Brian Leddin (Limerick City, Green Party)
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The purpose of today's meeting is to conduct pre-legislative scrutiny of the general scheme of the gas safety (amendment) Bill 2023. On behalf of the committee, I welcome the following witnesses from the Commission for Regulation of Utilities, Mr. Jim Gannon, chair; Ms Loretta Joyce, director of energy safety; and Mr. Daniel Ward, gas safety regulatory manager.

I remind the witnesses of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If any statements are potentially defamatory in relation to an identifiable person or entity, I will direct witnesses to discontinue their remarks. It is imperative they comply with any such direction.

I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I also remind members that they are only allowed to participate in this meeting if they are physically located on the Leinster House complex. In this regard, I ask those members who are joining online - I see a few are joining us virtually - prior to making their contribution to the meeting, to confirm they are on the grounds of Leinster House.

I invite Mr. Gannon to make his opening statement.

Mr. Jim Gannon:

I thank members for inviting us to join them today to discuss the general scheme of the gas safety (amendment) Bill 2023. The Commission for Regulation of Utilities, CRU, has a key role in the protection of public safety and the prevention of major accidents in Ireland's energy sector. This includes a safety role in relation to electrical contractors, gas installers, gas supply, transportation and storage, and upstream petroleum safety extraction and exploration activities.

The Energy (Miscellaneous Provisions) Act 2006 required the CRU to establish and implement a natural gas safety regulatory framework. In 2010 and 2012, the safety regulation of certain aspects of the liquefied petroleum gas, LPG, industry was added to the CRU's statutory functions. First, the Energy (Biofuel Obligation and Miscellaneous Provisions) Act 2010 incorporated LPG installers into the registered gas installer, RGI, registration scheme. Second, the Energy (Miscellaneous Provisions) Act 2012 provided the CRU with licensing powers for operators of piped LPG distribution networks. The revised framework became known as the gas safety regulatory framework, incorporating the safety regulatory regime for both natural gas and LPG. LPG undertakings are regulated by the CRU under this framework and require an LPG safety licence from the CRU to supply LPG to two or more domestic customers via a piped LPG distribution network. Piped LPG distribution networks are networks supplied by an LPG bulk tank or cylinder that distribute LPG to customers. At present, Calor Teoranta and Flogas Ireland Limited hold an LPG safety licence from the CRU and operate the majority of these types of networks. More specifically, the existing legislation provides for operators which import LPG or purchase it directly from a refinery within the State and supply it to domestic customers via a piped LPG distribution network to hold an LPG safety licence.

The legislation does not currently cover operators of piped LPG distribution networks which purchase LPG from other sources, that is, directly from an LPG supplier. To regulate these operators with respect to safety, the CRU requested a change to primary legislation to amend the definition of an LPG undertaking and to include a new class of LPG safety licence covering these operators. We will briefly outline further context which led to the development of this Bill.

First, in November 2016, the CRU received a safety complaint from a customer supplied by an unlicensed piped LPG distribution network operator. Following receipt of this complaint, the CRU carried out an inspection of the network and identified several non-compliances with safety standards. The CRU then engaged with LPG suppliers, requesting information on the location of any other such networks. Once received, the CRU used its gas safety officer, GSO, powers to undertake inspections of these networks. This allowed the CRU to build an understanding of the scale and scope of the networks at each site and gather information on the condition of these networks and compliance with relevant codes and safety standards. Where the CRU's gas safety officers identified any immediate risks, action was taken to make the situation safe.

To date, LPG suppliers have informed the CRU of approximately 100 piped LPG distribution networks currently operated by unlicensed parties. At the same time as work was being done to gather information on the condition of these networks, the CRU examined the legislation and identified a gap in the Electricity Regulation Act, which identified that these operators did not meet the definition of an LPG undertaking and, therefore, they could not be licensed by the CRU. To remove this gap in the legislation the CRU engaged with the Department of the Environment, Climate and Communications. In 2018, the CRU provided the Department with a report which highlighted the non-compliances with safety standards found during the CRU's inspections and requested that the Electricity Regulation Act be amended to bring these operators into the CRU's gas safety regulatory framework. Following this, the CRU also engaged with industry and the public, publishing consultations on our website in 2019, 2021 and 2022, seeking feedback on the CRU's overall proposed approach and its specifics.

