Scottish Power Complete Audit And Overview Construction Essay

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"We aspire to be the preferred Company because of our commitment to the creation of value, people's quality of life and the protection of the environment"

Introduction

Scottish Power is the UK's third biggest energy supplier behind British Gas and E.ON. The six biggest energy suppliers are collectively known as the 'big six' and provide 99% of all UK domestic energy requirements, the other three being nPower, EDF Energy and Scottish and Southern Electric.

Scottish Power has a generation capacity of 6139MW and is the distribution network operator for central and southern Scotland, Merseyside and North Wales regions.

Due to the nature of their work and more specifically the fact that the majority of their energy is produced through the burning of fossil fuels, a company in this line of work will always be regarded with a certain degree of animosity. It is the purpose of this document to cast those prejudices aside and critically evaluate the professional and ethical conduct of the company. Its performance will be evaluated in terms of direct comparison with competitors and with the claims made in their CSR review 2009.

Corporate Social Responsibility

Breakdown of fuel mix

The breakdown of how the company generates its power in comparison with the market leader British Gas (in terms of number of customers) can be divided up as follows:

These results show that 93% of Scottish Power's supply comes directly from the burning of fossil fuels. British Gas, who supply roughly three times as many UK households, have far greater renewable and nuclear energy resources. On top of this natural gas produces around 45% less carbon dioxide than coal for the same amount of heat. The company is planning to build Combined Cycle and Gas Turbine's with the redevelopment of their Cockenize site being touted as a possibility.

Scottish Power is by no means alone in being so reliant on non-renewable energy sources, and its portfolio can be seen as a fair average for the sector not just in the UK but across Europe, with the exception of France who generate around 75% of their energy through nuclear power. Nuclear power does have the advantage of not producing carbon dioxide emissions but has other drawbacks in that it does produce radioactive waste that has to be stored safely for many centuries. Whilst Scottish Power generates none of its electricity through nuclear power stations you would expect this would be an obvious choice for the long term future. However despite purchasing land at Sellafield no immediate plans are in place.

Carbon capture and storage

Scottish Power has decided to put its faith in a so far unproven technology known as carbon capture and storage (CCS). The technology works by fitting a coal powered station with the filters required to scrub the CO2 out of their emissions. The CO2 is then compressed, liquefied and pumped via pipelines away for storage. In the case of Scottish Power this storage is likely to be beneath the North Sea. The then executive director Nick Horler is quoted as saying "Once we've got the carbon it'll be easy to pipe it out under the North Sea - we'll bury it in the rock which gave us North Sea oil and gas. In fact, we'll just be putting it back where it came from."

The company hopes to secure large financial backing from the government and likes to see itself as a champion of this technology. However the US government has already tried and failed with such a scheme known as FutureGen, wasting a billion dollars in the process.

It is clear that Scottish Power has a vested interest in generating energy through fossil fuels and so is determined to push ahead with CCS as this will allow them to maintain their position as one of the UK's main suppliers. Coal is widely acknowledged as the most economical method of generating large amounts of electricity This means they will avoid investing in expensive long term projects such as nuclear power stations or have to dramatically increase their number of off shore wind farms. The company wants to be seen as proposing a realistic alternative in the battle with climate change, however few share this optimism. The sceptics argue that capturing and compressing the CO2 will increase the fuel required by the power station by 10%-40% and also transporting and storing the carbon safely and inexpensively may not be as easy as some would like you to believe.

Longannet

The company is the operator of the Longannet power station in Fife. This is an enormous facility that is capable of burning 4.5 million tonnes of coal every year and supplying 2,400MW, which represents nearly half of Scotland's annual power requirements. In 2007 the WWF published the European 'Dirty Thirty' naming Longannet as the worst polluter in the UK in terms of power output. It is here the company plans to progress its carbon capture and storage programme with the intention of developing a global centre of excellence and having a commercial scale demonstration operating by 2014.

