The AMP contains the following sections:

1. Document Purpose: Introduction to the purpose and the structure of this AMP.

2. Executive Summary: Overall summary of asset management objectives, performance and growth.

Part A - Strategic Asset Management Plan

3. Background and Context: Overview of ATCO’s coastal network, relevant standards and compliance

framework.

4. Strategic Alignment: Strategic alignment of ATCO’s asset management vision, objectives, investment,

and benefits to customers.

5. Asset Management Planning and Governance: Overview of ATCO’s Asset Management System (AMS),

describing the asset management planning process, investment governance, asset lifecycle

management, deliverability, and risk assessment approach.

Part B – Asset Management Plan

6. Asset Management Plan: Description of asset performance, asset condition, expected growth, and

asset-specific maintenance and replacement strategies by asset class

7. Financial Summary – Overall summary of the investments proposed over the next 10 year planning

period 2019 to 2028.

This document is structured into two parts: Strategic Asset Management Plan (SAMP) and AMP. These two sections focus on ATCO’s enduring asset management strategy and shorter-term tactical approaches respectively. These different areas of focus are important elements in our AMS.

1.1 Strategic Asset Management Plan

The SAMP (Part A) is a strategic planning tool that clarifies intentions, priorities and certain practices that will be adopted for the management of ATCO’s assets. The SAMP is a critical component of our asset management approach at ATCO. The SAMP fulfils several roles, including:

Providing guidance for the long-term asset investment approach across the GDS.

Aligning asset management with ATCO’s corporate objectives and ensuring these are supported

through our investment decision-making. Linkages from corporate strategies are established via KPI’s,

which in turn drive our asset investments.

Providing the high-level direction for managing assets throughout their lifecycle. This approach is the

basis for ATCO’s asset-class level activities.

Documenting the relationship between organisational objectives and lower-level asset management

objectives and defining the initiatives required to achieve these. The links between these objectives

are two-way and are developed through an iterative process.

DOCUMENT PURPOSE


The purpose of the SAMP is to:

Bridge the gap between the organisational strategic plan and the specific, relevant and prioritised activities necessary to deliver it through the lifecycle management of ATCO’s portfolio of assets.

Translate the (bottom-up) realities of the assets (capabilities, needs, risks, opportunities, lifecycles etc.) into the implications for ATCO’s business goals.

Translate (top-down) organisational expectations into practical programs, and shape those expectations by (bottom-up) recognition of practical constraints, risks and opportunities.

The SAMP provides a guide to achieving our long-term asset management objectives, including that ATCO:

Manages assets in a manner that supports the long-term interests of customers.

Optimises asset utilisation, while minimising lifecycle costs through well-managed maintenance and capital investment programs.

Maintains reliability, safety, and efficiency while meeting agreed service levels.

Complies with legislative and regulatory requirements.

Sets network-level lifecycle asset management objectives, strategies and targets that promote continual improvement in the delivery of safe, reliable and efficient gas supply to customers.

1.2 Asset Management Plan

The AMP (Part B) sets out ATCO’s systematic approach to managing the overall GDS including planned investments over our 10-year planning period. This section provides an overall view of network asset performance and asset condition relating to the GDS.

Asset management plans describe in detail the activities that are to be carried out on the assets, and co-ordinate those activities to align with ATCO’s asset management objectives (described in the AMS). AMPs provide detail to support financial requirements, the means to prioritise and deliver the planned activities, and the monitoring and management of delivery.

The AMP is used in conjunction with Asset Lifecycle Strategies (ALS), stakeholder feedback, and other key reports to inform ATCO’s investment strategies and expenditure proposals.

The purpose of the AMP is to:

Consult with stakeholders, particularly on planned investments.

Assist stakeholders to understand the asset management approach by providing clear descriptions of assets, objectives, strategies, and target performance levels.

Explain how the planned asset management investments support corporate objectives.

Describe the asset management continuous improvement process.

Describe the role of the asset management system in supporting achievement of the asset management objectives.

Figure 1.1: Purpose of the SAMP

DOCUMENT PURPOSE


1.3 Document Scope

This AMP cover the Coastal gas supply areas defined in Gas Distribution Licence 8 (GDL8). Natural gas is distributed through the Coastal gas supply areas from the Dampier Bunbury Natural Gas Pipeline (DBNGP) and APA Group’s (APA) Parmelia gas transmission pipeline (PGP) via gate stations and Pressure Regulation Stations (PRS).

The Coastal gas supply areas covers the following geographical areas:

Perth metropolitan area (including Barter Road, Ellenbrook, Mandurah, and Rockingham).

Muchea, Eneabba, and Geraldton.

Pinjarra, Harvey, Kemerton, Bunbury, and Busselton.

The Albany and Kalgoorlie networks are covered under GDL8 but do not form part of the regulated GDS and have separate Asset Management Plans.

1.4 Key Asset Management Documents

ATCO’s asset management documentation ensures the asset management objectives are clearly traceable to organisational objectives so that asset management related tasks and activities are directly aligned to the needs of the stakeholders. As depicted below the AMP forms part a key part of the framework, interconnecting several documents.

Figure 1.2: Asset Management Document Framework

EXECUTIVE SUMMARY


2. Executive Summary

2.1 Context and background

ATCO is the owner and operator of Western Australia’s largest collection of natural gas distribution infrastructure, which consists of more than 14,000 km of pipelines, and enables gas to be distributed to approximately 760,000 end use customers.

The management of ATCO’s gas network and associated infrastructure assets is guided by the strategies, objectives, principles and procedures detailed in this AMP. The AMP also informs investment strategies and proposals. The time horizon of ATCO’s AMP is 10-years, although the plan is updated annually.

This AMP is a key component of the AMS and should be read in conjunction with other key documents such as Asset Lifecycle Strategies (ALS), and the Safety Case.

This AMP applies only to the ATCO Distribution System (GDS) covered by the Access Arrangement, which is formally referred to as the Mid-West and South West Gas Distribution System (MWSWGDS).

2.2 ATCO’s asset management approach

ATCO’s longer-term approach to asset management is detailed in Sections 3, 4 and 5 of this document.

The Strategic Asset Management Plan presented in these sections is essentially a strategic planning

framework that guides ATCO’s overall approach to asset management.

The strategic focus of these sections is complemented by the tactical approach to asset management

outlined in Sections 6 and 7. These sections describe the plans, programs and strategies that will guide the

management of particular classes of network assets.

2.3 Strategic asset management: objectives

The high-level objectives that underpin ATCO’s strategic approach to asset management are outlined below. These objectives are focussed on ensuring that ATCO delivers safe, reliable, and affordable gas network services while also enabling the transition to a lower carbon future.

Network integrity: Reduce gas escapes by replacing aged assets and suitably maintaining the network to minimise network incidents.

Customer and public safety: Ensure safety for customers and public by minimising operational risk.

Workforce Safety: Ensure safety to personnel working on or around gas network assets.

Regulatory compliance: Ensure regulatory compliance by implementing safety case operating regime for gas distribution assets.

Security of supply: Ensure a safe and reliable natural gas supply to all gas consumers.

Prudent and efficient expenditure: Ensure costs are prudent, efficient, consistent with accepted industry practices, and necessary to achieve the lowest sustainable cost of providing gas distribution services in the long-term interest of customers.

Customer service: Quality systems and processes help to deliver a safe and reliable service to customers. They are used to ensure that appropriate pressure levels are available at customer premises.

Growth: Enable the growth of the WA state economy.

Innovation: Build the foundation for a clean energy future.

EXECUTIVE SUMMARY


The achievement of these objectives is the core purpose of this AMP, which is designed to manage network assets throughout their lifecycle to deliver current and future service levels and performance targets, and to provide assurance that ATCO’s investment in the network is prudent, efficient and appropriate to manage the risks associated with owning and operating the asset. Asset-specific plans are detailed in the relevant Asset Lifecycle Strategy (ALS) document.

Further detail on the cascading nature of ATCO’s approach to asset management is provided in Section 4.

2.4 Strategic asset management: Planning and governance

ATCO’s asset management is supported by a robust, structured and transparent planning and governance framework that ensures asset management decisions are well-informed and consistent with regulatory requirements, corporate strategies and good industry practice.

This framework ensures that ATCO continues to focus on achieving the lowest sustainable cost of providing a safe, reliable, and cost competitive natural gas distribution service.

Further detail on ATCO’s planning and governance framework is provided in Section 5.

2.5 Asset management: Asset classes

ATCO’s proposed ‘tactical’ approach to the management of each major class of assets is detailed in Section 6 of this AMP. This section outlines, for example, how ATCO proposes to approach the management of pipelines, mains and services over the next decade.

The approach detailed in Section 6 is supplemented by a summary of ATCO’s forecast expenditure across each of specific asset classes for the 10-year horizon of the AMP. This section also details the assumptions that underpin these forecasts.

EXECUTIVE SUMMARY


Part A – Strategic Asset Management Plan

BACKGROUND AND CONTEXT


3. Background and Context

ATCO owns and operates the gas infrastructure network in Western Australia - the Mid-West and South-West Gas Distribution System (GDS). Our core business is owning, operating, and maintaining natural gas distribution networks and providing a safe, reliable, and affordable natural gas delivery service to residential, commercial, and industrial customers.

3.1 Network Overview

The GDS is the largest reticulated gas infrastructure in Western Australia. ATCO distributes the gas on behalf of the retailer, delivering gas to over 760,000 customers through more than 14,000km of distribution pipelines.

3.1.1 Gas Distribution

Natural gas supplies more than half of Western Australia’s primary energy needs and fuels over 70 per cent of WA’s electricity generation. However, the majority of gas produced in WA is exported in the form of liquefied natural gas (LNG).

ATCO’s role in the natural gas supply chain is to distribute the gas to consumers. Following production and processing, the gas is delivered through high-pressure transmission pipelines such as the DBNGP and PGP.

The gas is then delivered to homes and businesses through our gas distribution network. ATCO owns, operates, and maintains the distribution pipelines up to the meter box of the customer, owns and maintains the meter in the meter box and conducts the meter readings at each property.

Retailers then organise gas contracts from producers and on-sell gas to consumers. Retailers are also responsible for managing the customers’ accounts and are the primary consumer contact point. ATCO connects the customer to the distribution network, who then pays their chosen retailer directly for the gas and gas services they provide. The retailer pays ATCO for the delivery and connection services.

The figure below illustrates the roles of ATCO and identifies the key stakeholders in the gas supply chain.

Figure 3.1: Our role in the gas value chain

3.1.2 Areas we serve

The GDS operates in the Coastal Gas supply areas under the conditions defined in GDL8. While ATCO’s Albany and Kalgoorlie networks are covered by GDL8, they are non-regulated networks and are not included in the GDS for the purpose of the Access Arrangement.



ATCO’s operational base is located in Jandakot with depots1 situated in Wangara, Mandurah, Bunbury and Geraldton. Key activities carried out include the operation, construction and maintenance of the gas distribution system, along with the management of interfaces with customers, public, retailers, regulators, local authorities, and emergency services.

The GDS is supported by an ATCO workforce of 350 personnel and an additional contracted workforce to deliver a reliable and safe energy source to our Western Australian customers.

3.2 Regulatory Context

ATCO’s networks are managed and operated subject to economic and safety regulation and Australian Standards. These regulations govern efficient investment in the network, network safety, and technical specifications.

The primary regulations relating to Asset Management and Safety in legislation is covered in:

National Gas Access (WA) Act 2009 (NGA)

Gas Standards Act 1972

Petroleum Pipelines Act 1969

3.2.1 Economic Regulation

The National Gas Access (WA) Act 2009 adopts an amended version of the National Gas Law (NGL) with some specific amendments to accommodate local circumstances. The NGL regulates all third-party access to gas infrastructure in Western Australia.

Under the NGL, the National Gas Rules (NGR) detail the requirements relating to prudent investments on the network, asset management, network operations, and pipeline safety.

The NGR focuses on efficient investment and operations of the gas network for the long-term interests of gas consumers with respect to gas safety, reliability and price. The NGR provides a set of criteria to assess whether the expenditure required is prudent and efficient. The SAMP ensures that ACTO’s approach to asset management identifies and mitigates risks in the most efficient way. Compliance with the NGR is built into all investment decisions and investment governance process.

ATCO’s GDS is subject to the NGL and the NGR, and ATCO must have an access arrangement in place for the pipeline services it intends to provide. The access arrangement sets out the terms and conditions of access to these pipeline services, including the tariff for accessing the network.

Gas Distribution Licence

The Economic Regulation Authority licenses ATCO’s distribution systems that operate at a pressure of less than 1.9 mega Pascals (MPa) within the gas supply areas of the Coastal Network, the Kalgoorlie Distribution Network and the Albany Distribution Network.

A Gas Distribution Licence (GDL8) has been issued by the ERA under the licensing scheme in the Energy Coordination Act 1994 for the operation of our GDS. This licence requires us to comply with a range of obligations prescribed by this Act and its associated regulations and codes:

Energy Coordination (Customer Contracts) Regulations 2004

Energy Coordination (General) Regulations 1995

Energy Coordination (Higher Heating Value) Regulations 2008

Energy Coordination (Last Resort Supply) Regulations 2005

1 Depots in Albany and Kalgoorlie to service Albany and Kalgoorlie networks that are not part of the GDS



Energy Coordination (Licensing Fees) Regulations 1999

Energy Coordination (Ombudsman Scheme) Regulations 2004

Energy Coordination (Retail Market Schemes) Regulations 2004

Energy Coordination Regulations 2004

Gas Marketing Code of Conduct 2008

A licence requirement of GDL8 is to provide to the ERA specified information in relation to the licence. In accordance with this requirement, the ERA requires annual performance reporting of the indicators identified in the Gas Distribution Licence Performance Reporting Handbook. These categories are:

Customer Connections

Gas Consumption

Leaks

Network Reliability

Complaints

Call-Centre Performance

Network Construction

Each year, the ERA publishes the Annual Performance Report for Gas Distributors, which provides transparency to the public of the legislative levels of service provided. There are no targets set by the ERA for these indicators. The results are used for benchmarking purposes only.

3.2.2 Safety Regulation

The primary regulations relating to Safety in legislation is covered in:

Gas Standards Act 1972 and supporting regulations

o Gas Standards (Gas Supply and System Safety) Regulations 2000

o Gas Standards (Gasfitting and Consumer Gas Installations) Regulations 1999

Petroleum Pipelines Act 1969.

The WA Government Department of Mines, Industry Regulation and Safety (DMIRS) carries out technical and safety regulation of gas activities throughout Western Australia, including the activities of gas distribution licence holders.

The GDS is regulated by the DMIRS Building and Energy Division, under the provisions of the Gas Standards Act 1972 and the Gas Standards (Gas Supply and System Safety) Regulations 2000.

The Mandurah Gas Lateral (MGL) is regulated by the DMIRS Dangerous Goods and Petroleum Safety Branch, under the provisions of the Petroleum Pipelines Act 1969 and the Petroleum Pipelines (Management of Safety of Pipeline Operations) Regulations 2010.

Legislative requirements for both the GDS and MGL require ATCO Gas to operate within a Safety Case regime. The safety case outline how ATCO complies with the safety requirements.

GDS Safety Case

ATCO’s safety framework is aligned with the Gas Standards (Gas Supply and System Safety) Regulations 2000 (WA), which requires the production of a Safety Case, which must be reviewed and accepted by Building and Energy.

The GDS Safety Case documents the processes and procedures employed to ensure the safe and reliable operation of the GDS. The latest Safety Case was accepted by Building and Energy in late 2017. It maps out the safety activities the network operator must conduct to reduce safety risks to ALARP. The Safety Case



requirements are factored into this AMP and relevant ALS, which identify specific programmes of work that will manage safety.

A requirement of this Act is that ATCO Gas must provide for management of safety on the GDS via a Safety Case. As per the requirements of the regulations, the Safety Case identifies:

The measures necessary to “prevent hazardous events identified in the safety case from occurring”

The measures necessary “to protect consumers, the public, employees, plant, equipment and the environment, should such events occur”

“The training and equipment requirements necessary for personnel to be able to implement the various procedures set out in it”

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

MGL Safety Case

The Mandurah Gas Lateral (MGL) Safety Case applies to the Pipeline Operation of the Class 600 section of the Mandurah Gas Lateral as defined by Pipeline Licence 83 (PL83), granted to ATCO by DMIRS. The Safety Case is aligned with the Petroleum Pipelines (Management of Safety of Pipeline Operations) Regulations 2010, and the latest revision was accepted by the Minister during 2016.

The Safety Case has been prepared to comply with the requirements of:

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

ATCO is required to take all reasonably practicable steps to ensure that the MGL Pipeline Operation is carried out in a manner that is safe and without risk to the health of persons engages in the MGL Pipeline Operation. ATCO must also ensure that persons engaging in the MGL Pipeline Operation do so in accordance with the MGL Safety Case.

They key aspects of ATCO’s Safety Management System (incorporating both asset management and risk management frameworks) apply to both the GDS and MGL.

3.3 Asset Management Drivers

Several drivers influence the extension, replacement, modification or refurbishment of network assets. Such factors include:

Network growth.

Network safety and performance.

Asset condition.

Third-party capital works programs.