The enduring regulatory framework for these operators has now been decided upon and will be enabled by the gas safety (amendment) Bill. Once in force, it will enable the CRU to begin the licensing process, bringing these operators, which supply LPG to approximately 1,000 domestic premises, into the CRU's regulatory framework. In 2022, the CRU published an operator handbook, which sets out prescriptive safety requirements with clear conditions for compliance that must be met by the network operators once they are licensed. The Bill will also provide the CRU with the power to regulate the requirements of an emergency response service by the LPG supplier to the piped LPG distribution network. The licensing process will require operators to complete an application form, provide a map of their network and submit proof of payment of the €200 application fee. The Bill provides operators with three months to apply for a licence upon commencement.

In 2023, the CRU undertook a programme of inspection of over 100 unlicensed LPG networks which included the reinspection of some networks previously inspected. Following inspections, the CRU issued GSO statutory instructions to every network within the CRU's remit. Since August 2023, the CRU has recorded more than 500 communications with operators in relation to their safety responsibilities and requiring confirmation that remedial works, as instructed, have been completed. Until such time as the licensing process has been completed, the CRU will continue to undertake a risk-based programme of network inspections, including extensive engagement with network operators, to address identified non-compliance with safety standards. This continues to include GSO instructions not to refill LPG bulk tanks until remedial works are undertaken, and GSO instructions to immediately disconnect the gas where the level of risk warrants this.

I will move now to the Bill. The CRU has collaborated with the Department on the legislative review process. In addition to bringing all operators of piped LPG distribution networks serving domestic customers into the CRU's full regulatory remit, the Bill also includes several measures that strengthen the CRU's existing safety powers to enhance the protection of the public from gas safety risks.

We will now provide the committee with our views on the main provisions of the Bill. Head 4 amends certain definitions in the Electricity Regulation Act which relate to LPG. Under head 4, the definition of an LPG undertaking is amended and expanded, which is necessary to capture those operators that are currently outside of the CRU's safety regulatory remit, as outlined. Also under head 4, the definition of an LPG safety licence is amended to reflect the subdivision of such licences elsewhere in the Electricity Regulation Act into two classes of licence. A class 1 LPG safety licence will apply to a person who operates ten or more piped LPG distribution networks for use by individual domestic final customers. A class 2 LPG safety licence will apply to a person who operates fewer than ten piped LPG distribution networks. Based on current information, the operators that currently fall outside of the CRU's regulatory remit each operate fewer than ten networks and, as such, the class 2 LPG safety licence will be applicable to them.

The introduction of two classes of LPG safety licences is necessary as it allows the CRU to implement a more proportionate and effective regulatory approach in respect of the class 2 licensees, while still requiring that these networks are in compliance with the same safety standards as those applicable to networks operated by class 1 licensees.

Head 5 adds to the CRU's functions under the Electricity Regulation Act by providing the CRU with the power to regulate the requirements of the emergency response service by the LPG supplier to customers of a class 2 licensee. This amendment is necessary as class 2 LPG licensees do not have the means directly providing an effective emergency response service to their customers.

Head 7 amends section 9 of the Electricity Regulation Act, which provides for the appointment and powers of gas safety officers, GSOs. This amendment includes the provision of an explicit CRU power to appoint a GSO to investigate natural gas incidents, as is already the case for LPG incidents, and provides the GSOs with the power to preserve a scene and apply for a warrant. These amendments are important to enable learnings to be derived from the investigation of gas incidents that can lead to further safety improvements and reduction in gas safety risks. Head 7 also provides the necessary clarifications on the existing powers of the GSOs to enter onto private land, including into an individual's premises where there may be a danger to life or property. It states the powers they can exercise and under what circumstances they can exercise them. It is necessary for GSOs to have these powers as the risks posed by gas are not just confined to an individual but may pose danger to the public.