Emissions results

The environmental performance of the company can be gauged from the ten year targets set against a 1999 baseline:

Figure : Scottish Power 1999 emissions targets vs. 2009 emissions results

The company claims they didn't hit the SOX target as there was a delay in the commissioning of equipment at their Longannet Power plant. These results are however still very encouraging, particularly when considering the reduction in CO2 emissions as many climate change experts claim it is the excess of CO2 in the atmosphere that is causing the surface of the planet to heat up.

Environmental policy

The company has set up the environmental coordination group, who report directly to the executive team. The purpose of the group is to provide advice and guidance when necessary and to help with the development of company environmental policy. Despite the intentions of the group it is the auditor's opinion that the chair of the environmental coordination group should be an executive member of the board. This would be a statement of intent from the company that they put environmental policy at the top of their agenda. As it stands the CEO is solely responsible for environmental policy at board level. Whilst it is clear that this is an undertaking they take very seriously it may be very difficult for them to remain impartial and to maintain environmental interests as a direct, subjective influence over all business decisions.

An external forum has also been set up to discuss environmental matters. The members of the forum are authoritative figures on climate change, environment and energy issues. This forum is also attended by senior executives in an aim to provide the company with the constructive feedback it desires.

Corporate social responsibility policy

Scottish power does not have a corporate social responsibility policy per se but instead considers the implications of CSR in all its business decisions. They are a member of CoalImp (the association of UK Coal Importers). This group works with its members to assure a high standard of corporate responsibility at all stages of the supply chain, be it the major end user or a haulage company. The guidance offered to members' concerns issues such as the law, human rights and health and safety. The intention of CoalImp is to provide a level playing field to all companies concerned so none have a competitive advantage by flouting regulations. CoalImp has also been attempting to persuade European competitors to abide by its guidance. The dilemma posed by corporate social responsibility is that running a company in this manner is expensive particularly when your main competitors may not be so conscientious. This is hopefully going to change with the introduction of ISO 26000, an internationally recognised standard on social responsibility. ISO 26000 is however only to be considered as voluntary guidance and not a certified standard. Scottish Power is considering benchmarking its own operations against the standard. A decision on this was due by the third quarter of 2010, however despite contacting the company for information the auditor has not had a response.

Conclusion

It is difficult for companies in the energy sector to balance what is on one side a moral obligation to protect the environment and on the other to run a successful, profitable company that the shareholders have confidence in. Whilst there are green energy options available they are expensive and these costs will at some stage filter down to the consumer putting the company in a less favourable position with its competitors.

Health, Safety & Environmental Management

Introduction

One of the top priorities for Scottish Power is to protect their staff, contractors and the general public from harm as a result of their activities and Scottish Power is constantly seeking ways to improve. In 2009, Scottish Power saw the fewest accidents compared to any time in their history. This was achieved both by training and by managing risk to create safe working conditions. Other management techniques are used as well such as behavioural safety, asset management and process safety. This can ensure Scottish Power is providing a safe and reliable service to its customers.

The health and safety policy is approved by the chief executive and complemented by local policies at site level. The performance is measured every year and compared withhealth and safety standards that are designed to meet world-class performance benchmarks. All sites and major departments have health, safety and environment committees which meet regularly to discuss any potential hazards and identify all possible ways to improve safety.

Health & Safety Management

In 2009, Scottish Power managed to certify all health and safety management systems within the company to the OHSAS 18001. OHSAS 18001 is an Occupation Health and Safety Assessment Series for health and safety management systems. It is a standard that is being used internationally. The standard requires organizations to set up, maintain and continually improve their occupational health and safety management system in order to eliminate or minimize risk to employees and all parties who may be exposed to the risks associated with their activities. Also, Scottish Power is installing a new health and safety management IT system, Cintellate, which manages health and safety,environmental and risk related performance. This will better facilitate sharing of data across the business.

Training

Safety training is given a high priority, especially for staff requiring authorization for technical, safety critical roles. Scottish Power owns two technical training centres offering a wide range of safety training, including NEBOSH (The National Examination Board in Occupational Safety and Health) and IOSH (Institution of Safety and Health) courses. Other types of training are also provided such as leadership, behavioural safety, first aid and refresher courses on risk assessment.

