Caltex Australia 2 Market Street Sydney NSW 2000 Tel: (02) 9250 5000 Fax: (02) 9250 5742

GPO Box 3916 Sydney NSW 2001 www.caltex.com.au

16 December 2010

Trade Measurement Coordination Legal Metrology Branch National Management Institute PO Box 264 Lindfield, NSW, 2070 trade@measurement.gov.au

Caltex comments on the Consultation Paper on National Trade Measurement Regulations November 2010 Dear Sir/Madam, Thank you for the opportunity to comment on the proposed trade measurement regulations. Caltex fully supports the new national trade management system and is keen to support changes in regulations that result in more efficient and effective processes. With regard to the consultation paper Caltex would like to restrict its comments to issue (c) Reverification periods.:a) Which of the Options for Reverification periods do you support? Caltex are in favour of retaining option i): the current practice of not mandating reverication periods. There appears to be no net benefit to consumers or owners/operators of fuel dispensers by mandating reverification periods. In addition to this, there is the added cost of performing and administering formal reverification compared to in-service inspections. Caltex has had a robust preventative maintenance program in place since 2007 for scheduling and reporting calibrations for over 13,000 fuel pump meters. Calibrations are scheduled based on a matrix of information including pump age, pump type, fuel grade and throughput. Having collected and analyzed a vast amount of relevant pump and calibration data Caltex have been able to schedule meter calibrations with a view to achieving compliance with NMI requirements, consumer satisfaction and minimizing fuel losses We believe that mandatory reverification will not greatly influence the performance of meters since it is already in the owners best interest to perform regular maintenance. This is not just to ensure a high level of compliance with the NMI tolerances, but to minimize fuel losses, since meters tend to wear in favour of the consumer. Even after the requirement for state based mandatory reverification was removed in 2010, Caltex has continued to schedule meter calibrations (i.e. in-service inspections and reverification only where a meter is required to be adjusted) at frequencies of 6 months, 1 year and 2 years. Caltex also adjust their meters at a tighter tolerance than the NMI requirement (and formerly, more frequently than mandated by reverification periods) as a compliance and efficiency benefit for our business.

b) Time Period recommended for fixed periodic reverification. Although Caltex are not in favour of adopting a national fixed reverification period for fuel dispensers as outlined above, if this were to be adopted, our data strongly supports the claim that an interval of less than 2 years is not appropriate, and might even increase the cost of fuel dispensing for consumers while adding no compliance benefit. For example, the table below shows that of over 10,000 meters tested and analyzed, Caltex was found to have 99% NMI compliance rate for meters tested at 6 monthly, 1 yearly or 2 yearly intervals. Note that the results below also show a > 99% compliance rate for more than half of these hoses that were tested at 2 yearly intervals. This evidence strongly supports the argument that mandatory reverification at intervals less than 2 years would increase the cost of NMI compliance but would provide very little compliance benefit for Caltex or consumers. Note also, that this historical data is national, and therefore includes results from states which did not mandate verification periods. Therefore, not having a national mandatory reverification does not seem to have an overly negative affect on the compliance rates for sites on the Caltex program (since the total number of non-compliant meters found is very low). Calibration Compliance Rates Test Frequency (Years) Compliance with NMI tolerance Compliance with Caltex tolerance Total Hoses Data Set 1 All Data Set 2 2 Data Set 3 1 Data Set 4 0.5

99.27% 99.59% 98.84% 98.99% 97.38% 97.36% 97.02% 97.79% 10827 5184 1644 3570

* Data for Retail sites, taken from Hose Compliance Report 01 Sept 2010, prepared by Leighton O'Brien Pty Ltd (Project Manger for Caltex Pump Calibration Program).

c)

Reverification Options Outlined

Of the options proposed Caltex would prefer the first two voluntary options outlined in the discussion paper (code of practice & certificates of accuracy). However, we would recommend a certificate of accuracy to be valid for at least 24 months, rather than 12. Introducing yearly reverifications (where our data suggests 2 yearly calibrations can give a very high NMI compliance rate for most meters) could result in unnecessary costs to passed on to consumers if adopted. We are less inclined to support options 3 or 4 (maximum reverification period of five years or fixed verification of 2 or 3 years) based on our earlier arguments.

d) Costs and Benefits Incurred

Caltex doesnt see a benefit, either for Caltex or for consumers in mandating verification periods. Conversely, the cost of complying with national mandatory reverification periods is potentially large. Based on our previous experience of former state based mandatory reverification, the following factors increase the cost of fuel dispensing:

Contractors charge extra for a reverification compared to an in-service inspection Additional paperwork is required to be provided to the governing body (Notification of an Instrument Reverification Form). Additional project management resources are required to ensure compliance (such as tracking each sites last certification date or otherwise, making sure contractors have clear instructions to reverify when required) and to manage any non compliance notices issued. This results in increased project management costs.

Conclusion In summary, Caltex can see no net benefit to mandating reverification periods for either the consumer, or the operator. This is based on our experience of operating a program of scheduled maintenance and on the statistical results of calibration data analyzed. We believe that random testing done by NMI inspectors to test against and enforce the legal MPE tolerances is appropriate for encouraging industry wide compliance. In fact, if instrument/fuel owners were aware that increased compliance with the MPEs naturally entails fuel savings by reducing losses, and is thus in their best interests financially, then there would be no need to administer a new regulation to enforce this. This is why we believe that a voluntary recommendation (options 1-2) would work just as well as mandating a fixed reverification period.

Yours sincerely,

Garf Hunt UPSS Risk Coordinator 02 9250 5083 ghunt@caltex.com.au