Heads 8 and 12 remove the 21-day period that is provided to an undertaking to submit representations to the CRU before the CRU can issue an improvement notice. The improvement notice is a type of enforcement action, which forms part of the CRU’s regulatory toolkit. When a decision has been taken to issue an enforcement action, the CRU will consider the circumstances of the non-compliance and then look to take an action that will be, among other things, proportionate and effective. This amendment is necessary, as the existing representation provision results in a significant time delay in the management of safety risk and diminishes the CRU’s ability to ensure effective and efficient enforcement. Furthermore, this amendment brings the CRU’s power in this regard in line with comparator safety regulators like the Health and Safety Authority, HSA, for example. Undertakings retain their right to appeal to the High Court within 14 days against the improvement notice.

Head 9 introduces the class 1 and class 2 LPG safety licences and licensing procedure, the necessity of which we have already noted.

Head 10 amends the Electricity Regulation Act to provide the CRU with powers to make regulations relating to natural gas incidents. This amendment is necessary, as it brings the CRU’s natural gas powers into line with those already provided for in respect of LPG. Gas incident reporting is essential as it supports the identification of trends and the effective investigation of gas incidents, which, as already noted, can be examined for learnings that can lead to safety improvements and a reduction in gas safety risks.

Head 11 amends the Electricity Regulation Act to place the safety case guidelines, safety case and operator handbook on a statutory footing. Currently, under the gas safety regulatory framework, the CRU operates a safety case regime, which requires that gas undertakings, such as Gas Networks Ireland, demonstrates how it manages the gas safety risks associated with its activities to a level that is as low as is reasonably practicable. This safety case must then be accepted by the CRU before the undertaking can begin operating. The CRU publishes gas safety case guidelines to assist the undertakings in the development of its safety cases. The operator handbook is a new element of the gas safety framework and prescriptively sets out the safety requirements with which the class 2 LPG safety licensees must comply.

Creating a legislative basis for these documents is important, as it allows for associated amendments to the Electricity Regulation Act to place an obligation on the gas undertakings to comply with either their safety cases or the operator handbook and to set penalties for non-compliance with same. In addition, this amendment brings this element of the gas safety regulatory framework into alignment with the CRU’s petroleum safety framework. In conclusion, we wish to emphasise the importance of this Bill in helping to ensure that the public and end customers are appropriately protected from the safety risks associated with piped LPG distribution networks and that the additional measures contained in the Bill will also serve to strengthen the CRU’s gas safety regulatory framework, thereby enhancing the protection of the public from gas safety risks.

I thank the committee and am happy to take questions.

Brian Leddin (Limerick City, Green Party)
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I thank Mr. Gannon for his opening statement.

I am mindful that the committee is here to undertake prelegislative scrutiny of the legislation that is before the committee. However, this legislation is about a serious safety risk as it deals with an explosive fuel, as Mr. Gannon rightly pointed out in his statement. We must take this seriously. I will digress from the conversation around the prelegislative scrutiny for a moment.

In Mr. Gannon's statement, he is clear to point out that the CRU is, in the absence of legislation and licensing, engaging with operators that fall outside the regulatory regime. That is very welcome. This committee heard from Department officials last week that no particular incident has driven this legislation and that this has been rolling for a number of years. Mr. Gannon referred to a complaint or an observation from a member of the public in 2016 which led, in time, to various consultation processes by the CRU. Can he reiterate the position that no particular incident is driving the timelines for this legislation? The public wish to be assured that everything that could and should have been done was done, prior to any particular tragic incident. The particular incident in Creeslough was referenced last week. There may have been other less tragic incidents, but serious ones nonetheless. It is important that the public is reassured that what we are seeing now is not a response and that everything was being done prior to that incident and any other similar incidents.

Mr. Jim Gannon:

I thank the Chair.

As outlined, at the end of 2016 there was a complaint from a customer about an unlicensed LPG supplier. At the point, we engaged directly with the gas operators, namely, Calor and Flogas, to understand how many of these unlicensed networks, which were not captured by legislation and were not within the sight of the CRU, existed and what was their nature and scale. On receipt of that information, we engaged in an inspections programme of approximately two years to again identify the nature and scale of these. At the end of that, we submitted a report to the Department that noted the results of that inspections regime. We then engaged directly on updates to the legislation that would capture these networks and would also facilitate ensuring that they abide by the various requirements of the safety standards that were in place. There were consultations then in 2019, 2021 and 2022, which resulted in the publication of the handbook on how the CRU would license these operators.

