Safety Management Systems for Electricity
Introduction
As a result of amendments to the Electricity Act in 1986, every person generating more than 10MVA is required to have in place a safety management system (SMS). Specifically section 61A of the Electricity Act requires that every electricity generator and every electricity distributor that owns or operates an electricity supply system must implement and maintain a safety management system in accordance with the regulations.
In relation to a generator,2 an electricity supply system is defined as assets, either individually or as a whole, that have a rated electricity generating capacity equal or greater than 10 MW. In relation to a distributor, an electricity supply system is defined as assets that either individually or as a whole are used or designed or intended for use, in or in connection with the conversion, transformation, or conveyance of electricity at a capacity equal to, or greater than, 10 MVA.
The concept of safety management systems is relatively broad and can cover a variety of aspects from public safety to environmental safety and worker safety. The Electricity Act's requirements are specifically with respect to public safety. The SMS provisions require that all practicable steps be taken to ensure the supply system does not present a significant risk of serious harm to the public or significant damage to property. The discussion of the proposed SMS regulations is thus from this position and aspects such as environmental safety, worker safety and damage to assets within the supply system are not included in the regulations because they fall outside the scope provided for in the Act.
This does not prevent a company from having a SMS which addresses more than public safety matters. The SMS will need to satisfy the requirements of the proposed regulations but can also include other matters as considered relevant by the company, for example, with respect to worker safety.
Scope of Safety Management Systems
The Act requires the regulations to include some specified elements for public safety and provides scope for the regulations to include other elements, where necessary, to meet the Acts intention.
Section 169A of the Electricity Act 1992 requires that the SMS regulations must provide for requirements relating to:
- Systematic identification of new and existing hazards
- Taking of all practicable steps to eliminate, isolate or minimise those hazards
- Regular assessment of each hazard identified
- Documentation of the SMS, and
- Audit of the SMS.
In addition, the Act provides that the SMS regulations may provide for additional requirements, for example, relating to:
- The design, construction, operation, maintenance, and inspection of the system;
- Security and control of access to the electricity supply system;
- Skills, knowledge and experience of persons who do, or assist in doing, work on or in connection with the electricity supply system;
- Implementation and management of contingency situations that may affect the system;
- Processes for the on-going improvement of safety in connection with the system;
- Investigation of accidents that involve or affect the system;
- Who may conduct audits;
- How often the audits must be conducted; and
- Outcomes and objectives of audits.
The discretionary items listed above are not restricted and further requirements may be included.
Background to the Proposed SMS Regulations
The SMS provisions outlined in this section are based on a risk management approach and rely on the identification, risk assessment and the adequate control of hazards. SMSs that meet the Act's requirements place an obligation on electricity generators and distributors to identify hazards, assess their risks and then take all practicable steps to control each hazard such that the residual risk of serious harm to members of the public or significant damage to property is as low as reasonably practicable.
The proposed regulations set the minimum SMS requirements. They will be performance based, rather than prescriptive, to enable scope for compliance in, what can be, variable situations.
A SMS is intended to provide a systematic process for identifying and managing safety risks associated with electricity. The level of risk for which preventative action is required can vary considerably and the Act requires measures to be taken to prevent any electricity supply system to which the Act applies presenting a significant risk of serious harm to members of the public and/or significant property damage.
Industry, as a whole, appears to have a number of systems in place to manage aspects of safety. It is the intent of these regulations to formalise critical safety requirements and provide for increased confidence in the identification and assessment of hazards associated with electricity and overall public safety in relation to electricity generation and supply in New Zealand.
It is intended that only one SMS for public safety and property protection be in place for any particular part of the electricity supply system. Multiple SMSs for public safety and property protection are neither desired nor considered to adequately address the public safety requirements.
The following discussion is presented as a combination of both the regulatory requirements and the essential elements defined in the SMS Standard. This approach has been taken because the two are intrinsically linked and solely setting out the regulatory requirements does not provide a complete picture.
The Proposed Safety Management System (SMS) Regulations
It is proposed that the regulations will provide that every owner or operator of an electricity supply system, as defined in section 61A of the Electricity Act, will be required to implement and maintain a SMS in the following manner.
