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Southern Gas Networks Connections Charging Methodology and Standard Condition 4B Statement Effective from 1 st October 2018 2 Contents 1 Introduction ........................................................................................................................................... 4 2 Principles for connection charging .......................................................................................................... 5 2.1 Charging: general ......................................................................................................................................... 5 2.2 Standard connection pressure .................................................................................................................... 5 2.3 Self‐lay pipes or systems ............................................................................................................................. 6 2.4 Reasonable demands for capacity ............................................................................................................... 6 2.5 P18 Pipelines................................................................................................................................................ 6 3 Methodology for determining connection charges ................................................................................. 7 3.1 Connection design philosophy .................................................................................................................... 7 3.2 Connection work charging ........................................................................................................................... 7 3.3 Standard charges ......................................................................................................................................... 8 3.4 Standard designs ......................................................................................................................................... 8 3.5 Charging for the final connection of apparatus (<7Barg connections) ....................................................... 8 3.6 Charging for minimum connections (>7Barg connections) ......................................................................... 8 3.7 Standard source pressures .......................................................................................................................... 8 3.8 Domestic Load Connection Allowance (DLCA) ............................................................................................ 9 3.9 Load evaluation service ............................................................................................................................... 9 3.10 Connection design charges ........................................................................................................................ 9 3.11 System entry and storage connections ..................................................................................................... 9 3.12 Reinforcements for system exit connections .......................................................................................... 10 3.13 Gas Infill projects ..................................................................................................................................... 12 3.14 Connections associated with fuel poor customers ................................................................................. 12 3.15 Adoption of below 7Barg apparatus ....................................................................................................... 14 3.16 Taking ownership of above 7Barg apparatus .......................................................................................... 14 3.17 Traffic management charges ................................................................................................................... 14 3.18 Network approach mains ........................................................................................................................ 14 3.19 Entry and exit agreements ...................................................................................................................... 15 3.20 Connection – load size thresholds ........................................................................................................... 15 4 Charges for disconnections and service alterations ............................................................................... 16 4.1 Disconnections .......................................................................................................................................... 16 4.2 Alterations ................................................................................................................................................. 16 4.3 Competition in disconnection and alteration services .............................................................................. 17 5 Examples of connection charges ........................................................................................................... 18 5.1 Connection from a distribution network system to an existing four bedroom house .............................. 18 5.2 Alteration of an existing service to a domestic property .......................................................................... 18 5.3 Connection from a distribution network system to a convenience store ................................................. 19 5.4 Connection has to be upsized to enable an increase in flow rate at a factory unit that is connected to a distribution network system ................................................................................................................. 19 5.5 Connection from a distribution network system to a new housing estate ............................................... 