During 2021 and 2022, the CRU again engaged with operators to update itself on the LPG unlicensed networks. This led to another inspections regime in 2023 and that gave the CRU the ability to have a clear sight of what was in front of it and what would be captured by the legislation. This allows for the CRU to progress and regulate these entities.

This has been progressing for a significant number of years. In the absence of these amendments to the legislation, the CRU safety team took the initiative and found a pathway to inspect and ensure safety at these unlicensed LPG networks through the gas safety officer powers. What is being done with this legislation is ensuring that they are fully captured within legislation.

Brian Leddin (Limerick City, Green Party)
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Part of my question is around the timelines. If something of serious concern was identified in 2016, has any particular incident led to an elevation of this to being priority legislation? I am concerned that the timelines are quite slow. I do not know anything around investigations that are ongoing, such as the investigation around Creeslough, for example. Did that incident or other incidents influence the timeline of this legislation coming before the committee?

Mr. Jim Gannon:

In 2021 and 2022, Covid-19 inhibited some of the inspections that the CRU traditionally did. On top of that, there were interactions with the gas operators who identified that there may have been additional networks that were not covered by the additional inspections regime.

That led to us again determining that we would go out for a second round of inspections at the sites and that is what facilitated that. Separately, we had requested the amendments to the legislation from the Department in 2019 and work continued on that throughout that period.

Brian Leddin (Limerick City, Green Party)
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I thank Mr. Gannon.

Mr. Jim Gannon:

I thank Deputy Kenny. I will begin answering these questions and then I will pass over to my colleague. In terms of how many, there are approximately 65 networks currently, with approximately 1,000 domestic consumers being served by them. They vary in size. Where two or more are served, they would be captured by this. In some cases it might be two, in other cases it could be significantly more than that and it is approximately 1,000 end consumers with about 65 networks. As for the regime that we will be putting in place, because these will be captured by a more conventional framework, the workload with regard to inspecting and ensuring that these are being kept to a standard will be less than was needed for the inspections regime last year, where we needed to work through the gas safety officer framework and structures. My colleague, Ms Loretta Joyce, will complete that.

Ms Loretta Joyce:

When these networks are regulated through the licensing regime, the commission expects the effort to be much less than what it currently is in relation to inspection and administrative overhead in issuing instructions to each operator. The application fee is €200 and we did consult and decide a few years ago that we would not levy these operators. The reason for that is that there are a large number of operators with a very small number of customers. We did not feel that it was efficient to try to recoup all of those levies from those operators. Instead, as Mr. Gannon has said, the ongoing activities are expected to be less resource-intensive once they are in our framework. However, the commission will keep it under review. In respect of the gas emergency officers, they can be appointed by GNI or by the CRU and we have restricted the appointment of the gas emergency officers by a licensed LPG undertaking, such as Calor and Flogas. It would instead come to the CRU to determine who should be authorised. As they have significant powers we felt that was more appropriate.

Mr. Jim Gannon:

For the inspections regime in 2023, in and around 25% of the sites inspected were disconnected from the main. What happens then is that the licensed network operator will call down a first response fitter from either of the existing operators, namely, Calor or Flogas. In the majority of cases, the challenge or the safety risk will have been mitigated and fixed and the gas will have been reconnected within the day or the day or two following that. In any instances during inspection where risk was found and risk at a certain level was detected, that would have been acted upon immediately and it usually occurs that gas is reconnected and service is restored within the day or the following couple of days.