1. Description of the System: it is proposed that the owner or operator of an electricity supply system will be required to document and describe their supply system including all the assets within that system that they own or are otherwise in control of. The asset description must list the location, physical description (including state of repair), operation and other detail necessary to determine the associated risks and the development of mechanisms for mitigation.
The system description will enable identification of what assets are included in the SMS, allow for identification of the associated hazards and enable the risks presented to the public and property to be assessed.
2. Hazard Identification: it is proposed that the owner or operator of an electricity supply system will be required to demonstrate that the following processes have been undertaken:
- systematic identification of all hazards posed by the supply system in relation to public safety and property protection, including hazards arising during commissioning, operation, maintenance, and decommissioning of the supply system;
- identification of the points at which the hazards occur; and
- Identification of geographic/environmental factors that may affect the magnitude of the hazards.
The identification of hazards presented by particular assets, their locations and associated activities is vital in the prevention of "serious harm" to the public and significant damage to property. This is because it defines the areas where risks present themselves, enables their magnitude to be established and allows for the development of measures to mitigate those risks.
A particular asset or operation may pose certain hazards; however, the surrounding conditions can affect the level of risk posed. For example a power line conductor contact with ground in a remote field does not present the same level of risk as the same conductor contacting ground in a residential area simply because there is a greater change of people coming into contact with it.
The definition of "hazard" is set in the Act as the presence (or absence) of assets, activities or events that may present a significant risk of serious harm to any member of the public or significant damage to property owned by a person other than the generator or distributor.
It is noted that the electricity industry considers such hazards as being within the "significant hazard" subset of hazards in general. It is intended that an essential part of the SMS process is for electricity generators and distributors to separate these "significant hazards" from hazards in general by examining the risk associated with each hazard that is identified. Control, appropriate to the circumstances, must then be applied to the "significant hazards" such that the residual risk of serious harm to members of the public or significant damage to property is as low as reasonably practicable.
3. Hazard Assessment: it is proposed that the owner or operator will be required to demonstrate that the following has been undertaken:
- systematic assessment of the risks of serious harm to members of the public;
- systematic assessment of the risks of significant damage to property.
After the hazards have been identified they will be assessed to determine whether they pose significant risks of serious harm or significant property damage. The definition of "serious harm" is set in the Act and relates to harm caused to members of the public. It is proposed that the definition of "significant property damage" will be along the following lines.
Significant property damage (as mentioned under the Interpretation section) is proposed to be damage that is greater than superficial, being such that the property is either damaged beyond repair or requires substantial repair or reconstruction in order to restore it to, at a minimum, the condition prior to it being damaged
The identification and assessment of hazards will be required to be done to the extent practicable.
Question
Have the requirements for hazard identification and assessment be adequately addressed; if not, in what respect?
4. Risk Mitigation:
- the owner or operator of an electricity supply system will be required to demonstrate that they have taken "all practicable steps" to mitigate the associated significant risks to public and property from the identified significant hazards to as low as reasonably practicable. We note that the steps required are likely to be different in each case.
- the owner/operator must demonstrate that systems, processes and documentation are in place to manage the significant risks by either elimination, isolation or minimisation of the hazards to the extent practicable in the circumstances.
It is noted that the regulations will require only the significant risks to public safety and property to be addressed. Although the legislation does not require the lesser risks to be addressed in the SMS it may be prudent to do so.
- to demonstrate that "all practicable steps" have been taken to mitigate the significant risks posed by the electricity supply system the SMS must contain evidence that:
- acceptable processes and procedures have been established and are being maintained;
- monitoring procedures have been established and are being maintained;
- actions that need to be taken in situations where the processes, procedures or monitoring are not adequate are defined.
- Evidence of acceptable processes and procedures is proposed to include, but not be limited to:
- establishment of the requirements for persons carrying out work on the system, for example skills, knowledge, competence, supervision requirements and training provisions;
- the setting of standards for the equipment and materials used within the supply system;
- establishment of indicators for reporting on the health, effectiveness and adequacy of the SMS;
- establishment of response plans for remedial actions and emergency situations.
It is not proposed to regulate the type of evidence that may be provided for mitigation. The intent of this is to provide flexibility in the options that may be taken to achieve the fundamental safety concepts established in the Act. Referring to industry best practice and standards (New Zealand or international) may meet some of the requirements; however, it is noted that the certification process will ultimately confirm whether the system has adequately identified and assessed the hazards and mitigated the significant risks posed.