These drivers are used in conjunction with asset performance indicators to determine the most prudent and efficient course of action to address ongoing network risk and capacity requirements.

3.3.1 Network Growth

Growth is a key factor in ATCO’s asset management strategies. Population growth, new developments, and industrial growth require the natural gas distribution network to expand into new areas. Such network



expansion requires the installation of new mains, telemetry systems, and pressure control facilities. Growth in brownfield areas requires reinforcement of existing assets to ensure sufficient network capacity.

Growth is dependent on factors that affect the number of network connections, and factors that affect gas consumption.

Connection drivers in the residential customer sector include population and housing growth and

building codes for homes. The key drivers of new industrial and commercial sector connections are

prevailing economic conditions and delivered energy cost compared to the nearest alternative.

Consumption drivers in the residential sector include weather, retail gas price, microeconomic factors,

appliance efficiency and alternative energy appliances. Drivers for commercial and industrial

consumption include the retail gas price, micro- and macro-economic factors, and appliance efficiency.

Consumption at some smaller commercial connections is also influenced by weather.

Reinforcement projects usually include the installation of a pressure regulator, mains extension or capacity upgrade of a regulator set. These projects are assessed on the highest risk event associated with insufficient network pressure cause by incremental growth, which leads to a loss of supply to existing customers.

Reinforcement projects aim to provide sufficient capacity under peak winter condition and continue to facilitate growth of the area, operate above the minimum allowable pressure, and maintain continuity of gas supply to consumers’ appliances for safe operation.

The criteria for reinforcement projects are based around meeting demand for a 1-in-20 year peak winter severity. Minimum allowable operating pressures (MAOPs) are identified and used as the modelling basis to identify reinforcement requirements

The purpose of reinforcing the network is to:

Maintain a safe supply of gas to customers: Poor network pressures could, in some circumstances, lead to a momentary loss of supply to an appliance. Should a ‘flame out’ occur and remain unnoticed, this could lead to a gas in building incident, which in turn could result in serious injuries or fatalities through a gas explosion or asphyxiation. While the likelihood of this is low the consequences could be major.

Maintain supply reliability to existing customers: Growth within and at the extremity of networks can decrease network capacity. This is measured by pressure monitoring devices (PMD) on the network. If pressures drop below system minimum; the supply reliability to existing customers will be compromised resulting in a gas outage. Supply interruption to customers can cause significant operational, compliance, and reputational issues.

3.3.2 Network safety and performance

Network safety of the community and personnel is a primary driver for asset management activities. There are inherent safety risks in operating a gas distribution network. Leaks from the mains and services can create a safety risk. A leak can release gas into or under a building where it may collect, be ignited and cause an explosion.

Asset management activities are designed to increase the likelihood of leaks being detected, and ideally repair or replace assets before a leak, crack or break occurs. A common indicator of asset condition is age. However, asset condition is also heavily dependent on the material, location, and conditions under which the pipe was laid.

Network reliability is an important driver of ATCO’s asset management approach. All customers should be provided the same reliability of gas supply. ATCO manages its coastal gas networks in accordance to Australian Standards, which provide guidance on acceptable levels of safety and reliability. ATCO install



additional infrastructure to avoid a major gas outage caused by a single point failure (third-party damage) causing significant operational, compliance, and reputational issues.

3.3.3 Asset condition

Assets deteriorate as they age, and typically their performance declines over time. The rate of deterioration can vary dramatically depending on asset type, material, location and operating pressure. Though deterioration tends to be gradual, asset failure (particularly gas main failure) can be sudden, and the consequences severe.

As a result, asset condition is a critical driver of asset replacement; ATCO aims to replace aged and poor condition assets before failure occurs. The replacement and maintenance programs may have to accelerate or switch focus in response to asset performance indicators or safety incidents.

3.3.4 Third-party capital works programs

Capital works programs by other utilities and road authorities often require assets such as gas mains or service inlets to be moved, modified or replaced. The cost of such works is recouped from the requesting party.

STRATEGIC ALIGNMENT


4. Strategic Alignment

4.1 Overview

To ensure strategic alignment, ATCO links corporate objectives with day-to-day activities when managing assets using the alignment framework illustrated in Figure 4.1.

The main elements of ATCO’s asset management system are:

Stakeholders: Several internal and external parties have an active interest in how ATCO’s assets are managed. Ensuring ATCO effectively identifies and addresses these interests is a focus of our stakeholder engagement activities, which is discussed in Section 4.2.

Business Plan: The Business Plan encapsulates our corporate vision, purpose and values. The Business Plan is used to document the financial accountabilities of the company and described further in Section 4.3 (Corporate Strategy).

Asset Management Policy: Aligns the asset management approach with ATCO’s strategic objectives (see Section4.4) through a set of network management strategic priorities.

Asset Management Plan (this document): Sets out our asset management objectives and associated KPIs that will guide our asset management approach over the planning period. Our asset management objectives reflect our Asset Management Policy by prioritising safety, stakeholder needs and the importance of effective risk management. The Asset Management Objectives are detailed in Section 4.5.

Asset Lifecycle Strategies: Reflect our asset lifecycle model and set out how these processes and activities are applied to individual asset classes. They explain how we apply our objectives to individual asset fleets and how these inform our intervention plans. We have developed eight of these to cover the main asset types on the GDS. The objectives related to each asset type are outlined in Section 5.3.

Business cases: are used to challenge and approve proposed investments. Business cases are a key part of the Asset Management Governance framework summarised in Section 5.2.

4.2 Stakeholders

To be an effective asset manager, ATCO must identify and address the interests of stakeholders in its decision making. This ensures the right service is offered, at the right quality, at the right price.

To achieve this appropriate balance, ATCO ascertains its stakeholders’ needs and expectations through a variety of approaches, including its Voice of Customer program, analysis of industry standards and trends, and competitive market analysis.

The purpose of stakeholder engagement is to define the requirements for the AMS to provide the services needed by stakeholders identified in Table 4.1. This process identifies stakeholders involved with the system throughout its lifecycle.

Figure 4.1: Elements of our Strategic Alignment Framework

STRATEGIC ALIGNMENT


Table 4.1: Main stakeholders and identified needs

STAKEHOLDER MAIN INTEREST

Customers

Our customers include residential, commercial and industrial users that are served through our distribution networks. They want a safe, reliable supply at a reasonable price.

Retailers

Retailers own the gas that we distribute and have the contracted delivery responsibility with customers. They want to understand our investment plans, our ability to respond to faults (and to provide them information) and our approach to connecting new customers.

Economic Regulation Authority The ERA is responsible for regulating third-party access to gas pipelines in Western Australia. The coastal network excluding Albany and Kalgoorlie gas networks is a fully regulated gas distribution system and as such the ERA periodically review amendments to ATCO’s access arrangement.

Department of Mines, Industry Regulation and Safety (DMIRS), Building and Energy Division, and Dangerous Goods and Petroleum Safety Branch

Building and Energy is responsible for the technical and safety regulation of our GDS. This includes administering gas technical and safety legislation and setting and enforcing minimum safety standards for gas networks. The Dangerous Goods and Petroleum Safety Branch is responsible for the technical and safety regulation of the Mandurah Gas Lateral

WA Communities

The communities that host our assets and that may be impacted by the performance of or networks. It is important that we consult effectively with them when planning our activities, so we can better understand potential impacts and mitigate these as far as practicable.

Service Providers

We outsource a number of field activities and a number of other roles to a group of ‘service providers’. Ensuring sustainable and effective working relationships is important to our overall effectiveness.

Staff Our staff are key stakeholders in everything we do. Ensuring they have appropriate skills is essential if we are to manage our assets safely and reliably.

Shareholder

Our owners seek financial returns that are commensurate with investment risk. Working with our Board and Executive Team they ensure that we are an effectively managed business with appropriate governance processes.

Other Stakeholders Other stakeholders with an interest in our asset management approaches include government ministries, financial institutions, the media and other industry bodies.

We regularly seek input from interested parties during the development of our investment plans. These discussions provide useful feedback, which has been considered and incorporated into our investment plans. We will continue to liaise with these interested parties throughout the period of this plan.

4.2.1 Voice of Customer Program

ATCO believes customer and stakeholder engagement is important when preparing revisions to access arrangements, even if this is not a specific regulatory requirement.

The Voice of Customer (VoC) program focussed on creating a dialogue with customers and stakeholders across five distinct phases through interviews and workshops. Harnessing the insights through the VoC

STRATEGIC ALIGNMENT


program ensures ATCO’s investment plans reflect the preferences of customers and stakeholders. Table 4.2 outlines the engagement themes that were used in the VoC program.

Table 4.2: Engagement themes

ABOUT ATCO AFFORDABILITY SAFETY,

RELIABILITY, AND GROWTH

CUSTOMER EXPERIENCE

CLEANER ENERGY FUTURE

Attractive qualities of natural gas

Predicted price rise from AA4 to AA5

Reliability of gas supply and outages

What does good customer service look like?

Incentives

About ATCO AA5 price path Proposed Capex programs for AA5

Channel preferences for engaging with ATCO

AGA’s initiatives towards a low-carbon future

Components of a gas bill

Capital Contributions Policy

Priority preference for proposed Capex program

- -

Further detail on ATCO’s VoC program, including the overarching approach and methodology, and the insights generated from the engagement program can be found in Chapter 4 (Stakeholder Engagement) of ATCO’s 2020-24 Plan.

4.3 Corporate Strategy

4.3.1 Our Vision

ATCO’s vision is to realise the full potential of its infrastructure, with natural gas recognised as a key and valuable energy solution for the people of Western Australia.

4.3.2 Strategic Objectives

Our strategic objectives are set out below.

Continue to provide a safe gas distribution network in accordance with good industry practice.

Maintain reliable access to gas.

Provide affordable access to gas at the best price we can.

Support a competitive retail market.

Enable the growth of the WA state economy.

Build the foundation for a clean energy future.

Safe

There is no greater priority to ATCO than the safety of its employees, and of the people that make up the communities in which it operates. ATCO believes that no other objective should override the safety of employees, contractors or the public. A strong safety culture has been developed by promoting the importance of safety throughout the organisation and taking all steps to provide employees and service providers with safe working conditions.

ATCO supports the Safety Case approach as it provides transparency and ensures accountability for safety performance while considering costs, risk and any other commitments. Executing the activities required in the Safety Case ensure customers and the public experience a safe gas supply now and in the future. A key driver of activities under the Safety Case is the requirement to ensure that risk is reduced to ALARP.

STRATEGIC ALIGNMENT


Safety is a key driver for capex during the planning period. Investments are sometimes required to ensure that assets do not pose safety risks to staff or the general public. ATCO ensures that such risks are isolated or minimised as much as practicable.

Reliable

ATCO understands that providing a reliable gas service is important for the needs of its customers, which was confirmed that the high-level of reliability was appreciated by consumers in the VoC program.

Affordable

In an economic environment of continually increasing prices for energy, ATCO are committed to providing the lowest cost source of energy per gigajoule, balanced against risk and performance, by managing and investing in the distribution network prudently and efficiently. ATCO benchmark very well against other Australian utilities and endeavour to ensure maximum value is delivered to WA consumers.

Competitive retail market

To ensure excellence in support for gas retailers, ATCO will implement bespoke customer service training for personnel focusing on a culture of adding value for the customer with a “can do” mind set. Customer service delivery success benchmarks and feedback processes will be improved to ensure that ATCO continues to keep pace with the changing needs of customers.

With customers’ increasing use of digital media to source information and make purchasing decisions ATCO is continually reviewing and updating its digital platforms. Areas for focus will include the customer gas connection process as well as maximising the opportunities to provide customers information on all of the services provided. Digital media also provides an excellent opportunity to improve the ways that ATCO can listen and respond to customers’ needs. ATCO will review current customer feedback processes to determine where digital media can enhance the customer service experience.

Growth of the WA State economy

With an overarching strategy that aims to ‘shift’ the company to a more customer focussed organisation, growth strategies will adopt a customer-centric approach targeted at both the residential and commercial and industrial (C&I) segments with the aim of:

Increasing gas consumption

Connecting additional gas customers

Foundation for clean energy future

ATCO aspires to build the foundation for the clean energy future by ensuring our network designs remain efficient while transitioning to a cleaner energy future through the introduction of renewable gas, e.g. biogas and hydrogen.

4.4 Asset Management Policy

The Asset Management Policy is the cornerstone of ATCO’s approach to asset management. It has been developed in line with the strategic objectives and provides the guidance within which ATCO develop the asset management strategies, objectives, targets and plans to deliver strategic objectives.

The policy has an annual review requirement at the President level. The executive level accountability and endorsement of the policy signifies the key role it plays in setting ATCO’s asset management direction.

The policy confirms ATCO’s commitment to realising the full potential of its infrastructure by managing its assets safely, reliably, and sustainably for the long-term. ATCO is committed to:

STRATEGIC ALIGNMENT


Ensuring that investment in the expansion, operation, maintenance and replacement of the network is prudent and appropriately balanced between costs, risks and performance of the assets

Setting objectives and targets that promote continual improvement of the Asset Management System and to the assets being managed throughout their lifecycle.

Complying with the Safety Case obligations, current applicable legislation, regulations, standards, codes, and licences.

Ensuring the assets are operated safely and without harm to the environment.

Proactively managing existing and future risks in accordance with the Risk Management Policy and Framework.

Making informed decisions based on reliable asset information.

4.5 Asset Management Objectives

The AMP builds on the Asset Management Policy to develop Asset Management Objectives. These objectives guide ATCO’s asset management activities, asset management decisions, and asset performance targets.

ATCO’s asset management objectives are aligned to our strategic objectives. They are:

Network Integrity: Reduce gas escapes by replacing aged assets and suitably maintaining the network

to minimise network incidents.

Customer and public safety: Ensure safety for customers and the public by minimising operational

risk.

Workforce safety: Ensure safety to personnel working on or around gas network assets.

Regulatory compliance: Ensure regulatory compliance by implementing the safety case operating

regime for gas distribution assets.

Security of supply: Ensure a safe and reliable natural gas supply to all gas consumers.

Prudent and efficient expenditure: Ensure costs are prudent, efficient, consistent with accepted

industry practices, and necessary to achieve the lowest sustainable cost of providing gas distribution

services in the long-term interest of customers.

Customer service: Ensure the quality systems and processes help to deliver a safe and reliable service

to customers. They are used to ensure that appropriate pressure levels are available at customer

premises.

Growth: Enable the growth of the WA state economy.

Innovation: Build the foundation for a clean energy future.

4.5.1 Line-of-Sight

Leading asset management bodies emphasise the importance of aligning an organisation’s strategic plan with its asset management objectives, asset management strategies and asset management plans; right through to the on-the-ground daily activities. The concept of having a clear alignment between corporate objectives and daily activities is considered a key feature of effective asset management.

Asset management objectives described in this AMP are derived from the organisational objectives and are set for asset management activities and for the performance and condition of the asset systems and assets. When setting the asset management objectives, ATCO ensures that the objectives are:

Consistent and aligned with corporate objectives.

Consistent with the asset management policy.

STRATEGIC ALIGNMENT


Established and updated using asset management decision-making criteria defined in this document.

Measurable (if practicable).

Table 4.3 provides the ‘line-of-sight’ between ATCO’s corporate strategic objectives and the asset management objectives.

Table 4.3: Alignment of asset management and strategic objectives

STRATEGIC OBJECTIVES

ASSET MANAGEMENT

OBJECTIVES KEY PERFORMANCE INDICATORS (KPIs)

Safe Network integrity

Asset Health Index

Network Incidents

Leaks on mains per 100 km Mains

Customer and public safety

% of broken mains responded to within 1 hour

Attendance to gas smells in a public area - % attended to within 2 Hours

Workforce safety

Total Recordable Injury Frequency Rate (TRIFR)

Regulatory compliance

Number of noncompliance from regulator safety authorities

Reliable Security of supply

SAIFI

SAIDI

Affordable Prudent and efficient expenditure

Opex per customer

Opex per km main

Unaccounted for Gas (UAFG)

Competitive retail market

Customer service

% New customer connections within 5 business days for established residential

property within line of main

Growth of the WA State economy

Growth Km of mains laid

Number of new connections – commercial and industrial (regulated)

Performance against the KPI targets are reported monthly. This allows quick identification when a performance falls below acceptable levels, and the implementation of corrective measures where necessary. A formal evaluation of the KPIs is conducted at the end of the year. The KPI evaluation process has key elements:

Performance of KPIs against agreed targets to understand the driver behind the performance and the progress to achieving the relevant strategy and any mitigation recommendations.

Review of the existing KPIs to ensure they are still relevant and a good measure of achieving corporate strategy.

Setting and agreement of project KPI targets to assess the potential for strategies to succeed.

4.6 Asset Lifecycle Strategies

The Asset Lifecycle Strategies (ALS) include investment plans and detailed asset strategies for each asset fleet. The ALS set out objectives and strategic approaches specific to the management of individual asset classes throughout their lifecycle.

STRATEGIC ALIGNMENT


ALS provide strategic direction at a level of detail sufficient to enable the development of our investment plans. This includes the objectives, and the asset performance measures (see Table 4.4) which ATCO uses to monitor the implementation of the strategy throughout the lifecycle of the asset class.