Ms Loretta Joyce:

As regards putting this in place quickly, we have already got the licence application form ready and the licence ready, we have consulted on that so once the legislation is in place, we are ready to go from that side of things. The Deputy asked what we have done in terms of emergencies. At present, the current licensed LPG suppliers, Calor and Flogas, have committed to providing an emergency response at this time to all of those networks and that has been the case since we found out about these. We will be putting it on a statutory footing that we will have the power to put in place emergency response arrangements that will make it an obligation on the LPG supplier to provide that emergency response. The reason for that is that these operators would not have the ability to do that as they are very small providers. Sometimes it is only one person and it would need a 24-hour on-call service, the likes of which Calor and Flogas already provide. Other suppliers, such as Tervas and North West, will also have to provide that because they supply these networks.

Richard Bruton (Dublin Bay North, Fine Gael)
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I thank the witnesses for the presentation. I presume they are all signed up to a licensed entity so they would now be licence 1. To clarify, has the commission changed the terms of licensed bodies to ensure it has a better handle over these unlicensed bodies whereby it could cut off supply to someone that it has concerns about? Has the CRU as an interim measure tightened the rights to licence 1 in order that these unlicensed players could be brought to heel, so to speak? Second, was safety found to be significantly compromised when the commission went out and inspected these 100 suppliers? Have you got 100% co-operation from them in terms of dealing with any difficulties? The witnesses might elaborate on what will be in licence 2, which will be different from licence 1? It is a dual approach recognising proportionality. I was interested in the 21-day provision that is being changed. Has that hampered the commission's ability to take enforcement actions, in that there is a period of delay or is this just a tidying-up arrangement that is being put in place?

Mr. Jim Gannon:

In terms of the licence 1 operators, we have found them to be very supportive in terms of giving us information on all of the networks that they have identified they deliver gas to. In respect of safety at the site, the gas delivery drivers and deliverers are mandated to identify any risks that may come up on a delivery.

Ms Loretta Joyce:

That is true, the licensed LPG undertakings, Calor and Flogas, have provided information and we have highlighted what we have found on these sites to them. I will outline what we are doing in respect of licence class 2 in particular.

We are placing a prescriptive obligation on these operators in order that it is clear what they need to do, versus the existing licence in which a safety case must be developed and submitted to us for acceptance. Deputy Bruton outlined how safety risks will be managed. For these operators, we felt it was more proportionate to use an operator handbook that is prescriptive and tells them exactly what they need to achieve compliance.

As for inspections, we found a number of issues on each site. As Mr. Gannon outlined, 25% of those sites needed immediate action, which entails isolation and a first response fitter coming to carry out remedial action. In all of the networks, we issued statutory instructions to the network operator to undertake remedial action within a certain time and we are following up with these operators. When we are not happy with the progress, we have placed a stop on the LPG tank so that it cannot be refilled until these remedial actions have been done. This is a way of ensuring these actions are carried out.

The 21-day provision has not hampered us in taking enforcement action; we have certainly used that power. However, we felt it was time to bring it into line with other comparable safety regulators that do not have that 21-day period. We felt it was an unnecessary delay as part of the process.

Timmy Dooley (Fianna Fail)
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I thank Mr. Gannon for the presentation.

He stated that there are 65 networks with up to 1,000 units. What is the breakdown of that? I thought that this was to address those that had fewer than ten units in the network. If they were all at ten units, that would be 650 units.

Mr. Daniel Ward:

Mr. Gannon was referring to the number of customers with the figure of 1,000. If someone operates fewer than ten networks, he or she will fall into the clause-----

Timmy Dooley (Fianna Fail)
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Fewer than ten networks.

Mr. Daniel Ward:

Yes.

Timmy Dooley (Fianna Fail)
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Okay, that is clear.

I wish to probe a bit around the role and responsibility of the main providers. To focus on the domestic aspect, there are people, myself included, who have an LPG tank at the back of the house. I live in a housing estate and there is a cluster of four or five houses that are in close proximity to my tank. I have concerns with the model one deals with whereby either of the two operators will lease a person a tank but they do not seem to take responsibility if an issue arises. Ms Joyce mentioned that there is a certain responsibility on the drivers to do certain things but what level of auditing does the CRU do on the work of those operators?