Question
Have the steps for mitigation been adequately addressed? If not what areas should be considered?
5. Processes for monitoring the on-going effectiveness of the SMS: it is proposed that the owner or operator of an electricity supply system will be required to have in place documentation that sets out procedures for;
- monitoring the effectiveness and health of the SMS, for example by establishing performance indicators and mechanisms for collection of relevant data; and
- identifying and addressing areas of concern, within their SMS, industry wide and from international experience; and
- the investigation of accidents, reporting and utilisation of lessons learned; and
- implementing improvements or updates to the system.
It is not proposed that the regulations specify an interval for the regular assessment of the identified hazards and mitigation measures put in place. The assessment process is expected to be somewhat of a continual process. In addition to regular on-going reviews it is expected that assessments will be triggered by certain events, such as accidents involving parts of the supply system.
The audit certification process (discussed in detail on page 25) will review the effectiveness of the on-going maintenance measures in place for a particular SMS and should identify areas where further attention is required.
6. On-going Maintenance of a SMS: it is proposed that he owner or operator of an electricity supply system will be required to regularly update the SMS to incorporate, but not limited to, the following aspects including the following:
- audit findings; and
- changes to the supply system that may change the nature or scale of hazards; and
- changes to the environment in which the supply system operates; and
- accidents, incidents and other experience from elsewhere in the supply system, from other supply systems, and from anywhere else that might be relevant; and
- the passage of time.
It is noted that some hazards for public safety or property may be identified through other processes, for example, hazard identification and risk assessments for worker or environmental safety. Where hazards are identified in these other processes they should be incorporated into the public safety SMS.
Question
Are the further aspects for on-going monitoring and maintenance of an SMS that should be considered?
7. Performance Indicators: It is proposed that, as a minimum, the owner or operator of an electricity supply system will be required to include the following performance indicators in the processes for monitoring the on-going effectiveness of the SMS:
- Accidents/incidents involving members of the public and damage to property;
- Education programmes undertaken;
- Vandalism incidents;
- Asset entry by the public.
Performance indicators are an important aspect in determining the overall effectiveness of a SMS. While it will be up to the individual owner/operator to establish the majority of performance indicators within their SMS, it is proposed that the above key performance indicators (KPIs) be set in the regulations.
These KPIs are intended to provide the basis for demonstrating that the principles of public safety and property protection are being addressed in connection with the supply system.
It is not proposed that any minimum or maximum numbers be set around the KPIs. This is because they are only intended to serve as a mechanism for identifying that these important aspects are being monitored and/or addressed.
Data on accidents and incidents involving public safety and property is considered important because it allows the owner or operator and auditor to identify areas within the SMS that may require further attention.
The undertaking of educational programmes and monitoring incidents of vandalism and public entry to assets is considered important because they can provide a measure of the effectiveness of the actions being taken to increase public awareness and reduce exposure to the hazards posed.
It will be the owner or operators responsibility to instigate programmes and collect data against these indicators, which will in turn form a key part of the independent audit process.
Question
Are there any other performance indicators that should be mandated in the regulations?
8. Contingency plans for unexpected supply outages: it is proposed that the owner or operator of an electricity supply system will be required to include, in the SMS, processes for:
- identifying supply outage events that may pose significant risks of serious harm to members of the public or significant damage to property; and
- managing those risks (i.e. though elimination, isolation or minimisation of the hazards to the extent practicable in the circumstances (contingency planning).
It is noted that some of these elements may be addressed under other legislative requirements, such as that for Civil Defence emergencies, or the Electricity Commission guidelines for vulnerable consumers. This information should be included in the SMS where the hazards identified pose significant risks to the public and/or property.
It is noted that there will be no requirement to duplicate risk assessment and mitigation work that has been carried out under other legislation.
Documentation of the SMS
The documentation requirements for a SMS are vital to ensure it has addressed the necessary elements. Without some sort of formalised documentation requirements auditing of the SMS could not occur.