Collectively, the ALS provide strategic direction on how ATCO intends to drive and implement the asset management system across each asset classes. They set out past performance and identify future objectives that guide our approach to managing these assets. The approach for each asset class guides business decision making, subject to constraints such as funding, deliverability, and optimisation between portfolios.

Table 4.4: Asset Performance Indicators

ASSET CATEGORY ASSET PERFORMANCE INDICATORS

Pipelines, Mains, and Services Leaks on mains per 100 km Mains (Whole Network)

Leaks on mains from leak survey per 100 km of main (rolling 5 years)

Class 1 & 2 Leaks on mains per 100km of mains

Damage to a MP/LP Pipeline -Instances per 100km of MP/LP main

Damage to a HP pipeline - Instances per 100km of HP main

UAFG Rolling 12 Months %

% of pipeline patrolled

No of over pressurisations

Number of mains breaks per 1000 DBYD requests

Ratio of broken mains and services per 1,000km of network

Number of broken mains per 100km (rolling 12 months)

Ratio of broken services per hundred customers

% of Broken Main Responded to Within 1 Hour

% on within 1 hour for priority response (incl. SFE, SOG Telstra Pit)

Attendance to Gas Smells in a Public Area - % attended to within 2

Hours

Class 1 leak (repair within 1 day)

Class 2 leak (repair/reassess within 1 week)

Class 3 leak (repair/reassess within 12 months)

Km of main surveyed (High risk area)

Km of mains laid/replaced

No of service laid/replaced

Total length of new main constructed

Regulating Facilities % PRS Failures

% HPR Failures

% MPR Failures

Leaks on Gate Station, Regulator sets and metersets

No of “High High pressure alarm” Instances

No of "Low Low Pressure Alarm" Instances

Metering Facilities Leak at meter position

Attendance to No Gas (Commercial) - % attended to within 2 Hours

Attendance to No Gas (Domestic) - % attended to within 3 Hours

Attendance to Gas Smells at Meter – Standard Response - % attended

to within 48 Hours

% of meter set failures

% of meter set failures

STRATEGIC ALIGNMENT


ASSET CATEGORY ASSET PERFORMANCE INDICATORS

Supervisory Control and Data Acquisition Metro communication faults attended within timeframe

Metro data faults attended within timeframe

Regional communication fault attended within timeframe

Regional data fault attended within timeframe

Network alarms attended or actioned

Over pressure shut off (OPSO) devices alarmed

Accuracy verification test (AVT) carried out at third party gate stations

connected to the ATCO GDS

Accuracy verification tests (AVTs) carried out at third party gate

stations connected to the ATCO GDS

Metro communication faults attended within timeframe

Metro data faults attended within timeframe

Regional communication fault attended within timeframe

Regional data fault attended within timeframe

Corrosion Protection Systems Percentage of network protected by CP

ASSET MANAGEMENT PLANNING AND GOVERNANCE


5. Asset Management Planning and Governance

5.1 Overview

Consistent with ATCO’s Gas Distribution License and Safety Cases, ATCO has developed an Asset Management System (AMS) to effectively manage activities associated with owning and operating the GDS. The AMS has been prepared in alignment with the requirements of ISO 55001 and it documents the interactions between the policy, processes and procedures required to ensure the safe, reliable, cost effective, customer focused, and environmentally sustainable natural gas delivery service.

Personnel and organisations working for and on behalf of ATCO are required to comply with all applicable policies and fulfil safety and environmental duties of care. Specific performance and procedural requirements of the AMS apply to all construction and operational activities associated with owning and operating the GDS.

An effective Asset Management approach encompasses the following key components:

Table 5.1: Components of Asset Management

AMS COMPONENT DESCRIPTION

Asset Planning

(Section 4)

ATCO’s planning strategies are focused on meeting customer needs in the most

effective and efficient manner.

A planning process ensures the consistency and alignment between objectives.

Planning documents such as AMP, ALS are reviewed annually

ASS

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(Sec

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Financial planning Financial planning process to ensure its financial viability over the long term

ATCO has a Business Plan that documents the financial accountabilities

Significant variances in actual/budget income and expenses are identified and

corrective action taken where necessary.

Capital expenditure planning

ALS and Business cases provide justification for capital expenditure and timing of

expenditure.

The capital expenditure plan is consistent with the asset life and condition

identified in the asset management plan.

Risk management Key to this process element is demonstration that risks are identified and

managed to an acceptable risk level.

Risks are documented in a risk register and treatment plans are actioned and

monitored.

The probability and consequences of asset failure are regularly assessed.

ASS

ET L

IFEC

YCLE

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ENT

(Sec

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.3)

Asset creation and acquisition

ATCO utilise a project management methodology (described in PMM MA00001

Project Management Manual) adapted from Project Management Body of

Knowledge (PMBoK) and ISO 21500.

Business cases consider non-asset options where possible and costs are justified

and cost drivers identified.

Full project evaluations include all life-cycle costs.

Projects reflect sound engineering and business decisions.



AMS COMPONENT DESCRIPTION

Asset operations and maintenance

Risk management is applied to prioritise operations and maintenance tasks.

Assets are documented in an Asset Register including asset type, location,

material, plans of components, an assessment of assets’ physical/structural

condition and accounting data.

Operational and maintenance costs are measured and monitored.

Regular inspections are undertaken of asset performance and condition.

Failures are analysed and operational/maintenance plans adjusted where

necessary.

Contingency planning

Environmental analysis Opportunities and threats in the environment are assessed.

ATCO ensures compliance with statutory and regulatory requirements.

Asset disposal The reasons for under-utilisation or poor performance are critically examined

and corrective action or disposal undertaken.

There is a replacement strategy for assets.

Asset management information system

ATCO invests in IT systems to improve processes, data collection and update

software effectively support the asset management functions.

Review of AMS

An annual review process is in place to ensure that the asset management plan

and the asset management system described therein are kept current.

The AMS undergo independent audits to review the effectiveness of the the

asset management system.

The AMS is designed on the principles of continuous improvement and adopts the method of Plan, Do, Check and Act. This is in line with good asset management practice as defined in ISO 55000 – Asset Management.

Table 5.2: Asset Management Method

PHASE DESCRIPTION

Plan Annual and five to ten-year capital and expenditure plans are developed based on assessment of

performance, reliability, condition, risk and cost. This is documented in the Asset Lifecycle

Strategies.

Do Projects and programs approved in accordance to investment planning and governance

processes

Approved works are executed in accordance with approved budgets and controlled and

monitored using formal project management methodology

Check Key Performance indicators are reported and reviewed monthly to ATCO’s executive

management

Act Asset management issues and risks are assessed and prioritised to inform the scope of projects

and programs for the development of the next iteration of the AMP

5.2 Asset management governance

Asset management governance assures asset management decisions are made in line with overall company governance requirements, the Asset Management Policy and the agreed performance objectives.



5.2.1 Asset management annual planning process

ATCO’s approach to asset management decision-making is key component of the AMS. ATCO has a

structured, annual planning process that drives its investment in assets. Figure 5.1 outlines this process,

which includes:

Setting or updating the corporate strategy, business plan and objectives.

AMP and ALSs.

Construction of the investment portfolio (projects and programs) to achieve the business plan

objectives, within the context of the asset management plans and strategies.

Governance of the portfolio by the Investment Governance Committee (IGC) and of individual

investments by steering committees and sponsors.

Monitoring, assessing and rebalancing of the portfolio by the IGC over time, as required.

Use of the Project Management Manual (PMM) by project managers to manage the execution of

projects/programs within the portfolio. This structured approach ensures achievement of project

objectives and the realisation of related benefits.

Figure 5.1: Annual planning process



For more information on the annual planning process, see Investment Governance – An Overview2.

5.2.2 Governance principles

Through ATCO’s formal governance processes, including the development of business cases, ATCO can demonstrate that expenditures incurred are prudent and efficient and in accordance with accepted good industry practice. They are designed to achieve the lowest sustainable cost of providing a safe, reliable, cost competitive natural gas delivery service.

ATCO’s governance processes are guided by a set of principles. They help ensure prudent and efficient investment over time:

Clarity: Includes appropriate guidance and direction in our asset management decisions that reflect the commercial, regulatory and competitive environment in which we operate. Help our frontline staff understand the drivers and context for our asset management decisions.

Line of sight: Ensure that our Asset Management Policy and Asset Management Objectives are effectively delivered by our ‘frontline’ day-to-day activities – helping to ensure ‘line-of-sight’ between operations and overall objectives.

Practical frameworks: Ensure our policies, processes and standards align with our Asset Management objectives, are readily available to decision makers within the business, suited to the audience, are followed, and support detailed decision making in the business.

Continuous improvement: Ensure we continuously challenge assumptions, analysis, and decisions from a wider perspective, prior to investment or implementation.

5.2.3 Governance components

Important components of the governance of investment in assets at ATCO are:

Policies and relevant standards

o Guiding principles for investments

o Asset Management Policy3

o Project Management Policy4

o Procurement Procedure5

o Risk Management Framework6

o Capital Expenditure Authority – Acquisition & Disposal of Fixed Assets Policy7

o Delegated Financial Authority Policy8

Roles and responsibilities

o Clearly defined roles and responsibilities, including those of governance bodies such as the

Investment Governance Committee (IGC) which are outlined in its charter9

2 Investment Governance – An Overview – EIM# 96784645

3 Asset Management Policy – EIM# 84574246

4 Project Management Policy – EIM# 88242061

5 Procurement Procedure – EIM# 96807571

6 Risk Management Framework – EIM# 96376528

7 Capital Expenditure Authority – Acquisition & Disposal of Fixed Assets Policy – EIM# 91175958

8 Delegated Financial Authority Policy – EIM# 85236015

9 Investment Governance Committee Charter – EIM# 90880015



Systems and processes

o The investment management process including controls, regular monitoring and reporting, the

Project Management Manual (PMM10) and the stage gate approval requirements.

o Business case development11 – transparency over the drivers for individual investments (projects

and programs), options for achieving the desired outcomes and related information such as cost

estimates, captured in a standardised document.

o Enterprise resource planning (ERP) system (SAP) – SAP enables the business to monitor, maintain

and replace assets prudently and efficiently. It allows ATCO to identify and justify necessary

investment and to analyse and manage its risk profile and forecast expenditure. For more

information, refer to the IT Asset Strategy (ITAS12).

For more information on the investment governance components, see Investment Governance – An

Overview13.

5.2.4 Risk Management

All asset management decisions are linked, in various degrees, to managing risk. For a gas distributor this includes safety risks, avoiding capacity constraints, managing asset failure risk through maintenance and renewals, or managing procurement and delivery to ensure financial prudency. Managing these requires sound governance processes to direct effective procedures and controls.

ATCO is committed to the integration of risk management into its day-to-day decision making. In line with this commitment, ATCO has adopted the International Standard for Risk Management ISO 31000:2009 as a benchmark to establish, implement and maintain its risk management framework.

ATCO has specialist groups to ensure that the risk management framework is embedded into asset management decisions in accordance with applicable standards, including Technical Compliance, Technical Services, Asset Services and Engineering Services Teams.

Risk Management Framework

ATCO’s risk framework is documented within ATCO Australia POS Risk Management Framework (AA-RSK-FWK-01) and provides an enterprise-wise approach to risk management. The ATCO Risk Management Policy (RMT PO00001) outlines how ATCO intends to meet this objective. The main objective of the framework is to achieve sustainable growth in a safe and environmentally responsible manner, while enhancing shareholder value and maintaining operational excellence. The Risk Management Framework is developed based on:

International Standard for Risk Management - Principles and Guidelines (ISO 31000:2009)

the Australian Standards Pipelines - Gas and Liquid Petroleum (AS 2885.1 :2007)

Gas Distribution Network Management (AS/NZS 4645.1 :2008)

Risk Management Process

Figure 5.2 depicts ATCO’s Risk Management Process14 and provides the foundation for asset risk management at ATCO.

10 Project Management Manual (PMM) – EIM# 85733808

11 ATCO Business case template – EIM# 85224867

12 Information Technology Asset Strategy – EIM# 97151935

13 Investment Governance – An Overview – EIM# 96784645

14 Source: International Standard for Risk Management – Principles and Guidelines (ISO 31000:2009)



Risk identification: Network asset risk identification is undertaken and documented as part of Formal Safety Assessments (FSAs) required by AS/NZS 4645 and AS2885. ATCO’s methods for identifying and documenting risks are described within the Technical Compliance Risk Management Guideline (TCO GL0001). FSAs are undertaken in a workshop environment with relevant stakeholders.

Risk analysis: Risk analysis involves the assessment of the identified risk, taking into consideration the existing prevention and mitigation controls in place, and their effectiveness at treating the risk. The consequence and frequency of the risk eventuating (with current controls in place) is assessed against the ATCO Risk Management Matrix (RMT PL00001 PR0002 WI001) to determine the risk rating (Negligible, Low, Intermediate, High or Extreme).

Evaluating risk: Extreme and High risks are intolerable and Risk Management Action Plans (RMAPs) must be developed and put in place to reduce risk to Intermediate or lower. Intermediate risk must be further assessed to investigate whether there are any reasonably practicable measures available to reduce the frequency or consequence, thereby reducing risk to Low or Negligible. Where no reasonable measures can be identified, a risk may be deemed to be ALARP. Low and Negligible risks are tolerable and there is no requirement to further reduce risk.

Treating risk: Treating risk that is not deemed to be acceptable or otherwise intermediate and not ALARP involves the development of RMAPs. RMAPs are assessed to ensure that it will treat the risk to an acceptable or intermediate and ALARP level. This assessment is to be documented within the FSA. Where identified RMAPs require the implementation of projects to reduce the risk to an acceptable level, they are assessed as part of ATCO’s overall works program, considering factors such as risk prioritisation, availability of capital funds, and consideration of resource availability, deliverability, project management and timing. ATCO’s business case process ensures that options analysis in undertaken, and that the optimal least cost solution is selected to treat risk to an acceptable level.

Monitor and review: To ensure risk management and asset lifecycle processes are robust and being adhered to by the business, ATCO has a suite of internal and external reporting and audit processes. These processes help evaluate the effectiveness of the overall asset management approach, as well as the skills and competencies of personnel.

ALARP justification

Where a risk ranking outcome is Intermediate, an assessment is required to be documented to ensure all reasonable measures are taken to reduce risk to ALARP. The first stage of ALARP assessment is to identify additional or alternative controls which could be applied to further reduce risk. The hierarchy of effectiveness of controls should be considered as part of this process. Where additional controls are identified, the feasibility of these options is assessed in terms of practicability and risk reduction benefit.

Identified feasible controls that would incur significant capex undergo a cost benefit analysis against other identified options as part of ATCO’s business case development process. This ensures that the optimal least-cost solution is selected to treat risk to an acceptable level.

An intermediate risk may also be deemed to be ALARP when no additional reasonable controls have been identified, or assessment of potential additional controls has deemed them unreasonable (in that the cost is grossly disproportionate to the benefit gained).

Figure 5.2: Risk Management Process (ISO 31000:2009)



Semi-quantitative risk assessment

ATCO implements semi-quantitative risk assessment where appropriate and justified methodologies have been developed to support qualitative risk analysis outcomes. In particular, ATCO uses quantitative risk analysis to support the following assessments:

Supply risk resulting from third-party impact to Class 150 and above steel pipelines (pipelines

constructed to AS 2885 and AS 1697-1981). The outcomes of the assessment are detailed in TCO RP

0287 Supply Interruption Customer Weeks Lost Assessment; AS2885 Safety Management Studies.

Safety risk relating to step touch electrical hazard is assessed using the method provided in AS/NZS

60479.1 Effects of current human beings and livestock Part 1: General Aspects.

Safety risk outcomes from the Mains Replacement Prioritisation (MRP) tool (applicable to AS 4645

pipelines). Further information is provided in PVC Mains Replacement Strategic Analysis & MRP Tool

Overview (AST 2018 RP 038).

To assist in the correlation of semi-quantitative risk outcomes to the ATCO Risk Management Matrix (which informs tolerance requirements), correlation criteria have been developed and accepted within the GDS Safety Case. Further information is provided in: TCO GL0001 Technical Compliance Risk Management Guideline.

The qualitative to quantitative correlation has been developed in line with good industry practice for tolerance of Individual Risk (risk of one fatality resulting from an event), against ATCO’s risk tolerance criteria.

5.3 Asset Lifecycle Management

This chapter explains ATCO’s approach to lifecycle asset management and explains how investments are planned and delivered. Effective asset management considers the full asset lifecycle. There are several key lifecycle-based considerations when undertaking asset management activities. Some of the aspects considered as part of the decision-making process are listed below.

1. Decisions made at the concept and planning stages of an asset’s life will have a major bearing on its

practical and safe operation.

2. The value of an asset is maximised if it has a lifetime of safe and reliable operation. This requires

adequate maintenance, together with appropriate operation of the asset.

3. The cost of an asset involves more than the initial capex. When comparing investment options, ongoing

operational, maintenance and refurbishment costs, as well as the expected life of the asset, need to

be considered.

4. Complex decommissioning and removal of assets can burden future operations if this has not been

considered and prepared for from the outset.