For example, I had to change a boiler last year and when the installer came to change it, he discovered that the regulators were well beyond their natural life and there was leakage. They had significantly depleted over time to the extent that the installer was not able to proceed until the regulators were changed. I have no interaction with my heating system other than pressing the button and hoping that it is on when I get home. That is it. I believe there are a lot of people in that space. However, if someone comes and delivers a tank, it is expected that as part of that, basic checks are carried out on the technology and the kit that is actually on the tank. For sure, issues happen and burst pipes occur over time but I wonder what level of scrutiny the CRU provides in auditing that work.

Ms Loretta Joyce:

This legislation is not for bulk tanks serving domestic properties.

Timmy Dooley (Fianna Fail)
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I accept that.

Ms Loretta Joyce:

I wished to clarify that first of all.

As the Senator stated, the bulk tank is owned by the supplier. As for our remit in LPG, we are actually not the regulator for the bulk tank, that is the Health and Safety Authority, HSA. As part of these inspections, if we find any issues around bulk tanks, we forward that onto the HSA for action. Certainly, the-----

Timmy Dooley (Fianna Fail)
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I understand the infrastructure piece but I refer to putting the burden of responsibility to address any issues that arise on the entity that provides it. The CRU has some oversight on such entities. Does Ms Joyce feel the CRU has enough oversight or does she believe legislation should be broadened to put a responsibility on the company that delivers the gas to identify potential risks?

Ms Loretta Joyce:

Bulk tank owners, such as Flogas and Calor, must respond if there are any issues with their bulk tanks. That is the case. However, that particular part of LPG is under the remit of the HSA.

On the regulator, if it is associated with the bulk tank, it depends on-----

Timmy Dooley (Fianna Fail)
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It is the plumber who puts the regulator on the tank. The gas company takes no interest in that; it is the tank. It will come and paint a tank and put a new sticker on it but the regulator, which has the potential to leak, can be leaking away for as long as it likes and the company does not seem to have any responsibility in that regard. This is where I believe there is a gap. We are talking about safety here. The tank in all likelihood is going to remain solid anyway but it is the connections around the regulator and such where issues arise. I am concerned that there is a gap there and I am not sure how that is going to be addressed. It has a potential risk. I wish to make the point that while this may just be for a domestic residence, based on where it is located within a development, it could impact on four, five or six houses, which all abut one another at the back. Is there a gap here from a safety perspective that we are missing?

Ms Loretta Joyce:

Owners certainly have a responsibility to action any issues around the bulk tank. However, if the regulator is part of the household installation as such, then a registered gas installer must carry out that work. That scheme is operated on our behalf as well. As far as I am concerned, that is regulated and the work must be certified.

Mr. Jim Gannon:

We can come back to Senator Dooley identifying whose remit this falls under; whether the regulator is associated with the tank or with the domestic installation itself.

Timmy Dooley (Fianna Fail)
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Okay.

My last question is around how this is dealt with in an office block, for example. There are plenty of small office campuses in semi-rural areas where there are small companies or a multiplicity of small companies where 50 or 60 people operate from. Indeed, there are hotels, too. What level of scrutiny is afforded to those? I am thinking of the volume of people that could be impacted by a safety issue. This may be a basic question to the witnesses and may have already been covered.

Ms Loretta Joyce:

If a LPG network is serving a business or a hotel, it is under the HSA's remit.

Timmy Dooley (Fianna Fail)
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Does the HSA carry out checks on stuff like this?

Ms Loretta Joyce:

It does inspections, yes.

Timmy Dooley (Fianna Fail)
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It does, okay.

Ms Loretta Joyce:

As for the registered gas installer, RGI, scheme, the Senator may be aware that we are extending it to include non-domestic works. When a RGI does work on the hotel side of the installation, that is work that will be certified. That is part of what we are doing with the scheme this year and it should be live next year.

Timmy Dooley (Fianna Fail)
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I thank the witnesses.

Brian Leddin (Limerick City, Green Party)
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I thank Senator Dooley.

As no other members have indicated they wish to ask questions, that brings us to the end of the session. I thank the witnesses from the CRU; Mr. Gannon; Ms Joyce; and Mr. Ward for coming before the committee this morning and engaging with us. It has been a useful engagement and will help the committee in the preparation of our prelegislative scrutiny report, which we will deliver to the Minister, Deputy Eamon Ryan.