Documentation in this context does not necessarily require the production of a single document with all the elements contained therein. The documentation may be spread over a number of documents that are referenced and can be brought together for the purpose of auditing. This approach is recognised in the proposed SMS regulatory requirements 1 to 8 that set out a number of documentation requirements.
The documentation forming an SMS is not limited to policies, processes and procedures. It may also include maps, plans, photographs, electronic images and knowledge of staff. It is a repository of criteria to be met and actions required to maintain public safety and protect property.
The SMS documentation must contain records of the essential elements as provided under proposed regulatory requirements 1 to 8 and includes:
- an up to date description of the system including assets, infrastructure and processes involved;
- the hazards identified;
- the risk assessment for the identified hazards;
- mitigation measures (both in-place and proposed);
- records of on-going maintenance of the system (i.e. periodic assessments);
- records of incidents involving the system.
It is proposed that the regulations will specify that all documentation associated with a SMS must:
- be written clearly and unambiguously;
- have established sign-off procedures;
- be communicated to all relevant staff;
- be regularly reviewed and updated; and
- be kept and maintained to be available to auditors when undertaking an audit.
The auditor, through the audit process, will review the documentation for the SMS as to its adequacy for the supply system described. Detail regarding the audit requirements and processes is discussed below.
Audit Certification of the SMS
It is proposed that the regulations will require every SMS to be audited by an independent third part at least every three years. The auditor will be required to certify that an adequate SMS is in place. The adequacy of the SMS will be based on their meeting the general safety requirements and SMS requirements set out in the regulations. Evidence from performance indicators, set in the regulations and those defined by the owner or operator of the electricity supply system will also be used to determine the adequacy of a SMS.
It is proposed the regulations will provide that audits conducted on a progressive basis over a period not exceeding three years will be considered to meet the required audit timing. The core objective of the audit process is to provide an independent assessment of the adequacy of the SMS in preventing significant risk of:
- serious harm from occurring to any member of the public; and
- significant damage occurring to property not owned by the owner or operator of the supply system.
Due to the specialised nature of the auditing process, it is proposed that the qualification requirements for auditors be managed under the Joint Accreditation System of Australia and New Zealand (JAS-ANZ). JAS-ANZ will determine the skills necessary to perform the required auditing functions and will establish an accreditation scheme for conformance assessment bodies3 (CABs). CABs will be required to conduct the independent audit of SMSs.
Upon completion of the audit, the CAB will produce an audit report for the owner or operator of the gas supply system. The audit report may indicate areas where further work is required before an audit certificate will be issued or highlight issues that should be addressed before the next audit or within a specified period.
Where the CAB considers that a SMS is satisfactory an audit certificate will be issued along with the audit report. The audit report and audit certificate will become part of the SMS "package"; however, the audit certificate is the document that indicates compliance with the SMS regulations. The audit certificate must be supplied, by the owner/operator, to the regulator as proof of compliance. Any non-compliance will be the responsibility of the owner/operator to remedy.
Implementation and Transition
An asset owner will be required to obtain a SMS certificate 2 years from the promulgation of the regulations. The 2 year period is intended to provide JAS-ANZ sufficient time to establish the audit process, accredit CABs and for owners or operators of electricity supply systems to develop and have their SMSs certified.
Enforcement of SMS Provisions
Section 163B of the Electricity Act makes it an offence for an owner or operator of an electricity supply system not have a SMS when they are required to do so. For non-compliance, a fine of up to $250,000 will be imposed. An owner or operator does not have an SMS if it does not have an audit certificate.
Regulator's Role
The regulator's role in SMS will be minimal. The regulator, under the general provisions of sections 5 and 6 of the Act, will retain their existing ability to audit any aspects to do with electrical safety and compliance with the Act.
Means of Compliance
To provide more clarity for owners or operators of electricity supply systems meeting the SMS requirements, Standards New Zealand has developed the Standard, NZS 7901 Electricity and Gas Industries – Safety Management Systems for Public Safety. This Standard has been developed by industry with representation from consumers and the regulator.
It is proposed that the SMS Standard (NZS 7901) will be a means of compliance for the SMS requirements set in the regulations. Whether an owner or operator of an electricity supply system decides to follow the Standard or an alternative means of compliance, the CAB, through the audit process, will ultimately decide whether a SMS meets the obligations and requirements set under the Act.
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