A lifecycle-based approach is used to define and organise asset management activities and are underpinned by a continual improvement processes, which are used to identify and progress identified opportunities for improvement.

ATCO’s approach to asset management reflects the specific approaches and particular activities

undertaken during each stage of an asset’s lifecycle. As depicted in Figure 5.3, there are four lifecycle

stages:



Creation and Acquisition: This stage covers all

demand analysis for new assets, project

planning, engineering design and construction

processes.

Operation and maintenance: This stage covers

all monitoring and controlling of the gas network

and includes preventive maintenance, corrective

maintenance, and fault management.

Renewal and replacement: This stage covers the

process to decide when to refurbish or replace

assets. Generally, assets that are approaching

the end of their useful life are identified for

replacement or refurbishment.

Disposal and abandonment: This stage covers

activities related to the disposal of assets that

are no longer required.

5.3.1 Creation and acquisition

This stage covers the creation of an asset through development or acquisition, spanning the identification of the initial need, assessing options and preparing the conceptual designs. The requirement for constructing and installing new assets are mainly to address:

Customer-initiated connections: Network growth and new customer connections,

Network demand: this includes reinforcement for capacity management, network enhancements to

ensure security of supply and increased performance and functionality.

This stage can also include the acquisition of assets from other utilities or from customers.

Growth is a key consideration in ATCO’s asset management strategies. Factors impacting on residential and small commercial connections and consumption include weather, retail gas price, microeconomic factors, appliance efficiency and alternative energy appliances. Factors impacting on commercial and industrial connections and consumption include the retail gas price, micro- and macro-economic factors.

The processes look at current and future demand trends. ATCO is experiencing and forecasted a decline in average consumption per customer. The projected decline in demand and average consumption reflects a range of factors, including:

a shift away from gas appliances to electric appliances, including the increased penetration of reverse-cycle air conditioning;

improvements in the energy efficiency of buildings and appliances (e.g. modern appliances typically use less gas to perform the same functions); and

changes in the dwelling stock (e.g. from houses to smaller apartments and multi-unit developments).

While average consumption may be declining, the peak hour gas consumption has increased due to the use of high instantaneous hot water. The capital expenditure identified for asset creation undergoes a robust planning and approval processes explained in Section 5.2 to ensure capex is prudent, efficient and consistent with good industry practice.

5.3.2 Operations and maintenance

The way assets are operated and maintained is an important factor in how they perform and how long they remain serviceable. ATCO’s procedures aim to ensure that assets perform as designed. This includes

Figure 5.3: Asset Management Lifecycle



operating assets within acceptable operating parameters, which may change over the life of an asset as they degrade. ATCO’s maintenance approach ensures assets remain safe and serviceable over their expected lives in a cost-effective manner.

Following completion of commissioning, assets are put into service. At that point, the maintenance and operational stage commences and continues for the life of the asset.

Many assets have a 40-60 year life meaning the stage has the longest time span of the asset lifecycle. The operation and maintenance of GDS assets aims to ensure the safe and reliable performance of the assets over their expected lives. Effective asset management relies on appropriate links between operations and maintenance and the other lifecycle activities of development planning, design and construct, and renewals.

A primary driver for operations and maintenance is safety. ATCO’s Safety Case describes the safety requirements that drive maintenance processes from a safety perspective. Activities are scheduled in our maintenance standards and work schedules. These activities include:

Prioritised maintenance to reduce risks to ALARP.

Safety inspections of works, including structural checks to ensure component integrity.

Repair or replacement of structures and components that have been found to be at risk of failure.

Maintaining clear warning notices on equipment.

Keeping accurate records and plans of work to enable ready identification of fittings and components.

Several maintenance activities have a regulatory component as defined in relevant regulations. These activities include:

Identifying existing and new or potential hazards associated with the works.

Maintenance of safety barriers.

Testing of works and safety related-checks of works.

Maintenance practices are audited for compliance with distribution licence conditions, AS/NZS 2885.3 and AS/NZS 4645 requirements.

The operations and maintenance stage includes the following main types of activities.

Network operations: includes real-time network control, monitoring and event response. This involves planning for outages and to quickly and effectively respond to network events.

Network maintenance: is the care of assets to ensure they provide the required capability in a safe and reliable manner from commissioning through to their replacement or disposal.

Network operations

The main role of network operations is to ensure a reliable supply of gas to our customers and to maintain the network in a safe condition, 24 hours a day, 7 days a week. The operations function includes activities such as network control and the direction of field staff to respond to network faults, and the safe isolation of network sections.

We operate our assets in a way that ensures we meet network, operational and asset performance objectives. We seek continuous improvement by providing feedback to our asset management teams and to avoid repeat faults. Activities associated with operations provide information to the planning process on network and asset performance or risks, and any lessons learned that will improve the planning process. This includes taking into account reliability, cost, and safety and environmental requirements. These requirements are drawn from customers, regulators, and other stakeholders.



We consider operational requirements as part of our lifecycle approach to managing our network. This involves considering how we operate our assets, such as frequency of operation, and the impact on asset life and performance.

Network maintenance

This section sets out the role maintenance plays in ATCO’s asset management approach. It explains why it is essential to effective asset management and sets out the factors that have shaped the maintenance approach ATCO has adopted.

Network operation is a real-time function and our network operators monitor network status and pressures, and take actions as necessary to maintain safe supply throughout the GDS. This incorporates a service dispatch function, where operators communicate with retailers and customers. They communicate with our service provider service management centre to dispatch field staff where work is necessary to maintain or restore supply.

Operations staff manage the process of isolating and releasing sections of the network to enable works to be undertaken. This ensures that outage numbers and durations are minimised while allowing us to effectively manage multiple works during individual outages to deliver minimum disruption to customers.

Outage planning is a continuous cycle associated with the removal of network equipment to make it available for maintenance or other works. Outage planning includes:

scheduling, optimisation and coordination of asset outages

development of plans needed to safely maintain existing or commission new assets

contingency planning for operational control during unplanned events

operational review of planned projects to ensure the assets can be safely operated.

Some maintenance and project delivery work can be achieved without removing equipment from service. This work requires careful preparation in order to reduce risks to people, plant and asset availability and performance.

Assets newly added to the network (commissioned) or to be permanently removed (decommissioned) have additional planning steps. These include ensuring that the equipment specification is fully documented and that the formal notices or certificates governing operational and maintenance acceptance and readiness are approved.

Maintenance is the care of assets to ensure they are fit for purpose, enabling them to operate safely and effectively at their designed capacity and performance-level over their full, reasonably anticipated lives. It involves monitoring and managing the deterioration of an asset over time and restoring the asset to a safe working condition in the event of defect or failure.

Maintenance is a key element of the asset lifecycle. It is essential to maintain assets from the time of commissioning through to when assets are replaced or removed from service.

Maintenance work help assets achieve their expected life, while operating safely and remaining fit for purpose. Maintenance activities include but are not limited to:

Monitoring the condition/health of assets, testing and collecting information on asset condition to ensure that the assets are in a fit and safe state. This information guides corrective works and improves our understanding of asset deterioration and risk, allowing us to improve our future maintenance approaches.

Undertaking work on assets to manage their health or to restore them to good working condition in the event of a defect or fault, or to repair wear-and-tear damage. Maintenance activities also include routine adjustments and minor modifications or additions to assets to sustain performance and reliability.

Routine testing and calibration of devices to ensure they will operate when required.



Undertaking work on assets to ensure the safety of field workers, staff and the public.

Maintenance involves monitoring and managing the deterioration of an asset in operation, or in the case of a defect or failure, restoring the condition of the asset. Maintenance activities may also include minor modifications to assets to improve performance and reliability. Feedback from maintenance activities is used to continuously improve our asset standards and planning processes. Maintenance techniques evolve as the condition and performance requirements of the assets change.

The overall objective of maintenance is to ensure that assets remain safe and operational to meet their service duty and performance requirements. It covers how people and processes need to be coordinated to deliver maintenance and inspection regimes in the most effective and efficient way.

ATCO maintenance standards are developed by the asset services team, considering feedback from the operational teams. The maintenance procedures are designed to ensure assets remain safe and serviceable over their expected lives in a cost-effective manner.

Feedback from maintenance crews is invaluable for operations and planning purposes. This is where most of the information about operating conditions and asset performance is acquired. This is essential if we are to continually improve our planning and operations practices.

Maintenance takes many forms and is determined and documented appropriate to the assets in line with the asset management strategy and asset management plans. The two types of maintenance; Preventative and Corrective are described below.

Preventive maintenance

Preventive maintenance or scheduled maintenance (SM) includes inspection, testing and monitoring of GDS assets. The criteria for initiating preventive maintenance may be time-based, condition based, or usage based, but always takes risk into account. Non-intrusive checks are used to confirm safety and integrity of assets and to provide information for continued operations or determining corrective maintenance and renewal needs.

The activities may include minor modifications to assets to improve performance and reliability. Feedback from maintenance activities is used to continuously improve our asset standards and planning processes. Maintenance techniques evolve as the condition and performance requirements of the assets change.

Scheduled maintenance includes:

Leak surveys: undertaken at defined frequencies across the GDS to identify mains that are leaking so that they can be safely and proactively repaired or replaced before escalating to larger, reactive and more costly repairs.

Pipeline patrols: comprise a damage prevention measure that identifies and prevents third party activity that could potentially impact an underground gas asset. Pipeline patrols ensure that above ground signage of high pressure assets is compliant with the requirements.

Facilities maintenance: preventive maintenance activities carried out at defined frequencies required to sustain the reliable operation of the gas distribution facilities. Maintenance activities include functional checks, equipment servicing and condition surveys.

These activities play an important role in achieving our network performance objectives as they:

Provides data on the condition of our network assets as they age, so that we can manage supply quality and public and worker safety;

Enables us to compile asset condition information databases and identify trends in the condition of various network assets, to support the maintenance programme;

Enables identification of assets that require corrective work to prevent them from posing unacceptable risks to staff, the environment or the general public;



Provides regular servicing of assets to maintain them in a good state of health; and

Provides test result data that enables confirmation of compliance with safety standards.

Our ALS provide further details on the preventive maintenance activities undertaken on particular asset classes.

Preventive maintenance is managed using the Plant Maintenance (PM) module of the Systems Application Products (SAP) ERP database in the form of SAP Maintenance Plan. Each of these maintenance plans has associated maintenance items that encapsulate logical work packages, typically being an individual metering, monitoring or regulating facility.

Planned and scheduled maintenance activities are translated into schedules which are contained in SAP. Each schedule:

contains a list of tasks requiring actioning (with regards to maintainable items);

produces Work Orders for a maintenance item or group of items for regular preventive maintenance and scheduled inspections;

records maintenance information on each Work Order at completion of the work. Information includes details of maintenance conducted;

provides a mechanism for generating corrective maintenance Work Orders for equipment faults. These include equipment failures and faults that occur prior to scheduled maintenance; and

provides data for analysis and improvement of the process.

The maintenance activities and histories are recorded in the SAP PM Module and Work Orders will automatically be issued according to the assigned schedule. SAP Maintenance Plans are created based on designated maintenance frequencies for particular assets. The implementation of the overall preventive maintenance plan as well as asset performance and fault histories are recorded using the SAP PM Module and assessed annually.

We aim to undertake an efficient and prudent volume of preventive maintenance work to support our asset management objectives. The volume of work we undertake is driven by a variety of factors including the type and nature of the asset, its age, and serviceability. Primarily, our approach involves maintaining the assets in service until they require renewal with the objective to undertake the optimum level of maintenance throughout the life of the asset. Our maintenance standards operationalise this approach by setting out the maintenance tasks to be undertaken, and the frequency of each task.

These standards reflect the following drivers:

maintenance intervals will, where possible, be based on the outcome of the Reliability Centred Maintenance (RCM) analysis in conjunction with Failure Mode Effects and Criticality Analyses (FMECA)

Types and quantities of network assets in service, their age profiles, and the level of diversity in types and manufacturer

Network risk and criticality profiles of the asset

Ageing characteristics/drivers of deterioration of our network assets

Requirements to comply with safety regulations.

Unless the maintenance regime changes, overall activity volumes for Preventive Maintenance tend to remain relatively constant over time, with marginal increases to reflect the addition of new assets to the network.



Corrective maintenance

Corrective maintenance is the planned maintenance undertaken to prevent (reduce the risk of) faults, failures or excessive deterioration from occurring. Corrective maintenance involves managing identified defects or failures, restoring the condition of the asset. Corrective maintenance programs are conducted in accordance to the commitments stated within the GDS Safety Case. Planned maintenance includes the following main activities.

Modify asset: includes the alteration of mains, services and the cut and cap of mains. This work is generally carried out at the request of a third party such as local authorities, government bodies, utilities and customers.

Gas meter management: refers to the changeover and refurbishment of commercial meters that have reached the end of their compliance period, thereby ensuring the ongoing accuracy of gas consumption measurement to customers.

Retailer support services: are activities carried out on behalf of retailers such as audits of approved installations, changes of meter, upgrades to regulators and relighting of pilot lights.

The ALS documents will provide further details on the above planned maintenance activities.

We seek to undertake an efficient and prudent volume of corrective maintenance work. The overall volume of work we undertake is driven by factors including:

Ageing characteristics/drivers of deterioration of our network assets

Requirements to comply with safety regulations.

Continuity of supply requirement

Meeting service levels

Stand overs to ensure the integrity of the network where excavation is undertaken by others adjacent to our assets

Fault Management

Fault Management is typically a reactive maintenance activity that includes work to address faults that impair the normal operation of the network or pose an immediate safety threat. It is work (either temporary or permanent) undertaken as immediate or short-term response to an unplanned event.

The purpose of this work is to:

Manage any hazardous or operational conditions that arise from gas leaks

Maintain the safety of our service providers and the public

Restore supply to customers

These activities are performed to repair defects or damage where work is necessary to bring the asset up to standard and keep it operational. The need for reactive maintenance is usually identified and communicated to us by a customer. Fault management activities typically include the following:

Pipeline maintenance service: mains and services maintenance activities such as leak repairs that address network faults identified through proactive leak survey and reactive customer reported escapes. Maintenance is scheduled and prioritised based on Australian Standards classifications.

Gas faults: meter position maintenance activities that address network faults identified through customer reported escapes and faults. The majority of faults are attributable to public reported gas escapes, pubic reports of loss of supply and network pressure issues identified by pressure monitoring devices.

Emergency support services: maintenance activities resulting from third party damage to assets and requests for assistance by emergency services such as the WA Police and the Department of Fire & Emergency Services (DFES). All emergency support activities are prioritised for immediate attention within one hour.



Care is always taken when performing maintenance activities to safeguard Customers’ property. Where maintenance activities require excavation or result in any damage to customer property ATCO has processes in place to arrange for appropriate reinstatement. Our Call Centre Work Instruction [CCT WI001] provides further details on our process for handling calls through the call centre.

Events that may need a reactive response include excavation strikes or other third-party damage and significant asset failures. Response personnel attending a fault must have a wide range of skills and competencies to enable identification of the issue with certainty.

The reactive work volume we undertake is driven by asset attributes (e.g. condition), environmental conditions, and levels of third party interference. Reactive maintenance will be prioritised based on risk management principles e.g. leak classifications and levels of service e.g. response to “no gas” KPIs.

5.3.3 Renewal and Replacement

Renewal and replacement represents expenditure to replace or refurbish network assets that are at the end of their useful operating life. This is necessary to ensure they remain safe and reliable. This comprises both asset replacement (with like-for-like or new modern equivalents) and refurbishment (investments that extend the useful life or increase the service potential of an existing asset). It excludes expenditure which increases the size, capability or functionality of our network. It is carried out, for the most part, to manage asset deterioration and ensure that our assets remain in a serviceable and safe condition. As an asset deteriorates it will eventually reach a state where ongoing maintenance becomes ineffective or excessively costly.

Refurbishment is activity that extends the useful life of an existing asset by rebuilding or replacing parts or components of an asset. For some asset types, refurbishment is not cost effective compared to full replacement and potential refurbishment work is tested to determine the most cost effective long-term solution.

Typical drivers for renewal or refurbishment include managing safety risk or network performance, maintaining asset condition, meeting regulatory and legislative requirements, and obsolescence. Often a programme will contribute to more than one of these factors. The basis for these decisions varies by asset class. Examples of replacement capex are replacement of unprotected, buried metallic mains; replacement of distribution assets within multistorey buildings and natural gas meters that have reached regulated end of life. Commercial meters are refurbished based on statutory timeframes.

Proactive

The ALS identify a number of areas where proactive renewal and replacement expenditure is warranted, including the following examples.

Safety: is a fundamental organisational value and is a key driver for renewals. Some of our renewals programmes, such as our mains replacement program focus on mitigating risks to the general public. We ensure that such risks are isolated or minimised as much as reasonably practicable.

Asset condition: addressing asset deterioration is necessary to ensure our assets remain in a safe and serviceable condition. As condition deteriorates, defects may arise, and eventually the asset will reach a state where ongoing maintenance becomes ineffective or excessively costly. At this point we look to replace or refurbish them. ‘Type issues’ (for example where a particular make or model of an asset is found to suffer a particular defect or accelerated degradation) may be identified that require early replacement.