20 3 Contents (Continued) 5.6 Connection from a distribution network system to a new housing estate where reinforcement is required ................................................................................................................................................. 20 5.7 Distribution network system connection to a village outside of the gas supply area .............................. 21 5.8 Connection from a distribution network system to another Gas Transporter’s system supplying a housing development ........................................................................................................................... 22 Appendix A ‐ Key definitions ................................................................................................................... 23 Appendix B ‐ Additional points relating to capacity ................................................................................. 28 Appendix C ‐ Provision of meter houses/boxes ....................................................................................... 29 Appendix D ‐ Sufficiently complex jobs .................................................................................................... 30 Appendix E ‐ Description of Economic Test .............................................................................................. 32 Appendix F ‐ Fuel poor assessment ......................................................................................................... 34 Appendix G ‐ Contact information ........................................................................................................... 38 Appendix H ‐ Complaint handling procedure ........................................................................................... 39 Connections Charging Methodology and Standard Condition 4B Statement 4 October 2018 1 Introduction This is a Statement of the Principles and the Methods which Southern Gas Networks (SGN) will use to determine the charges specified in Standard Condition 4B of the Gas Transporter Licence. In addition this document outlines how SGN will charge for the alteration and disconnection of connection apparatus and includes information about capacity availability and meter housings. This Statement applies to charges determined from the Effective Date, until superseded by any future Statement. It also provides information in support of the relevant Long Term Development Statement in respect of connections. Further information relating to SGN’s connection services may be obtained from sgn.co.uk, or by writing to the address given in Appendix G. It’s illegal for anyone to carry out any work on SGN’s Distribution network system unless they are suitably qualified under the Gas Industry Registration Scheme (GIRS). A list of registered providers can be obtained at https://www.lr.org/en/utilities/gas‐industry‐registration‐scheme‐girs/search. We’ll need to approve any third party's work in advance to make sure they meet all our safety requirements. If they go ahead without our approval, we may have to cut off your gas and bill you for any resulting repair work. Please note that the provision of gas connection services is open to competition. Information of independent connection providers who hold Gas Industry Registration Scheme (GIRS) membership can be found at the following websites: https://www.lr.org/en/utilities/gas‐industry‐registration‐scheme‐girs/search/ http://eua.org.uk Connections Charging Methodology and Standard Condition 4B Statement 5 October 2018 2 Principles for connection charging 2.1 Charging: general 2.1.1 Cost recovery SGN aims to recover those costs that it reasonably expects to incur when it provides connection services. This is subject to the requirements of Standard Condition 4B (1) of our Gas Transporter Licence. 2.1.2 Basis of charges Charges will be calculated to reflect the cost of labour, materials, and any other expenses required to carry out the work to the customer’s requirements including applicable charges relating to traffic management legislation, parking bay suspensions, scaffolding etc. Each cost element will carry an appropriate level of overhead 1 . 2.1.3 Standard charges Standard quotes and standard charges will be applied for some categories of connection where the cost benefit of their use, relative to the production of non‐standard quotes, is believed to be favourable. 2.1.4 Design charges Design charges associated with non‐standard quotes will be identified within the quote. Where customers do not have an appropriate credit rating, design charges may be payable in advance. Where the work is sufficiently complex, a chargeable design study will be carried out prior to a quote being issued for physical connection work. The design charge for completing the design study will be payable in advance and will include an appropriate level of overhead (see Appendix D). 2.1.5 Additional costs SGN may carry out work additional to that requested by the customer. Where this occurs the cost of the additional work will not be charged to the customer. 2.1.6 Abortive visits Where customers fail to communicate changes in site conditions, or agree necessary on site variations that prevent SGN from starting work, SGN may apply a standard charge for abortive visits. 2.1.7 Contract All quotes are made subject to SGN’s conditions of contract from sgn.co.uk or from the address in Appendix G. 2.1.8 Assumptions Non‐standard quotes will include any assumptions that were used in the determination of the cost. Where these assumptions are found to be materially incorrect, SGN may require the person requesting the connection to agree to a variation in price before commencing or continuing work on site. Where such agreement is not provided, SGN may terminate the job. 2.1.9 Charging document Details of our charges are provided in our Connection Services Charges document, available on sgn.co.uk or by writing to the address given in Appendix G. 2.2 Standard connection pressure Gas will normally be made available to consumers at a pressure that is compatible with a regulated metering pressure of 21mbarg. 