Health Monitoring

By maintaining an occupational health risk register, which holds details of all employees who may be exposed to work related health hazards such as chemical substances, noise pollution, vibration and radiation, Scottish Power are able to detect any signs of health problems at an early stage. This enables them to prevent further health problems. This register has facilitated detection and reduction of diseases such as noise-induced deafness and hand arm vibration syndrome considerably. In 2009 there were 1708 employees being monitored on the occupational health risk register.

Lost time accident rate

A lost time accident (LTA) is a work-related accident that results in an individual being unable to work on a subsequent scheduled work day or shift.

Figure : Total Lost Time Accidents

shows the total lost time accidents every year (LTAs) from the year 2003 to 2009. There is a trend of decreasing lost time accidents since 2005 from 43 accidents down to 12 accidents in 2009. There is a huge drop of lost time accidents from 29 in 2008 to 12 in 2009, which exceeds Scottish Power's safety target by giving a fall of over 59%. The number of lost time accidents increased slightly between 2003 and 2005, this could be explained by both and , shows a decreasing trend from all years which indicates that there were more employees from 2003 to 2005, hence why the number of lost time accidents increases for those years.

Figure : LTA per 100 employees

shows the lost time accident rate per 100 employees and this gives very promising results, showing the lost time accident rate decreasing every year..

Both Figures give only the number of accidents each year, giving no reflection of the severity of the accident. One very serious incident occurred at Rye House Power Station in January 2009 where three contractors were badly scalded while removing a value for maintenance.

Behavioural safety

Behavioural safety programs have played a significant role in helping to reduce the number of accidents and injuries within the business and maintaining high levels of safety awareness among employees and contractors. These programmes involve trained staff conducting safety tours or behavioural safety audits, where they engage with employees in a positive way about the safety aspects of the job they are doing. Larger sites use STOP risk assessments (the Safety Training Observation Program) using a pro forma checklist, while smaller locations use similar techniques but in a less formal way. The shared goal is to have zero harm. This can only be achieved by including health as well as safety in a unified approach to all people, stopping harm before it happens. This would require adoption of a variety of tools across the portfolio and a major cultural change. Accidents that happen due to unsafe conditions account for only 4% of incidents. The other 96% comes from unsafe acts.

The shared goal of having zero harm can be achieved using 5 step behavioural auditing. First, observe discreetly and get the person's attention. Second, introduce yourself, strike up a friendly conversation. Third, discuss the possible consequences of any unsafe acts and try to lead the person to a solution. Congratulate those working safely. Fourth, try an agreement to work safely in future and finally thank the person.

Getting employees involved is more powerful than taking orders from managers or sending out piles of regulatory papers. By having safety contact, management-employee safety forum, regular dedicated meetings, spotting hazards or twinning with external companies would benefit from motivating the employees to participate and realize the important of safety.

Senior manager should provide two way communication, listening to feedback from the employees as well as sending out instructions to them. Try to achieve health and safety targets in personal development plans.

Although Scottish Power have achieved their best ever performance, there isstill space to improve until no accidents happen, the plan is to develop the approach to behavioural safety throughout the whole population of the business.

Process safety

Due to the failure of a coal conveyor at Longannet Power Station, Scottish Power renewed its focus on process safety in 2007. For a high standard of safety, correct installation, operation and maintenance of plant is critical. Scottish Power installed new systems to provide engineering managers with a much clearer overview of the plant and its condition. A set of principles is applied to ensure effective process safety. The principles also include employee authorisation, decision-making, competency, and responsibility and outline processes for the investigation of incidents and near misses, the sharing of information, as well as the operation of risk control, change control and performance measurement frameworks. During 2009, Scottish Power energy networks made a DVD on process safety to spread its key concepts to employees.

In conclusion, Scottish Power has OHSAS 18001 certificated on all their health and safety management systems, it has two technical training centres offering safety training, health monitoring over 1700 employees to detect any early stage health problems, the least lost time accidents rate on record, introducing both behavioural safety and process safety to prevent further health and safety problems.

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