Reliability: focused investments manage reliability levels experienced by our customers. This includes renewal of poor condition assets and assets with known failure modes such.



Obsolescence: such as when assets become incompatible with modern systems and standards, lack significant functionality (when compared to modern equivalent assets), or spares may no longer be available, and the asset may no longer be supported by the manufacturer. Obsolescence is a key driver for renewal of telemetry assets, where modern assets provide improved functionality and performance that allows us to more efficiently control and operate the GDS

Compliance: leads to a need to undertake renewals investments to ensure compliance with relevant legislative obligations and technical standards

Reactive

It is necessary to replace failed equipment reactively if repair is not feasible or cost effective. Some asset classes are considered ‘run-to-failure’ and are replaced reactively due to the low consequences associated with these failures. Asset failure requiring reactive replacement may occur because of internal causes (e.g. unforeseen asset malfunction or damage from major network events) or external interference (e.g. third-party strike).

5.3.4 Disposal and Abandonment

Asset disposal and abandonment are generally required when an asset is approaching the end of its useful life. Disposal activities include the processes from when planning for disposal of an asset begins through to the point where we no longer own the asset.

Asset disposal includes the decommissioning (abandonment) of the asset, sale as a functioning asset (e.g. vehicles), sold as scrap, or re-used by us elsewhere as an in-service asset or a spare. There are a number of ‘triggers’ for these decisions. Some of these are set out below and are inputs into our general planning process.

Safety and environmental: changes to safety or environmental standards and our efforts to reduce safety risk may require assets to be upgraded or retired.

Asset replacements: when they are no longer ‘fit for purpose’, such as when they do not meet reliability requirements or when they reach a pre-determined condition level (asset health).

Redundant assets: following changing demand, security needs, specific customer requests, or changes to performance criteria can lead to network modifications. These can include network re-configurations leading to disposal of assets as they are no longer required.

Servicing and repairs: requirements can trigger disposal of equipment and materials, such as scheduled maintenance recognising the need to dispose of hazardous materials.

The implementation of asset disposal also has many similarities with capital projects, including consideration of cost, safety, environmental impacts, and project management. Additional aspects that are specific to disposal works include site restoration and termination of all support activities and asset information.

The options for disposal of an asset will be strongly influenced by the particular trigger or driver being addressed. The option chosen will depend on a number of factors, including the asset’s salvage value, its viability as a spare and the presence or otherwise of hazardous substances. In some cases, different options may be chosen for different components of the asset.



5.4 Deliverability

ATCO’s approach to deliverability seeks to ensure the safety of staff, suppliers and the public. Completing works on time and to budget helps make sure the GDS and its assets are fit for purpose, with appropriate quality and functionality.

5.4.1 Workforce Management

To achieve stable, efficient use of resources ATCO reviews and refines its forward workplan. This enables its internal workforce and those of service providers to be effectively and efficiently deployed. This is a key part of managing future work deliverability.

In addition to this standard, business-as-usual process, several specific activities have been undertaken to ensure ATCO improves it delivery performance in support of its affordability objectives. These activities, include:

Development of a field service strategy (Kaizen) to improve the provision of field services and secure reductions in underlying costs sufficient field resource capacity

Modelling of required resources, by skill type and location, that will be required to the AMP workplan

Scaling of internal engineering resources to support future work volumes and activity types

Focused engagement with service providers to improve performance

Assessment of current capability to support large programs (e.g. main replacement program)

Deliverability Testing

The Capex and Opex work programs are assessed against available resources as part of the investment approvals process. This is done together with our maintenance programmes to achieve synergies from simultaneous and sequential works, including less customer disruption and lower costs. Two main constraints considered.

Deliverability: workloads by asset class are adjusted to account for potential deliverability constraints. This allows us to more effectively allocate resources across portfolios.

Available resources: we forecast the resource requirements of the works plan and make adjustments to ensure efficient use of internal capacity and available funding.

As a result of the steps outlined above, we expect to maintain our focus on safe work practice and the health and wellbeing of staff, suppliers and the public. The efficient delivery of the workplan set out in this AMP, while maintaining commercial tension with service providers, will support our affordability objectives.

Materials Procurement

ATCO has a range of local and international suppliers from which equipment, materials and services are sourced. Procurement includes working with the Technical standards to obtain specifications based on standardisation, reliability, availability and maintainability. ATCO Gas Procurement procedure requires running a competitive process to obtain best value and establish commercial arrangements. Price, commercial terms, quality and service form the basis of evaluation and award of these agreements. For items that are not under a contractual agreement, ATCO Gas Procurement procedure requires obtaining competitive quotes to obtain the best value purchase.

Procurement approaches for major asset categories are fashioned to enable better management of supplier capabilities to improve product quality and manage costs to achieve value for money. Frequently used items are held in stock and slow moving and one-off requirements are called off on a need basis. Future material requirements are forecast to ensure suppliers are able to respond in sufficient time for



delivery of the work plan. Please refer to ENS MA00001 Project Management Manual, and the implementation of AA-SC-PR01 Procurement Procedure.

5.5 Continual Improvement

Opportunities for improvement are identified, assessed and implemented across ATCO as appropriate, through a combination of monitoring and corrective actions for the assets, asset management, and asset management system. Continual improvement is regarded as an ongoing iterative activity, with the ultimate aim of delivering the organisational objectives. ATCO has established, implemented and maintains processes for determining opportunities and assessing, prioritising and implementing actions to achieve continual improvement and reviewing their subsequent effectiveness.

ATCO actively seeks and acquires knowledge about new asset management related technology and practices, including new tools and techniques; these are evaluated to establish their potential benefit to the organisation and are incorporated into the asset management system as appropriate. Examples include:

active participation in professional bodies and industry associations

conferences, seminars, publications, (online) forums, journals

benchmarking and technology transfer initiatives, and competitor check-ups

engaging specialist organizations

research and development

consultation of suppliers and clients

Although the opportunities for improvement are often widely different in size and effect, the approach for processing them consists of the following steps:

identification of improvement needs and potential

evaluation of options

estimation and determination of financial and non-financial consequences

risk assessment and management of change aspects

links with decision-making criteria

selection and execution

tracking of outcomes and review

Continual improvement is achieved by regularly evaluating the performance of the AMS against its policies, objectives, targets and performance criteria for the purpose of identifying and prioritising opportunities for improvement and implementing appropriate action. The improvement actions taken are those that increase the effectiveness and efficiency of the activities and processes to provide added benefits to both the organisation and its customers.

The Executive Management Team assure themselves and the Board of Directors that all relevant processes are in place and working effectively to manage risks associated with their business activities through regular:

Risk assessments and risk management reviews

Peer reviews, self-assessments and objective external assessments

Reviews of performance indicators against agreed targets

Internal and external audit programs against the Integrated Management Standards



Asset, health & safety, environmental and quality assurance is regularly discussed between the Executive Management Team and their senior staff members and audits are periodically conducted to provide a review of key internal controls.


Part B – Asset Management Plan



6. Asset Management Plan

This AMP describes the plans, programs and strategies for the management of the network assets, presented by asset class, to meet the requirements of the National Gas Law (NGL) and the National Gas Regulations (NGR). The AMP supports the provision of efficient, safe, reliable, natural gas distribution service in the long-term interest of customers. The AMP is designed to demonstrate the suitability of network assets for current and future service levels and performance targets, and to provide assurance that ATCO’s investment in the network is prudent and appropriate to manage the risks associated with owning and operating the assets.

The AMP documents the asset management practices for each major asset class and is utilised as part of an overall lifecycle management objective for ATCO’s GDS. Maximising asset utilisation and minimising life cycle costs through well-managed maintenance and capital investment programs contributes to achieving this objective. Implementation of the GDS Safety Cases continues to enhance safe management of these assets.

An overview of the Coastal Supply Area network is provided in Figure 6.1, detailing the configuration of various pressure reduction facilities, pipelines materials and MAOPs found within the network.

Figure 6.1: Coastal Supply Area (GDS) network summary



The GDS has been divided into logical network asset classes, each of which has its own asset lifecycle strategy (ALS) which provides a summary of asset lifecycle activities. Network ALSs include:

Asset Lifecycle Strategy – Pipelines, Mains and Services

Asset Lifecycle Strategy – Metering Facilities

Asset Lifecycle Strategy – Regulating Facilities

Asset Lifecycle Strategy – Supervisory Control and Data Acquisition Systems

Asset Lifecycle Strategy – Corrosion Protection Systems

Network activities are supported by non-network assets, which are described in ALS documents:

Asset Lifecycle Strategy – Property, Plant & Equipment

Asset Lifecycle Strategy – Fleet

Asset Lifecycle Strategy – Information Technology

These documents describe all key phases in the asset’s lifecycle and details appropriate strategies and decision-making criteria for managing the assets in accordance with this AMP. Network level factors and strategies that impact on a particular asset class are detailed out in this AMP.

An overview of the assets which make up each asset class are provided in the below sections.

6.1 Pipelines, Mains and Services

For the purposes of lifecycle management, assets are categorised within the pipelines, mains and services asset class by pressure rating, isolation and service valves.

The five categories used for this ALS are summarised below:

Transmission Pipelines Operated at AS2885

Distribution Pipelines Operated at AS4645

Mains and Services Operated at AS4645

Isolation Valves

Service Valves

6.1.1 Asset Class overview

An overview of each of the pipelines, mains and services categories are described below.

Transmission pipelines operated to AS2885

Pipelines that have a Maximum Allowable Operating Pressure (MAOP) above 1900kPa are constructed of steel pipe and are designed to AS2885. These higher-pressure pipelines are grouped together as a subclass of this ALS to ensure that they are managed appropriately. This includes Class 600 and Class 300 pipelines. When the MAOP exceeds 1900kPa these pipelines are required to be operated to AS2885. All other pipelines, mains and services covered by this ALS are required to be operated to AS4645. ATCO’s GDS contains 122km of these pipelines all of which are considered in good condition.

Distribution pipelines operated to AS4645

These pipelines are designed to AS2885, but are operated under AS4645 as their MAOP exceeds 1050kPa, but less than or equal to 1900kPa and include the Class 150 pipelines. These pipelines are typically used to distribute natural gas from the PRSs to the HPRs, to an end use consumer, or to other mains and services. ATCO’s GDS contains 565km of these pipelines all of which are considered in good condition.



Gas distribution mains and services operated to AS4645

Distribution Mains and Services with a MAOP of not more than 1050kPa are designed and operated to AS4645. Included in this asset class are Services (which run from the mains to the customer meter) and fittings used in the construction and repair of the pipe such as valves, tapping bands and couplings. These mains and services are constructed in steel, Polyvinylchloride (PVC) and Polyethylene (PE).

There are 13,374km of these mains in the GDS with varying condition and risk rating. To assess each main segment’s risk, a semi-quantitative analysis is performed using ATCO’s Mains Replacement Prioritisation (MRP) tool. MRP assesses all mains segments against a defined failure model to quantify the risk and condition of each segment. This software considers asset specification (such as age), historical leak data (including from fittings), and exposure criteria to estimate pipe condition, remaining useful life, and risk from each pipeline to the public. The risk outcomes from the MRP tool reflect the risk to public safety (probability of individual fatality per km per year) from each pipeline segment, and have been correlated to the ATCO Risk Matrix, in accordance with the GDS Safety Case.

In 2017, the MRP tool identified 1,890km of the PVC mains have an ‘Intermediate’ risk, which correlates to a probability of fatality per km per year between 10-4 and 10-6. Within this risk bracket, 171km sits within the ‘Upper Intermediate’ region (risk of fatality per km per year between 10-5 and 10-4) and is not ALARP. These segments are prioritised for replacement during AA5 due to their potential to move towards, or into, the ‘High’ risk category.

Isolation valves

In the event of a pipeline emergency, sections of the network may require isolation to rectify the problem while minimising the potential impact to safety, network integrity and continuity of gas supply to the lower pressure networks. There are 2,626 isolation valves in the GDS, where a condition assessment has rated 84% of these valves in good operating condition.

Service valves

Service valves are installed on off-takes from mains to stop the gas flow to the connected consumer’s service for safety or maintenance purposes. There are approximately 20,335 service valves in the GDS, of which 6,951 are plastic service valves. Service valves that are part of a metering or regulating facility are maintained under the facility maintenance programme and not assessed as a separate item. Service valves on distribution mains are not condition assessed due to their low criticality and operated under run-to-failure maintenance regime.

6.1.2 Strategic alignment

ATCO maintains alignment between corporate objectives, and day-to-day activities by aligning the asset management plan (AMP) objectives with those informing investments in the asset class.

The following table includes the pipelines, mains and services KPI’s that have been identified to support the delivery of the over-arching asset management objectives.



Table 6.1: Pipelines, mains and services objectives that support line of sight

CORPORATE

OBJECTIVE

AM OBJECTIVE MEASURES 2019 TARGET

Safe Network Integrity Leaks on mains per 100 km Mains (Whole Network) ≤4.85

Leaks on mains from leak survey per 100 km of main

(rolling 5 years)

<3

Class 1 & 2 Leaks on mains per 100km of mains <3.5

Damage to a MP/LP Pipeline -Instances per 100km of

MP/LP main

<1

Damage to a HP pipeline - Instances per 100km of HP

main

<0.1

UAFG Rolling 12 Months % ≤2.58%

% of pipeline patrolled 100%

No of over pressurisations 0

Number of mains breaks per 1000 DBYD requests ≤0.50

Ratio of broken mains and services per 1,000km of

network

<88

Number of broken mains per 100km (rolling 12 months) 0.75

Ratio of broken services per hundred customers <0.15

Customer and Public

Safety

% of Broken Main Responded to Within 1 Hour >98%

% on within 1 hour for priority response (incl. SFE, SOG

Telstra Pit)

>98%

Attendance to Gas Smells in a Public Area - % attended

to within 2 Hours

>98%

Class 1 leak (repair within 1 day) >98%

Class 2 leak (repair/reassess within 1 week) >98%

Class 3 leak (repair/reassess within 12 months) >98%

Regulatory

Compliance

Km of main surveyed (High risk area) 100%

Affordable Prudent Investment Km of mains laid/replaced 182

No of service laid/replaced 15351

Growth Viable Network

Expansion

Total length of new main constructed 242

6.1.3 Achievement of asset management objectives

Each project identified from applying the pipelines, mains and services lifecycle strategy aligns with at least one, and in most cases, multiple ATCO asset management objectives.

Security of Supply: ATCO perform network modelling to understand capacity constraints and areas of low pressure. These areas are reinforced to ensure loss of supply risk is minimised. Design of the network includes where possible additional sources of gas to add redundancy in supply.



Customer and Public Safety: ATCO is required to ensure its assets are maintained and operated to minimise hazards and risks to the public. Maintaining safety of pipelines, mains and services is achieved through robust emergency response planning, applicable integrity management techniques, safety awareness programs and access to Dial Before You Dig drawings.

Network Integrity: proactive testing and replacement helps to avoid unplanned outages and disruptions to customers due to asset failure.

Customer Service: Quality systems and processes help to deliver a safe and reliable service to customers. They are used to ensure that appropriate pressure levels are available at customer premises.

Prudent and efficient investment: mains and services are proactively replaced due to condition, helping to avoid higher-cost reactive interventions. Reinforcement projects often lag demand and new connections, which helps reduces the potential for asset stranding.

Table 6.2: Pipelines, mains and services alignment between proposed investments and asset management objective areas

PROJECT

ASSET MANAGEMENT OBJECTIVE AREA

SECURITY OF

SUPPLY

CUSTOMER

AND PUBLIC

SAFETY

NETWORK

INTEGRITY

CUSTOMER

SERVICE

PRUDENT &

EFFICIENT

INVESTMENT

Growth Development Project

AS4645 Security of Supply - 91/140/91/19/Two Rocks

Reinforcement – Main Extension (Queens Park MLP)

EOL Replacement - Exposed pipework (Canning Bridge)

EOL Replacement - Isolation Valves

EOL Replacement - Mechanical Fittings

EOL Replacement - Metallic mains

EOL Replacement - Odd Size Unprotected Steel

EOL Replacement - PVC mains

EOL Replacement - Warning Signs

AS2885 Pigging Infrastructure

AS4645 Security of Supply - Pi104 (Bunbury)

AS4645 Security of Supply - Pi105/106/107 (Caversham)

AS2885 Vegetation Clearing - Bunbury

AS2885 Vegetation Clearing - Ongoing

Asset Sampling & Testing

ATCO pipeline bridge inspections

Bridge Crossing Remediation (total of 20 crossings)

Condition assessment and data gathering in CBD

DBYD

Mains in Private Properties & Remediation



PROJECT


SECURITY OF

SUPPLY

CUSTOMER

AND PUBLIC

SAFETY

NETWORK

INTEGRITY

CUSTOMER

SERVICE

PRUDENT &

EFFICIENT

INVESTMENT

OPEX AS2885 - Inline Inspections

Pipeline remedial works

Proving

Safety Awareness

Water in the Main Non-recoverable

6.1.4 Planned expenditure

To address the investment drivers discussed above, a 10-year investment plan has been developed. The forecast expenditure for this period is summarised in Table 6.3by asset life cycle stages.