1 SGN is obliged to pass on only those costs which have been efficiently incurred. Connections Charging Methodology and Standard Condition 4B Statement 6 October 2018 2.3 Self‐lay pipes or systems Where customers wish to lay their own service pipe to premises expected to consume 2,196MWh per annum or less, then ownership of the pipe will remain with SGN once the connection to our system has been approved and satisfactorily completed. For work carried out by a non‐Gas Industry Registration Scheme (GIRS) organisation, adoption will be subject to a standard charge. Where the connection is for a pipe laid to premises expected to consume more than 2,196MWh per annum or the connection is to a pipe that isn’t a relevant main, self‐laid pipes do not automatically belong with SGN. We will however provide a quote for adoption that is reflective of future anticipated maintenance. SGN will provide a quote to maintain or adopt an existing private network on request. The quote will reflect the ongoing cost to upgrade the network as well as future maintenance. 2.4 Reasonable demands for capacity In certain instances specific system reinforcement may be required to maintain system pressures for the coming winter period. Details of how SGN charge for reinforcement and the basis on which contributions may be required can be found in section 3 of this document. Please note that reinforcement projects can have significant planning and construction lead‐times and that as much notice as possible should be given. For example, the construction of high pressure pipelines or plant may require several years’ notice. 2.5 P18 Pipelines SGN has highlighted a number of pipeline systems as P18. Additional care must be afforded to these pipelines particularly when making a connection. Early notification of the intent to expose such pipelines will need to be provided to SGN as additional monitoring will be required. Additional costs may be incurred by the customer as a result of working on or near the P18 pipelines. Connections Charging Methodology and Standard Condition 4B Statement 7 October 2018 3 Methodology for determining connection charges 3.1 Connection design philosophy SGN will construct apparatus on a least cost ‘fit for purpose’ basis. This means that where there are different design solutions that meet a customer’s requirements, the one that is anticipated to have the lowest overall cost of construction will be selected. 3.2 Connection work charging 3.2.1 Basis of charges Charges for connection work are calculated using: Materials – the costs plus overheads relating to the handling of materials Labour rates ‐ based on direct labour rates plus overhead costs which reflect the cost of managing and delivering this connection work Special services – any costs (including scaffolding, premium hours such as weekends, suspension of parking bays, easements, traffic management permits etc), plus overheads Pressure reduction apparatus – the cost plus overheads Larger projects such as Infills may be individually tendered or otherwise costed to take advantage of economies of scale and/or scope. 3.2.2 Public land Where appropriate, charges for connection will include excavation, backfill and reinstatement in land dedicated to public use. 3.2.3 Private land Charges include excavation, backfill and reinstatement on private land except where requested otherwise. The customer may request SGN to carry out permanent reinstatement of a specialist surface (eg mosaic, coloured tarmac, block paving, non‐standard tiles or flagstones), however this must be requested in advance and will result in a separate charge being made. Customers who require permanent reinstatement of a specialist surface are advised to arrange for their own contractor to carry out the work. SGN can’t guarantee to avoid damage to growing plants. 3.2.4 Pressure reduction apparatus Charges for pressure reduction apparatus are as follows: If it forms part of the supply meter installation, then charges must be provided by a gas supplier If it’s located along the connecting pipework, it’s charged for at cost plus overheads If it’s part of any specific reinforcement downstream of the connection charging point, it’s charged for at cost plus overheads If it’s part of any specific reinforcement upstream of the connection charging point, SGN will fund it subject to the application of the appropriate Economic Test If it’s part of an ‘alternative to reinforcement connection’, then the cost is treated in the same way as the proposed alternative to reinforcement connection pipe (refer to section 3.12) 3.2.5 Service pipes When a property already has one or more gas service pipes and the owner or occupier wishes to increase their consumption of gas, it may be necessary to replace or duplicate an existing service pipe, unless 3.2.6 is applicable. Connections Charging Methodology and Standard Condition 4B Statement 8 October 2018 3.2.6 Load increases No charge will be made if the additional flow of gas is required from an existing supply meter point and the total consumption remains below 73,200kWh (2,500 therms) per annum. In other circumstances the work will be chargeable. Please note that duplicate service pipes are not permitted for domestic premises unless the second service pipe is provided for a separate building, for example a stable which is separate from the main house. 3.2.7 Pressure increases All the costs associated with increasing the gas supply pressure from an existing gas supply pipe will be charged to the person concerned. Please note: Consumers using less than 732,000kWh (25,000 therms) per annum are not permitted to receive their gas at a pressure higher than 21mbarg nominal because of the provisions of the Gas (Calculation of Thermal Energy) Regulations. 