Three gas distribution operators to pay £8 million for missing callout targets
Press release
- Publication date
- Industry sector
- Distribution Network
Cadent Gas Limited, Scotland Gas Networks Plc (SGN Scotland) and Southern Gas Networks Plc (SGN Southern) have voluntarily agreed to pay a total of £8 million to Ofgem’s Energy Redress Fund after failing to meet their targets for attending gas emergencies in the required timescales.
Ofgem’s rules require gas distribution network operators (GDNs), which manage and maintain the network that delivers gas to homes and businesses, to attend reports of suspected gas leaks within one or two hours, depending on the circumstances of the incident, in 97% of cases.
An investigation was opened by the regulator after the GDNs involved self-reported, in advance of submitting figures formally, that they had missed the targets between 2022-2023.
After admitting the breach, and in acknowledgement of the potentially serious risk to the public in failing to meet these targets, the three companies have now voluntarily agreed to pay a total of £8 million to Ofgem’s Energy Industry Voluntary Redress Fund (EIVRF), which funds projects and schemes to support energy consumers, particularly those in vulnerable situations.
The payments agreed to be made by each company are:
Cathryn Scott, Director of Market Oversight and Enforcement at Ofgem, said:
“The potential risk to households and businesses if gas leaks aren’t investigated quickly is significant, so it’s right that the companies involved have acknowledged the seriousness of missing these targets.
“We’re confident the companies have improved their systems and processes to make sure this doesn’t happen again and have demonstrated their commitment to this by meeting their targets in the two years since the breach.
“We take compliance with our rules incredibly seriously, and as demonstrated with this case, will not hesitate to take action when companies fail to meet their obligations across the board.”
This licence obligation is currently subject to consultation as part of Ofgem’s wider price control setting process. The regulator has proposed that, from next April, GDNs will be required to provide more detailed performance and workload volumes as part of their annual Regulatory Reporting Packs. These additional reporting obligations will be aimed at enabling greater transparency and accountability, with the specific metrics in relation to response times to controlled and uncontrolled escapes subject to consultation.
The regulator also proposes to publish monthly and annual data in its RIIO Annual Report to provide consumers with greater visibility of GDN performance over the year, and require GDNs to proactively provide a detailed explanation if their performance falls below 97% in a month.
Ofgem’s investigation covered Cadent’s North London and North West regions, and SGN’s Scotland and Southern regions, with the target missed varying by area:
*Cadent Gas Limited is the license holder for their North London and North West networks, SGN hold separate licences for their Scotland and Southern networks.
Notes to editors
Relevant licence conditions
The Gas Transporter Standard Special Conditions (SSC) D10 2(h) requires that for each regulatory period, licensees attend 97% of reported gas emergencies within 1 hour for uncontrolled gas escapes or other uncontrolled gas emergency and 2 hours for controlled gas escapes or other controlled gas emergency.
“Controlled gas escape or other controlled gas emergency” means a gas escape or other gas emergency where the person reporting the escape or other emergency, after carrying out (or causing to be carried out) the actions advised by the telephone service, advises the operator that the escape of gas or other emergency appears to have ceased.
“Uncontrolled gas escape or other uncontrolled gas emergency” means one that occurs where the person reporting it is unable to bring the situation under control after following the advice given by the telephone service.