The table below illustrates the alignment of each proposed expenditure within the assets’ lifecycles to each regulatory expenditure category and to the specific investment driver for these expenditures. Investment drivers are categorised into cost, risk and performance, to align with common nomenclature and industry practice.

Table 6.3: Pipelines, mains and services summary of forecast expenditure ($’000)

LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX

($’000)

REGULATORY

CATEGORY INVESTMENT DRIVER

Cre

atio

n &

Acq

uis

itio

n

Growth Development Project 21,012 - Growth – Customer

Initiated

Cost – NPV

Reinforcement - Two Rocks 25,469 - Growth – Demand

Sustaining – Network

Safety and

Performance

Cost – NPV

Performance - Reliability

Reinforcement – Main

Extension (Queens Park)

107 - Growth – Demand Cost – NPV

Performance - Reliability

New Connections 312,740 Growth – Customer

Initiated

Cost – NPV

Op

erat

ion

s &

Mai

nte

nan

ce Preventive Maintenance - 21,318 Variable volume

opex

Cost - lifecycle cost

Risk - mitigation

Corrective Maintenance - 20,748 Variable volume

opex


Risk - mitigation

Fault Management - 47,100 Variable volume

opex

Risk - mitigation

Opex Projects - 19,509 Opex Projects – non-

recoverable


Risk - mitigation

Ren

ewal

&

Rep

l

ace

men t

Service Relay 35,594 - Variable volume

capex

Risk – compliance



LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX

($’000)

REGULATORY


EOL Replacement - CBD

Services

13 Sustaining – Asset

replacement

Risk – asset condition

Risk – compliance

EOL Replacement - Exposed

pipework (Canning Bridge)

797 - Sustaining – Asset

replacement



EOL Replacement - Isolation

Valves

1,458 Sustaining – Asset

replacement



Risk – safety

EOL Replacement - Mechanical

Fittings


replacement


Risk – safety

EOL Replacement - Metallic

mains


replacement



Risk – safety

EOL Replacement - PVC mains 317,495 Sustaining – Asset

replacement



Risk – safety

EOL Replacement - Warning

Signs


replacement



Risk - compliance

Facility Upgrade - Pigging

Infrastructure

10,616 - Sustaining – Network

Safety and

Performance


Risk - compliance

Security of Supply - Bunbury 7,592 - Sustaining – Network

Safety and

Performance

Risk – security of supply

Security of Supply - Caversham 15,751 - Sustaining – Network

Safety and

Performance


Security of Supply – Two Rocks 26,483 - Sustaining – Network

Safety and

Performance


Dis

po

sal &

Ab

and

on

men

t None - - - -

Cumulative Total 2019 to 2028 inclusive ($’000) 797,047 108,675

6.2 Regulating Facilities

Regulating facility assets are categorised by their inlet Maximum Allowable Operating Pressure (MAOP) pressure. The main asset types included in this ALS are as follows:

Pressure Regulating Station (PRS) with an inlet MAOP > 1900kPa

High Pressure Regulator (HPR) with inlet MAOP >= 500kPa



Medium Pressure Regulator (MPR) with inlet MAOP < 500kPa

Boundary regulators (BR)

These regulating facilities reduce higher (variable) inlet pressures to lower outlet pressure, controlled within a specified range. PRSs are located in secure compounds. The majority of HPRs are located in pits with larger sets having pneumatically actuated lids while some above ground MPRs are housed in cabinets. Majority of MPRs and BRs are located in pits.

Regulating facilities play a major role in not only the safe working of the network, but also optimising the distribution pressure levels and to help manage Unaccounted for Gas (UAFG) from the network.

6.2.1 Asset Class Overview

An overview of each of the regulating facility categories are described below.

Pressure Regulating Station

A PRS is defined as a regulator with an inlet pressure that exceeds 1,900kPa. PRSs are critical assets that allow the safe pressure regulation of gas from a higher variable inlet, to a lower set outlet pressure, controlled within a specified pressure interval for the full design flow range. They are supplied from the various laterals and transmission pipelines connected to the gas distribution system. The GDS has 16 active PRSs supplying gas into the high-pressure distribution networks.

ATCOs network is currently supplied from 15 DBNGP gate stations and 3 APA gate station therefore any loss of supply from DBNGP would result in a significant supply impact to customers. Additional connections into the APA will mitigate risk of a reduction or loss of supply due to isolation of DBNGP transmission pipeline. Interconnection to the PGP will provide access to the Mondarra gas storage facility.

Three gates stations proposed in total to prevent the Perth network from losing supply to customers in the event that DBNGP was not able to supply gas.

High Pressure Regulator

A HPR allows for safe pressure regulation of gas from a higher variable inlet to a lower set outlet pressure generally with an inlet pressure greater than 500kPa and an outlet pressure that can range between 7kPa and 350kPa. There are 194 HPRs located across the gas distribution system with an average age of 20 years.

Medium Pressure Regulator

A MPR is used for pressure regulation from networks of MAOP 350kPa and MAOP 70kPa to supply gas into the Metro MAOP 7kPa distribution network. The majority of the MPRs have an outlet pressure less than 7kPa. An MPR is not defined as a critical asset and no MPR is monitored. There are 412 MPRs located across the gas distribution system with an average age of 21 years.

Boundary Regulator

A boundary regulatory is typically used to supply gas services into a multistorey building. The inlet pressure of a boundary regulator range between 3kPa to 350kPa. The gas distribution system has 149 boundary regulators. A boundary regulator is not defined as a critical asset and no boundary regulator is monitored. There is approximately 149 boundary regulators are in operation across the gas distribution system.


ATCO maintains alignment between corporate objectives, and day-to-day activities by aligning the AMP objectives with those informing investments in the asset class. This approach helps to ensure ATCO



efficiently delivers a safe and reliable distribution network meeting the levels of services expected by its customers.

The following table includes the regulating facility KPI’s that have been identified to support the delivery of the over-arching asset management objectives.

Table 6.4: Regulating objectives that support line-of-sight

CORPORATE OBJECTIVE

AM OBJECTIVE MEASURE 2019 TARGET

Safe Network Integrity % PRS Failures <2%

% HPR Failures <2%

% MPR Failures <2%

Leaks on Gate Station, Regsets and metersets <14

No of “high high pressure alarm” Instances <3

Reliable Security of Supply No of "Low Low Pressure Alarm" Instances <3


Each project identified from applying the regulating facilities lifecycle strategy aligns with at least one, and in most cases, multiple ATCO asset management objectives.

1. Security of Supply: It is considered prudent to establish interconnects to the Parmelia pipeline to

enable access to gas available within the Mondarra storage facility. Additional connections into the

APA pipeline will mitigate risk of a reduction or loss of supply due to isolation of the Dampier to

Bunbury Natural Gas Pipeline (DBNGP) transmission pipeline.

2. Customer and Public Safety: ATCO is required to ensure its facilities are maintained and operated to

minimise hazards and risks to the public. Maintaining integrity of regulating facilities installations is

achieved through adequate physical security (e.g. palisade fencing). This reduces the risk of

unauthorised access to the assets, reducing hazards and risks to the public.

3. Network Integrity: proactive testing and replacement helps to avoid unplanned outages and

disruptions to customers due to asset failure.

4. Customer Service: regulating facilities help to deliver a safe and reliable service to customers. They

are used to ensure that appropriate pressure levels are available at customer premises.

5. Prudent and efficient investment: regulating facilities are proactively replaced due to condition,

helping to avoid higher-cost reactive interventions. Reinforcement projects often lag demand and new

connections, which helps reduces the potential for asset stranding.



Table 6.5: Regulating alignment between proposed investments and asset management objective areas

PROJECT


REGULATORY

COMPLIANCE

CUSTOMER

AND PUBLIC

SAFETY

NETWORK

INTEGRITY

CUSTOMER

SERVICE

PRUDENT AND

EFFICIENT

INVESTMENT

PGP Interconnection

Network Reinforcement Projects

Maintenance Activities

EOL Replacements

Facility Upgrade - HPR Vehicle Protection


To address the investment drivers discussed above a 10-year investment plan has been developed. The forecast expenditure for this period is summarised in the following table by Asset life cycle stages.


Table 6.6: Regulating summary of forecast expenditure ($’000)

LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX

($’000) REG CATEGORY INVESTMENT DRIVER

Cre

atio

n &

Acq

uis

itio

n

PGP Interconnection 18,862 - Sustaining –

Network Safety

and

Performance

Risk – Security of supply

Reinforcement - HPR (Secret Harbour) 316 - Growth -

Demand

Cost - NPV

Reinforcement - HPR Capacity Upgrade 306 - Growth -

Demand

Cost - NPV

Reinforcement - MPR Capacity upgrade 324 - Growth -

Demand

Cost - NPV

Reinforcement - New HPR (Atwell) 306 - Growth -

Demand

Cost - NPV

Reinforcement - New MPR (North

Metro)

343 - Growth -

Demand

Cost - NPV

Op

erat

ion

s &

Mai

nte

nan

ce

Preventive Maintenance - 4,480 Variable volume

opex


Risk - mitigation

Corrective Maintenance - 1,300 Variable volume

opex


Risk - mitigation



LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX


Fault Management - 190 Variable volume

opex

Risk - mitigation

Opex Projects - 4,125 Opex Projects –

non-recoverable


Risk - mitigation

Ren

ewal

& R

epla

cem

ent

EOL Replacement - Facility Equipment 692 - Sustaining –

Asset

replacement


EOL Replacement - HPR 316 - Sustaining –

Asset

replacement


EOL Replacement - MPR 1,000 - Sustaining –

Asset

replacement


EOL Replacement - PRS 5,124 - Sustaining –

Asset

replacement


EOL Replacement - Regulator Set Lids 1,091 - Sustaining –

Asset

replacement

Risk - safety

Facility Upgrade - HPR Vehicle Protection 849 - Sustaining –

Network Safety

and

Performance

Risk - safety

Facility Upgrade – Security on PRS 534

Dis

po

sal &

Ab

and

on

men

t

None - - - -

Total ($’000) 30,063 10,096

6.3 Metering Facilities

The scope of this asset class is all metering facilities used in the GDS. These include:

Domestic metering used to measure domestic gas consumption.

Commercial metering used to measure commercial gas consumption.

Network monitoring flow meters used in regulating facilities to monitor network flow characteristics. Note: this includes the meter only, as the facility infrastructure is covered in the regulating facility ALS.

Metersets, facilities for larger commercial and industrial customers.



6.3.1 Asset class overview

An overview of each of the metering facility categories are described below.

Billing meters for domestic and commercial customers

The GDS contains approximately over 759,000 meters that cover both domestic and commercial installations. This is approximately split between 13,700 commercial installations and 745,000 domestic meters. The vast majority are diaphragm meters with some rotary and turbine meters also deployed for commercial installations.

The general working condition of the domestic and commercial meter population is good. Statistical sampling strategies in accordance with AS4944 ensure healthy populations and age-based replacement in accordance to National Gas Rules, with the majority of the meters being retired from service after 18-25 years depending on model. The age profile of the metering population is relatively young with many domestic and commercial meters being replaced in the past 10 years.

There are no unmanaged issues impacting this asset class, though leaks are a recurring issue that requires a level of reactive maintenance. In 2017, there was on average one leak per 100 meters for domestic meters. The proportion was higher for commercial meters, which had a leak rate of 3 leaks per 100 meters. The analysis has identified that the primary reason for leaks is seal failure, mainly at the regulator for domestic meters or at service valve and pipe for commercial meters. ATCO has recently changed its maintenance strategy to ensure that all seals are replaced at the time the meter is replaced during routine meter change and therefore leaks are expected to decline over time.

Non-billing meters

Non-billing flow meters are installed with selected High Pressure Regulator Sets (HPR) and Pressure Reduction Stations (PRS) for flow monitoring purpose. These meters provide important data that is used to model the gas network via demand-modelling software. The Data is used to inform decision making and verify hydraulic modelling. There are currently 102 non-billing meters installed on PRSs and HPRs, 86 of which were installed between 2014 -2017.

Metersets

Metersets’ primary function is to measure the cumulative volume of gas passing through it with a capacity of greater than 30scmh. They act as a custody transfer point and allow accurate billing. There are approximately 1,300 metersets used at large commercial and industrial installations and are categorised based on operational pressure. ATCO has a range of different configurations for metersets which are tailored to meet specific customer needs.

Metersets are generally constructed to operate in an open compound or exposed to atmospheric conditions. Therefore, the main condition-related concern is the risk of corrosion.


ATCO maintains alignment between corporate objectives, and day-to-day activities by aligning the asset management plan (AMP) objectives with those informing investments in the asset class. This approach helps to ensure ATCO efficiently delivers a safe and reliable distribution network meeting the levels of services expected by its customers.

The following table includes the meter facility KPI’s that have been identified to support the delivery of ATCO’s overarching asset management objectives.



Table 6.7: Metering key objectives that support line-of-sight

CORPORATE

OBJECTIVE AM OBJECTIVE MEASURES 2019 TARGET

Network Safety Network Integrity Leak at meter position TBC

Customer and Public

Safety

Attendance to No Gas (Commercial) - % attended to

within 2 Hours

>98%

Attendance to No Gas (Domestic) - % attended to within

3 Hours

>98%

Attendance to Gas Smells at Meter – Standard Response

- % attended to within 48 Hours

>98%

Reliability Security of Supply % of meter set failures <2%

Affordability Prudent Investment % of meter set failures <2%


Each project identified from applying the metering facilities lifecycle strategy aligns with at least one, and in most cases, multiple ATCO asset management objectives:

1. Regulatory Compliance: ATCO is required to provide a compliant metering installation at each supply

point off the distribution network, test meter installations and replace meters as required. The projects

under this strategy have been designed to maintain operating efficiency whilst ensuring compliance.

2. Customer and Public Safety: ATCO is required to ensure facilities are maintained and operated to

minimise hazards and risks to the public. Each of the meter projects has the aim of maintaining integrity

of metering installations through the removal of defective meters from the field. This minimises the

likelihood of gas meter leaks, resulting in reduced hazards and risks to the public.

3. Network Integrity: By ensuring meter leaks are minimised through proactive maintenance and by

replacing aged assets, network incidents are reduced.

4. Customer Service: Each meter project has the aim to deliver a safe and reliable service to customers.

Defective meters are replaced with accurate, correctly functioning units. This maintains integrity of the

billing system, ensuring consumers are charged correctly for their gas usage. Proactive testing and

replacement also avoids unplanned outages and disruptions to customers due to meter failure.

5. Prudent and efficient investment: The size of annual programs, and smoothing of the domestic (high

volume) meter replacement program, allows for unit rates to be competitively negotiated and also

helps to minimise the project delivery risks. Furthermore, the use of refurbished commercial meters

can help to defer the need for a new replacement saving costs.



Table 6.8: Metering alignment between proposed investments and asset management objective areas

PROJECT


REGULATORY

COMPLIANCE

CUSTOMER

AND PUBLIC

SAFETY

NETWORK

INTEGRITY

CUSTOMER

SERVICE

PRUDENT AND

EFFICIENT

INVESTMENT

Routine Meter Change (Domestic)

EOL Replacement - Billing Commercial Meters

CIC – Metersets

Asset Performance - Smart Meter trial

EOL Replacement - Meter Facilities

Asset Performance - Meters Compliance


To address the investment drivers discussed above a 10-year investment plan has been developed. The forecast expenditure for this period is summarised in the following table by Asset life cycle stages.


Table 6.9: Metering summary of forecast expenditure ($’000)

LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX


Cre

atio

n &

Acq

uis

itio

n

Meter Upgrades 1,825 - Growth – Customer

Initiated

Cost - NPV

Meter Reconnects 1,008 - Growth – Customer

Initiated

(Variable volume capex)

Cost – Revenue growth

New AL18 Connections 1,348 Growth – Customer

Initiated

(Variable volume capex)

Cost – Revenue growth

Customer Initiated

Commercial metersets

21,17

3

- Growth – Customer

Initiated

Cost – NPV

Risk – compliance

Op

erat

ion

s &

Mai

nte

nan

ce Preventive

Maintenance

- 8,686 Variable volume opex Cost - lifecycle cost

Risk - mitigation

Corrective

Maintenance

- 11,832 Variable volume opex Cost - lifecycle cost

Risk - mitigation



LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX


Fault Management - 20,676 Variable volume opex Risk - mitigation

Opex Projects - 1,375 Opex Projects – non-

recoverable


Risk - mitigation

Ren

ewal

& R

epla

cem

ent

EOL Replacement -

Billing Commercial

Meters

1,294 - Sustaining – Asset

replacement


Risk – compliance

EOL Replacement -

Meter Facilities

1,541 - Sustaining – Asset

replacement



EOL Replacement -

Non-Billing Commercial

Meters


replacement


Routine Meter Change

(Domestic)

56,30

1

- Variable volume capex Cost - lifecycle cost

Risk – compliance

Facility Upgrade - Asset

Monitoring

3 - Sustaining – Network

Safety and Performance

Risk – safety

Performance – data quality

Asset Performance -

Meters Compliance

Project

2,721 - Sustaining – Network

Safety and Performance

Risk - safety

Dis

po

sal &

Ab

and

on

men

t None - - - -

TOTAL ($’000) 87,265 42,569

6.4 Supervisory Control and Data Acquisition

The asset class described in this ALS includes:

Pressure monitoring devices

Telemetry and peripheral devices located on network assets such as High Pressure Regulator (HPR) and Pressure Reducing Stations (PRS), industrial meter sets (IND), or Cathodic Protection (CP)

In AA5, Supervisory Control functionality is proposed aligned to this asset class and upon approval and deployment this new equipment will be maintained similar to telemetry assets. Initial maintenance will follow manufacturer’s recommendations then developed as the working history for these devices is developed in line with our current methodology for telemetry assets. SCADA systems and data acquisition systems will and are being used by ATCO for the effective and economical monitoring, recording and



control of the network, and this strategy covers maintenance and replacement of ATCO supervisory, communications equipment and systems.