3.3 Standard charges Standard charges will be used for some types of connection service requests. The principles used to establish these charges are: The standardisation is based on an analysis of the types of work that are typically carried out in that charge category The analysis will be based on a statistically significant sample of completed jobs over the previous 12 month period, and will produce a weighted average component for each work type in the charge category Current material and contractor charges and overheads are applied to each work type The Domestic Load Connection Allowance is applied where applicable to that charge category The cost of such typical work is calculated in accordance with the principles and methods of this statement The resulting standard charges do not entail undue preference or undue discrimination Details of our standard charges can be found in our Connections Charges Statement which is available on sgn.co.uk or from the address in Appendix G. 3.4 Standard designs SGN will use standard designs in respect of certain connections where: The cost/benefit of using standard designs is believed by us to be advantageous Representatives of customers, who might be quoted on the basis of a standard design, have been consulted The designs have been produced in accordance with the principles and methods of this statement The resulting standard designs do not result in charges which entail undue preference or undue discrimination 3.5 Charging for the final connection of apparatus (<7Barg connections) In general SGN will follow the same principles that we apply to other connection work in respect of charging for final connections. Whoever requests us to carry out a final connection will be expected to complete the necessary excavation and reinstatement, and will include their obtaining suitable permissions. 3.6 Charging for minimum connections (>7Barg connections) SGN will follow the same principles that we apply to other connection work in respect of charging for minimum connections. 3.7 Standard source pressures SGN will use, and provide to other connection service providers, standard source pressures for the purpose of the design of certain connections. The types of connection covered by standard source pressures will have previously been subject to public consultation. Standard source pressures are published by SGN and may be subject to change from time to time. Connections Charging Methodology and Standard Condition 4B Statement 9 October 2018 3.8 Domestic Load Connection Allowance (DLCA) For individual new connections to properties that are situated within 23m of a relevant main (unless the route to the property has obstacles which increase the physical pipe distance to over 23m or the obstruction acts as a barrier which is not economic to overcome) and are wholly or mainly used for domestic purposes, SGN will install the connection to the main but will not charge for the first ten metres of pipe laid upon property dedicated to public use (ie where the pipe is not laid in property owned or occupied by the person concerned). This is known as the Domestic Load Connection Allowance (DLCA). A person may request multiple connections, each benefiting from this allowance, provided that each connection is to a different eligible property. This allowance will not apply if the property is eligible to benefit from the fuel poor voucher (see section 3.14). 3.9 Load evaluation service SGN will carry out basic load evaluation services in the following circumstances: To determine whether a potential consumer will require a PARCA To determine whether a potential customer will require a supply point NEXA or NEA Where it’s necessary to determine which connection charge category a potential consumer is in 3.10 Connection design charges Any charges made for connection design work will be calculated on the basis of the cost that SGN expects to incur and is dependent upon the information provided by the customer, other publicly available information and information relating to our pipeline system. SGN will charge for a connections design except where there is a standard charge quote or a standard design connection. 3.11 System entry and storage connections 3.11.1 General SGN offers a service to connect pipelines or mains laid and intended to be operated by others, which will link entry or storage facilities to its systems. Consistent with Pricing Discussion Paper DNPD03, “Charging for LDZ System Entry Points” (available on the Joint Office website), SGN will enter into bilateral contractual agreements that will provide the most appropriate long term commercial and regulatory arrangements for these individual LDZ system entry points. The bilateral agreement will be drawn up between SGN and the delivery facility operator. It will set out the technical, engineering and charging details of the connection. The associated work will be considered as sufficiently complex jobs (see Appendix D) and in all cases SGN will charge for a remotely operable valve and telemetry at the interface of the connecting pipeline and the system operated by the other party. 3.11.2 Requirements for entry and storage connections In addition to the equipment provided by SGN, there are a variety of requirements (eg gas quality measurement) that a customer must fulfil to connect and operate an entry or storage facility that is connected to our system. These are not within the scope of Standard Licence Condition 4B and consequently they aren’t included within this statement. Prospective entry and storage facility operators should contact SGN for details of bilateral terms and conditions using the address in Appendix G. 3.11.3 Charging for connections to entry or storage facilities Following the principles above, charges will be set out in the Bilateral Contractual Agreement between SGN and the delivery facility operator. Where the connection of entry or storage facilities to SGN systems triggers reinforcement of those systems, the costs of such reinforcement will be charged to the customer within the connection charge. Next >