Currently, ATCO only has data acquisition capability based on an automated communications process that measures and collects data at various locations on the network and then transmits to receiving equipment for monitoring and use for distribution network operation, modelling and planning. Over the next five years, ATCO will install supervisory control capability as required to meet operational needs in reduction of risk or improve utilisation by remote pressure control where identified across the gas network. This will enable automation of values thereby delivering higher level of control over the network whether for management of network emergencies or greater utilisation of network assets. Further automation of valves will allow network isolation to deliver greater understanding of gas flows, improving the gas modelling outcomes and UAFG calculations while maintaining security of gas supplies.


SCADA is used on the network to allow ATCO to proactively monitor system pressures and respond to developing circumstances before they result in outages. Network performance data is integral to the day-to-day operation of the network and for the development of asset management strategies.

It is also a critical component of providing Industrial interval metering data to the gas retailers, in accordance with AEMO Market rules for which penalties may apply for failure to provide hourly flow data by the daily deadline. With increasing numbers of consumers, the number of facilities that include telemetry has increased.

Currently there are 648 monitoring devices installed across the GDS. Approximately one third are Pressure Monitoring Devices (208) located at strategic pressure monitoring points on the network. The remaining devices are located on network assets such as High Pressure Regulators (179) and industrial meter sets (269). ATCO has a number of devices located at Pressure Reducing Stations or at Cathodic Protection assets.

ATCO implemented a scheduled inspection and corrective maintenance program in 2012 to address excessive numbers of site visits to rectify failed components. This strategy has been successful in reducing the number of the faults and reactive repairs. In recent years, communication faults have been significantly less due to low power supply problems or temporary failures due to software issues.

The condition of telemetry assets varies across the different devices and equipment. ATCO identified a number of enclosures on Pressure Monitoring Devices at the extremities of the GDS that are in poor condition and coming to their end of life. These need to be replaced within the next three-year period. However, the majority of high pressure regulator monitoring sets: are considered to be in good condition and would be expected to be replaced as per their lifecycle within the next fifteen-year period.

The use of SCADA greatly reduces the operating cost and risks associated with running a distribution network, but for these efficiencies and mitigations to be continuously realised, the assets and systems need to be kept in effective working order. It is critical that SCADA system and communication equipment are relevant and compliant to ensure safe and accurate representation of the performance of the gas network. In particular it is critical to have equipment that provides reliable information in times when outage management is required or to model network performance.

Failure of SCADA equipment can result in catastrophic failure of gas equipment in the field. Therefore this asset lifecycle strategy aims to achieve a high level of safety and reliability for SCADA assets which in turn provides real-time network performance data and network operation capability.

Supervisory Control is a strategic shift in the maturity of the GDS, which this asset class will aim to deliver over the AA5 and beyond. There are a number of key Supervisory Control programs over the next 10 years:

Deliver Risk reduction strategies

Management of Higher Heating Value (HHV) Analysis Devices



Improved network utilisation by remote control of pressures

Network segregation to achieve greater network understanding and reduce network losses

Improved cathodic protection from enhanced monitoring and control of TRU’s

Automation of odorant monitoring across the network to increase network safety

Deliver Automatic Meter Reading (AMR) for basic meters at difficult meter reading locations


ATCO maintains alignment between corporate objectives, and day-to-day activities by aligning the AMP objectives with those informing investments in the asset class. This approach helps to ensure ATCO efficiently delivers a safe and reliable distribution network meeting the levels of services expected by customers.

The following table includes the SCADA assets’ KPIs that have been identified to support the delivery of ATCO’s overarching asset management objectives.

Table 6.10: SCADA objectives that support line-of-sight

CORPORATE

OBJECTIVE AM OBJECTIVE MEASURES TARGET

Safe Network Integrity Metro communication faults attended within timeframe 3 days

Metro data faults attended within timeframe 7 days

Regional communication fault attended within timeframe 7 days

Regional data fault attended within timeframe 14 days

Customer and

Public Safety

Network alarms attended or actioned 99%

Over pressure shut off (OPSO) devices alarmed 100%

Accuracy verification tests (AVTs) carried out at third party gate stations connected

to the ATCO GDS

2 per

month

Reliable Security of Supply Accuracy verification tests (AVTs) carried out at third party gate stations connected

to the ATCO GDS

2 per

month

Retailer

Support

Customer Service Metro communication faults attended within timeframe 3 days

Metro data faults attended within timeframe 7 days

Regional communication fault attended within timeframe 7 days

Regional data fault attended within timeframe 14 days


The vision for the SCADA network is to ensure the relevant stakeholders have adequate and relevant visibility over the gas network. It is also to ensure that personnel working on SCADA assets can continue to do so in a safe manner, whilst also maintaining current levels of technology serviceability.

Each project identified from applying the SCADA lifecycle strategy aligns with at least one, and in most cases, multiple ATCO asset management objectives.



Security of Supply: ATCO perform network modelling to understand capacity constraints and areas of low pressure. These areas are reinforced or reconfigured to ensure loss of supply risk is minimised. Design of the network includes where possible: remotely controlling network pressures to boost gas pressures at peak gas usage times; or additional sources of gas to add redundancy in supply.

Customer and Public Safety: ATCO is required to ensure its assets are maintained and operated to minimise hazards and risks to the public. Maintaining safety of SCADA assets is achieved through robust emergency response planning, remote alarm management, regular maintenance; and timely corrective maintenance response.

Network Integrity: proactive testing and replacement helps to avoid unplanned outages and disruptions to customers due to asset failure.

Customer Service: Quality systems and processes help to deliver a safe and reliable service to customers. They are used to ensure that appropriate pressure levels and metering data are available at customer premises.

Prudent and efficient investment: SCADA assets are proactively replaced due to age/condition, helping to avoid higher-cost reactive interventions. Proactively replacing SCADA assets has the additional benefit of alignment to technology changes due to further enhancements gained through development.

Table 6.11: SCADA alignment between proposed investments and asset management objective areas

Asset Management Objective Area

Project

Secu

rity

of

Sup

ply

Cu

sto

mer

and

Pu

blic

Safe

ty

Net

wo

rk

Inte

grit

y

Cu

sto

mer

serv

ice

Pru

den

t an

d

effi

cien

t

inve

stm

ent

Automation and Gas Quality

Asset Performance - New PMD installation

End-of-life replacement programme

6.4.4 Planned Expenditure

To address the investment drivers discussed above a 10-year investment plan has been developed. The forecast expenditure for this period is summarised in the following table by asset life cycle stages.




Table 6.12: SCADA Summary of forecast expenditure ($’000)

LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX


Cre

atio

n &

Acq

uis

itio

n

Supervisory Control & Enhanced

Data Acquisition15

12,583 Sustaining – Network

Safety And

Performance

Cost - lifecycle Cost

Risk - mitigation

New PMD installation 957 Sustaining – Network

Safety and

Performance


Op

erat

ion

s &

Mai

nte

nan

ce

Preventive Maintenance 1,954 Variable volume opex Cost - lifecycle cost

Risk - mitigation

Corrective Maintenance 1,239 Variable volume opex Cost - lifecycle cost

Risk - mitigation

Opex Projects 4,987 Opex Projects – non-

recoverable


Risk - mitigation

Ren

ewal

&

Rep

lace

men

t EOL Replacement – Data

Acquisition


replacement


Dis

po

sal &

Ab

and

on

men

t None - - -

TOTAL 20,542 8,180

6.5 Corrosion Protection Systems

The scope of this asset class is cathodic protection systems used in the Gas Distribution System16. These include:

Sacrificial anode system – utilising magnesium anodes

Impressed current system – utilising Transformer Rectifier Units (TRU)

Earth Potential Rise and AC Mitigation systems


All the ATCO high-pressure steel gas pipelines and a limited number of medium pressure steel pipelines and steel pipeline crossings, have cathodic protection systems to protect against pipeline corrosion.

Sacrificial Anode System

Sacrificial anode systems protect approximately 85% of the underground metallic mains and pipelines. These systems deplete at rates specific to environmental conditions the protected sections operate within

15 This AMP does not include a forecast capex estimate for the Supervisory and Enhanced Data Acquisition program for the period 2025 to 2028

16 The GDS, covered by the Access Arrangement, operates in the Coastal Gas supply areas under the conditions defined in Gas Distribution License 8. Our Albany and Kalgoorlie networks are non-regulated networks (not covered by GDL8) and are not included in the GDS.



thereby consuming these anode banks at varying rates. These systems are generally working well, and the anodes are replaced when protection levels are underperforming. Installation of these systems for protection are preferred due to their lower life cycle costs and installed on most new underground steel assets.

Impressed Current System

Impressed current systems protect approximately 15% of the underground metallic mains and pipelines. These systems use a TRU to impress current to the pipelines and mains to mitigate corrosion. The TRU have expected technical lives of approximately 40 years, but are replaced on poor condition or performance. Installation of impressed current systems remain on the older steel network and are preferred over anode systems when highly complex interactions, such as in the Perth Central Business District. These complex networks require considerable quantities of anodes to adequately protect and the life cycle costs of installing an impressed current system become viable.

Earth Potential Rise and Low Frequency Induction Mitigation Systems

There are two distinct mechanisms for transient and steady state AC voltage to occur on a buried metallic pipeline. Low frequency induction (LFI) occurs when a pipeline is parallel to a high voltage overhead power line. The magnetic field produced by the current flowing in the power line conductors can induce an alternating current on the pipeline. The other mechanism is when a fault occurs on a power line, or an earthed tower is struck by lightning, the current surge is conducted to earth via the earthing at the power line tower earthing system. Therefore Earth potential rise (EPR) is the effect of the power line passing a very high current to earth causing a substantial rise in potential of the ground close to the tower earth and onto the metallic pipeline in the vicinity. Both EPR & LFI have the potential for significant risk to personnel and the pipeline asset.

The ATCO GDS has numerous EPR (Spot mitigation) and LFI (Linear asset) mitigation assets, which have recently been installed and are inspected annually to ensure they are fit for purposed and in a functional state.

6.5.2 Strategic Alignment


The following table includes the cathodic protection systems KPI’s that have been identified to support the delivery of ATCO’s overarching asset management objectives.

Table 6.13: CP Key objectives that support line-of-sight

Corporate Objective AM Objective Measures 2019 Target

Safe Network Integrity Percentage of network protected by

CP

99% pipelines rated fair or good


Each project identified from applying the pipelines, mains and services lifecycle strategy aligns with at least one, and in most cases, multiple ATCO asset management objectives.

1. Regulatory Compliance: ATCO was issued a corrective action request in 2010 to install step touch

mitigation measures to protect against stray voltages. This is an ongoing project to ensure adequate

protection on all facilities.



2. Customer and Public Safety: ATCO is required to ensure facilities are maintained and operated to

minimise hazards and risks to the public. Each of the facility upgrade projects has the aim of

maintaining integrity of CP installations through increased protection levels between distribution

assets and the public. This minimises the likelihood of electric shock, resulting in reduced hazards and

risks to the public.

3. Workforce Safety: ATCO is required to ensure the safety of its workforce, and therefore must mitigate

any voltage hazards potentially present at the workplace.

4. Network Integrity: By ensuring protection levels are optimised through proactive maintenance and by

replacing aged assets, pipeline integrity is maintained for longer period of time.

5. Customer Service: CP projects do not directly affect ATCO’s quality of customer service.

6. Prudent and efficient investment: The development of annual programmes allows for unit rates to be

adequately controlled and also helps to minimise the project delivery risks.

Table 6.14: CP alignment between proposed investments and asset management objective areas

PROJECT

ASSET MANAGEMENT OBJECTIVE AREA R

egu

lato

ry

Co

mp

lian

ce

Cu

sto

mer

and

Pu

blic

Safe

ty

Net

wo

rk

Inte

grit

y

Cu

sto

mer

serv

ice

Pru

den

t an

d

effi

cien

t

inve

stm

ent

Facility Upgrade – Resistance Probes

Facility Upgrade – Step touch Mitigation

Facility Upgrade – Insulation joints & surge protectors

Facility Upgrade – CP Test Points

EOL Replacement – Anodes

EOL Replacement – Transformer Rectifier Unit

Install permanent reference cells at all CP units

Decommission and remove redundant CP facilities and signage

Capture GPS coordinates for all CP facilities

Investigate foreign structure interference on PL39

Relocate CP points out of PTA rail reserves


To address the investment drivers discussed above a 10-year investment plan has been developed. The forecast expenditure for this period is summarised in the following table by asset life cycle stages.




Table 6.15: CP Summary of forecast expenditure ($’000)

Lifecycle Stage Project CAPEX

($’000)

OPEX

($’000) Reg category Investment Driver

Cre

atio

n &

Acq

uis

itio

n

Facility Upgrade – Resistance

Probes

156 - Sustaining –

Network safety &

performance

Risk – network integrity

Op

erat

ion

s &

Mai

nte

nan

ce

Preventive Maintenance - 1,470 Variable volume

opex


Risk - mitigation

Corrective Maintenance - 312 Variable volume

opex


Risk - mitigation

Fault Management - - Variable volume

opex

Risk - mitigation

Opex Projects - 39 Opex Projects –

non-recoverable


Risk - mitigation

Ren

ewal

& R

epla

cem

ent

Facility Upgrade – Step touch

Mitigation

2,381 - Sustaining –

Network safety &

performance

Risk – public safety

Risk – workforce safety

Risk - compliance

Facility Upgrade – Insulation

joints & surge protectors

509 - Sustaining –

Network safety &

performance


Facility Upgrade – CP Test Points 181 - Sustaining –

Network safety &

performance


EOL Replacement – Anodes 460 - Sustaining – Asset

replacement

Cost – lifecycle cost


Dis

po

sal &

Ab

and

on

men

t None - - - -

Total ($’000) 3,688 1,820

6.6 Fleet

The fleet asset class includes; motor vehicles and associated plant and equipment assets.17 A further breakdown of these categories includes:

motorcycles

passenger vehicles

17 The plant and equipment assets are those that are licensed by the Western Australia Department of Transport.



light commercial vehicles (i.e. utilities vehicle and van)

truck

plant and equipment (i.e. trailers, mobile message boards, excavators, and compressors)

ATCO has a mobile workforce. Personnel and fleet assets are located close to operational demand centres so that customers can be served quickly and cost-effectively. The fleet assets underpin operations, enabling work crews to; undertake network maintenance activates, respond to network incidents in a timely manner, and provide a range of services to customers.


An overview of each of the mobile fleet categories are described below.

Motorcycles

Three motorcycles are used to conduct leak surveys across the GDS. To undertake this, they have been mounted with equipment to detect natural gas. The motorcycles must travel at a low speed while conducting leak surveys and are transported to testing locations using a trailer.

Passenger Vehicles

There are 33 passenger vehicles in the fleet. These are passenger carrying vehicles used by non-field staff and management to attend external meetings and stakeholder events, visit worksites to supervise and manage construction projects, network incidents and other network maintenance activities.

Light Commercial Vehicles (i.e. utilities vehicle and van)

There are 128 light commercial vehicles in the fleet, consisting of 98 utilities vehicles and 30 commercial vans. The light commercial vehicles are passenger carrying vehicle or load-carrying commercial vehicle mostly under two tonnes of payload capacity. They are generally used by field staff to attend worksites across the GDS for a wide range of activities including inspections, construction project visits, training and field assessment, planned and reactive network maintenance.

The vans are primarily used by the Customer Services team, who are the first responders to network faults, including gas leak and no gas. The vans are fitted with purpose-built storage units for the required network tools and materials to respond to the network faults.

Truck

The truck fleet consists of light rigid chassis vehicles with a gross vehicle mass (GVM) exceeding 4.5 tonnes but not exceeding 8 tonnes and medium rigid chassis trucks with no more than 2 axles and a GVM exceeding 8 tonnes. Most have fully custom-made body to carry excavator, material and tools. These trucks are used to undertake a range of activities on the GDS including leak repair, new gas connection, and new and replacement of gas mains.

Plant and Equipment (i.e. trailers, mobile message boards, excavators, and compressors)

Plant and equipment consist of a mixture of items associated with the vehicle fleet that are licensed by the Western Australia Department of Transport. There are 81 items in the category including excavators, trailers (for tools, material cartage and motorcycles), mobile light towers, mobile message boards, and mobile air compressors.

6.6.2 Strategic Alignment

ATCO maintains alignment between corporate objectives, and day-to-day activities by aligning the asset management plan (AMP) objectives with those informing investments in the asset class. This approach



helps to ensure ATCO efficiently delivers a safe and reliable distribution network meeting the levels of services expected by its customers.

The following table includes the mobile fleet KPIs that have been identified to support the delivery of the over-arching asset management objectives.

Table 6.16: Fleet Key objectives that support line-of-sight

CORPORATE OBJECTIVE AM OBJECTIVE MEASURES 2019

TARGET

Safe

Health & Safety

Total Recordable Incident Frequency (TRIFR) (per 1m hours

worked)

21.65

Motor Vehicle Incident Rate (per 1m km) ≤1.44

Customer Focused % of Broken Main Responded to Within 1 Hour >98%

% on within 1 hour for priority response >98%

6.6.3 Achievement of Asset Management Objectives

Each project described under this strategy is aligned to at least one, and in most cases, all of the ATCO asset management objective areas.

Table 6.17: Fleet Alignment between Proposed Investments and Asset Management Objective Areas


Project

Security

of

Supply

Customer

and Public

Safety

Network

Integrity

Customer

service

Prudent and

efficient

investment

Purchase fleet vehicles

EOL Replacement – Fleet vehicles

The bullets below summarise how the fleet investments align with ATCO’s asset management objective areas:

Customer and Public Safety: ATCO is required to ensure its assets are maintained and operated to

minimise hazards and risks to the public. Maintaining safety of pipelines, mains and services is achieved

through robust emergency response planning, applicable integrity management techniques, safety

awareness programs and access to Dial Before You Dig drawings.


To address the investment drivers discussed above, a 6-year investment plan has been developed. The forecast expenditure for this period is summarised in the following table.

Table 6.18: Fleet Summary of forecast expenditure 6 years (2019-2024) ($’000)

LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX


Cre

atio

n &

Acq

uis

itio

n

Purchase fleet vehicles 4,004 - Vehicles Cost – Growth



Op

erat

ion

s &

Mai

nte

nan

ce

Total Maintenance

6,208 Variable volume

opex


Risk - mitigation

Ren

ewal

&

Rep

lace

men

t EOL Replacement – Fleet vehicles 15,890 - Vehicles Risk – Asset condition

Dis

po

sal &

Ab

and

on

men

t

None - - - -

Total ($’000) 19,894 6,208

6.7 Property, Plant and Equipment

The scope of this asset class is PPE. This includes:

Property, including depots and offices, and associated assets such as air conditioning units, furniture and fittings

Plant and equipment, ranging from basic hand tools to small power tools, specialised flow-stopping equipment, pressure gauges and heavy plant such as concrete saws, generators and compactors.

ATCO has a mobile workforce. Personnel and PPE assets are located close to operational demand centres so that customers can be served quickly and cost-effectively. The PPE assets underpin operations and enable work crews to; undertake network maintenance activities, respond to network incidents in a timely manner, connect new customers to the network, extend gas mains to support network growth and provide a range of services to customers.


ATCO owns eight depots across its coastal gas distribution system, with its main operations centre at Jandakot. Generally, these facilitates are in good condition, with only routine capital investment and maintenance planned during the ALS palling period.

A range of plant and equipment is used to support network operations including equipment for building and maintaining the network and basic hand tools used for servicing and repairs.

Demand for new facilities is driven by forecast network activities, staff and accommodation requirements, and future network expansions. One of the primary objectives of ATCO’s facilities approach is to locate people and facilities close to concentrated operational demand centres to serve customers more safely, efficiently and effectively. This is in accordance with accepted good industry practice and will deliver the various service level obligations, including emergency response to broken mains/services within one hour.

Facilities (e.g. depots) are replaced or refurbished, as required, based on their condition, performance and operational suitability. Most other facility assets (i.e. fittings, fixtures, furniture and equipment) owned by ATCO are non-critical assets and are run to failure.

Currently, most plant and equipment are renewed on a run-to-failure basis. This is subject to the assets remaining in workable condition and performing effectively.





The following table includes the property, plant and equipment KPIs that have been identified to support the delivery of the over-arching asset management objectives.

Table 6.19: PP&E Key objectives that support line-of-sight

CORPORATE

OBJECTIVE AM OBJECTIVE MEASURES

2019

TARGET

Safe

Health & Safety Total Recordable Incident Frequency (TRIFR) (per 1m hours

worked)

21.65

Customer Focused % of Broken Main Responded to Within 1 Hour >98%

% on within 1 hour for priority response >98%


Each project identified from applying the property, plant and equipment lifecycle strategy aligns with at least one, and in most cases, multiple ATCO asset management objectives.

Table 6.20: PP&E Alignment between proposed investments and asset management objective areas


PROJECT SECURITY

OF SUPPLY

CUSTOMER

AND

PUBLIC

SAFETY

NETWORK

INTEGRITY

CUSTOMER

SERVICE

PRUDENT

AND

EFFICIENT

INVESTMENT

New Depot - Osborne Park/Balcatta

Clean Energy Innovation Hub

New plant and equipment

Depots – minor capital works

The bullets below summarise how the PPE investments align with ATCO’s asset management objective areas:

Customer and Public Safety: Our PPE assets underpin our operations, enabling work crews to undertake network maintenance activates and respond to network incidents in a timely manner to maintain a safe and reliable gas distribution network.

Customer Service: Our PPE assets underpin our operations, enabling work crews to provide a range of services to customers.

Prudent and efficient investment: ATCO has a mobile workforce and locate our personnel and PPE assets close to operational demand centre. This means that customers can be served quickly and cost-effectively, and support the growth of the gas network. Further, the selection and acquisition of PPE asset is managed through the procurement process to achieve best value for money.




To address the investment drivers discussed above a 6-year investment plan has been developed. The forecast expenditure for this period is summarised in the following table.

Table 6.21: PP&E Summary of forecast expenditure between 2019 and 2024 ($’000)

LIFECYCLE

STAGE PROJECT

CAPEX

($’000)

OPEX

($’000)

REG


Cre

atio

n &

Acq

uis

itio

n

Perth North Central

Depot

4,850 - Buildings Risk – Compliance

Risk – Security of supply

Performance – Operational

response

New plant and

equipment

5,248 - Plant &

Equipment

Risk – Asset condition

Risk – Workforce safety

Op

erat

ion

s &

Mai

nte

nan

ce Preventive Maintenance - 5,951 Variable

volume opex


Risk - mitigation

Corrective Maintenance - 1,028 Variable

volume opex


Risk - mitigation

Ren

ewal

&

Rep

lace

men

t Depots – minor capital

works

628 - Plant &

Equipment

Risk – Workforce safety

Risk – Asset condition

Dis

po

sal &

Ab

and

on

men

t None - - - -

Total ($’000) 10,725 6,979

FINANCIAL SUMMARY


7. Financial Summary

This chapter sets out a summary of ATCO’s expenditure forecasts over the AMP 10-year planning period. It is structured to align with regulatory expenditure categories (in support of AA5 expenditure plans), and reflects the programs discussed in earlier chapters.

The chapter also provides further commentary and context for the forecasts including key assumptions. It discusses the cost estimation methodology used and how this has been used to develop the forecasts for the planning period.

Funding requirements for managing the network are classified into four categories: (1) variable volume Capex, which covers the costs incurred for new connections; (2) variable volume Opex, which covers maintenance activities; (3) Capex projects, to cover demand, performance and replacement projects, and (4) Opex projects, to cover projects that cannot be classified as Capex or maintenance activities.

ATCO expects the expenditure profiles described in this section, particularly later in the period, to be further refined as modelling approaches are enhanced and the accuracy and performance of underlying asset information refined. This will lead to periodic reviews of proposed levels of investment.

7.1 Planned Capex Investments

ATCO assesses not only its operating practices, but also the lifecycle of the assets utilised to deliver natural gas service. The Company identifies assets for replacement, upgrading and improvement that are necessary and in the long term interests of customers.

Through a project governance process, including the development of business cases, which is described in ENS MA00001 Project Management Manual, and the implementation of COM PO00001 Procurement Policy, ATCO demonstrates that expenditures incurred are prudent and efficient and in accordance with accepted good industry practice. They are designed to achieve the lowest sustainable cost of providing a safe, reliable, cost competitive natural gas delivery service.

Growth Capex is that used for the economic expansion of ATCO’s reticulated network to provide service to new end use connections. New Mains and Services are Customer Initiated CAPEX (CIC). ATCO’s Gas Distribution Licence GDL 8 requires that the Network Operator must offer to connect any service that is on line of gas main with up to 20 metres of service line, and accompanying gas meter incorporated, as the “Service Connection”. Demand Capex is that assigned to developing spurlines or reinforcing the network to address increased demand for natural gas.

Sustaining CAPEX is that used to ensure the existing network infrastructure remains safe and reliable so that it can sustain the functions for which it was designed. Performance Capex represents expenditures to upgrade, enhance, or improve network assets or operations to improve safety, reliability or cost effectiveness. Examples of performance Capex are enhancements to the HP pipeline network to accommodate inline inspections of such assets consistent with Australian Standard AS2885; installation of supply connections and associated pressure reduction and mains infrastructure to provide supply security and reliability, and the installation of concrete slabbing to protect high pressure pipelines in certain population usage areas (schools, hospitals and other buildings of public occupancy) from excavation strikes.

Asset replacement Capex represents expenditure to replace network assets that are at the end of their useful, safe operating life to ensure they remain safe and reliable. Examples of replacement Capex are replacement of deteriorated plastic mains; replacement of distribution assets within multistorey buildings and natural gas meters that have reached regulated end of life.

FINANCIAL SUMMARY


The following table and chart summarise ATCO’s planned Capex during the AMP planning period and grouped by expenditure category.

Table 7.1: Total Capital Expenditure by Category ($’000)

CAPEX

CATEGORY 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

TOTAL

($'000)

GROWTH CAPEX 33,149 33,791 34,153 34,948 34,958 36,459 36,880 58,181 43,925 39,834 386,277

Customer

Initiated

Connections

33,147 32,836 34,046 34,416 34,958 36,352 36,880 37,849 38,788 39,834 359,106

Demand 2 954 107 533 0 107 0 20,332 5,137 0 27,171

SUSTAINING

CAPEX

44,187 56,909 53,263 55,795 57,649 52,516 56,730 56,389 59,288 59,066 551,805

Asset

Replacement

35,050 34,613 37,665 40,425 37,277 38,056 56,137 55,791 58,685 58,459 452,159

Network Safety

and

Performance

9,137 22,296 15,598 15,370 20,372 14,461 593 598 602 607 99,646

INFORMATION

TECHNOLOGY

2,152 7,400 8,762 6,423 5,487 8,025 7,973 9,381 6,857 5,828 68,288

Information

Technology

2,152 7,400 8,762 6,423 5,487 8,025 7,973 9,381 6,857 5,828 68,288

STRUCTURES &

EQUIPMENT

9,063 5,251 5,986 3,189 4,071 4,264 2,873 4,256 3,666 4,795 47,416

Fleet 3,580 3,556 4,708 1,879 2,989 3,182 1,790 3,172 2,581 3,709 31,146

Facilities, Plant

and Equipment

4,812 1,695 1,278 1,310 1,082 1,083 1,084 1,084 1,085 1,086 15,599

TOTAL ($'000) 87,881 103,351 102,164 100,355 102,165 101,266 104,455 128,207 113,736 109,524 1,053,104

It can be seen from the table above and chart below that the largest expenditure is planned for the customer initiated connections and asset replacement. This is predominantly due to variable volume retailer requests for new connections (34% of total Capex), and the mains relay programme (30% of total Capex).

FINANCIAL SUMMARY


Figure 7.1: Total Capital Expenditure by Category ($’000)

Understanding capital expenditures for each asset class allows for ATCO to refine asset lifecycle strategies to sustainably reduce the total cost of ownership for its assets in the long term interest of consumers. Capex summarised by asset class is shown in table and chart below.

Table 7.2: Total Capital Expenditure by Asset Class ($’000)

ASSET CLASS 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 TOTAL

($'000)

Pipelines, Mains &

Services

59,206 75,042 67,686 70,378 80,133 76,492 83,313 105,201 91,540 88,056 797,047

Regulating Facilities 5,696 2,768 8,306 8,801 477 270 270 273 2,923 278 30,063

Metering Facilities 11,506 9,240 7,936 8,129 8,356 8,447 8,838 7,902 7,549 9,362 87,265

SCADA18 516 3,242 3,403 3,316 3,311 3,429 828 830 832 834 20,542

Cathodic Protection

Systems

412 407 378 359 329 338 361 364 367 371 3,688

Information Systems 2,152 7,400 8,762 6,423 5,487 8,025 7,973 9,381 6,857 5,828 68,288

Fleet 3,580 3,556 4,708 1,879 2,989 3,182 1,790 3,172 2,581 3,709 31,146

Facilities, Plant &

Equipment

4,812 1,695 983 1,071 1,082 1,083 1,084 1,084 1,085 1,086 15,065

TOTAL ($'000) 87,881 103,351 102,164 100,355 102,165 101,266 104,455 128,207 113,736 109,524 1,053,104

It can be seen from the table above and chart below that the largest expenditure is planned for the pipelines, mains and services asset class. It can be clearly seen that this is predominantly due to the pipelines, mains and services asset class.

18 This AMP does not include a forecast capex estimate for the Supervisory and Enhanced Data Acquisition program for the period 2025 to 2028

FINANCIAL SUMMARY


Figure 7.2: Total Capital Expenditure by Asset Class ($’000)

7.2 Planned Opex Investments

In accordance with National Gas Rules, operating expenditure must be such as would be incurred by a prudent service provider acting efficiently, in accordance with accepted good industry practice, to achieve the lowest sustainable cost of delivering pipeline services. Projects and activities have been prepared to ensure all operational expenditure conforms to this requirement and to those in ATCO’s Safety Case.

Variable volume maintenance activities are those where a standard job requirement are performed on a repeatable basis. These jobs usually have very similar unit rates as actual costs to implement these tasks is similar. ATCO classify these activities into specific job types, which are seasonally trended to forecast resource requirements and cost allocations. Job types are grouped into three categories: (1) preventive maintenance; (2) corrective maintenance, and (3) fault management.

Due to the complexity of some maintenance activities, Engineering Services are required to ensure this maintenance is performed safety, effectively and efficiently. These activities are executed using ATCO’s project management methodology and not standard work management processes typically used by variable volume maintenance. These jobs are also estimated using engineering estimates and not from regression analysis of historical data to forecast unit costs. Typical maintenance projects are major maintenance works such as: pipeline inline inspections, safety awareness programme and Dial Before You Dig (DBYG) management.

FINANCIAL SUMMARY


Table 7.3: Total Opex by Expenditure Category ($’000)

EXPENDITURE

CATEGORY 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

TOTAL

($'000)

Preventive

Maintenance

3,513 3,438 3,358 3,406 3,428 3,389 3,443 3,468 3,493 3,549 34,484

Corrective

Maintenance

3,631 3,663 3,713 3,774 3,838 3,905 3,988 4,052 4,114 4,177 38,855

Fault

Management

6,048 6,544 6,638 6,743 6,818 6,891 6,965 7,034 7,107 7,178 67,967

Opex Projects 1,785 3,504 3,702 3,390 2,840 3,209 2,875 2,892 2,910 2,927 30,035

TOTAL ($'000) 14,978 17,149 17,410 17,313 16,924 17,394 17,271 17,446 17,624 17,832 171,340

It can be seen from the table above and chart below that the largest expenditure is planned for fault management variable volume maintenance activities. This is predominantly due to leak response from customer reported leaks at meter position and class 2 and 3 leaks on mains.

Figure 7.3: Total Opex by Expenditure Category ($’000)

Understanding operating expenditures for each asset class allows for ATCO to refine asset lifecycle strategies to sustainably reduce the total cost of ownership for its assets in the long term interest of consumers. Opex summarised by asset class is shown in table and chart below.

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

AA4 AA5 AA6

Op

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Exp

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($

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Preventive Maintenance Corrective Maintenance Fault Management Opex Projects

FINANCIAL SUMMARY


Table 7.4: Total Opex by Asset Class ($’000)

ASSET CLASS 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 TOTAL

($'000)

Pipelines, Mains & Services 9,606 11,316 11,404 10,972 10,385 10,931 10,875 10,963 11,052 11,171 108,675

Metering Facilities 4,128 4,105 4,030 4,116 4,179 4,256 4,329 4,401 4,474 4,549 42,569

Regulating Facilities 717 828 944 1,040 1,065 1,074 1,088 1,100 1,114 1,127 10,096

SCADA 302 734 862 1,009 1,118 952 798 800 802 804 8,181

Cathodic Protection Systems 225 166 171 175 178 181 181 181 181 181 1,820

TOTAL ($'000) 14,978 17,149 17,410 17,313 16,924 17,394 17,271 17,446 17,624 17,832 171,340

It can be seen from the table above and chart below that the largest expenditure is planned for the pipelines, mains and services, followed by the metering facilities asset class. This is predominantly due to leaks response due to class 2 and 3 leaks.

Figure 7.4: Total Opex by Asset Class ($’000)

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2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

AA4 AA5 AA6

Op

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nal

Exp

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($

'00

0)

Pipelines, Mains & Services Metering Facilities Regulating Facilities

SCADA Cathodic Protection Systems