Ofgem calls on energy companies to double payments for customers affected by power cuts during severe weather

Press release

Publication date

Industry sector

Distribution Network
  • Ofgem proposes to double Guaranteed Standards Payments during severe weather
  • This would build on Ofgem’s increased payments for customers cut off during normal weather conditions
  • Ofgem is seeking the simplification of claims process by which customers receive payment for loss of supply

Ofgem is today proposing to make Distribution Network Operators (DNOs) double the minimum financial payments they make for customers who face long power cuts in severe weather. 

The proposed reforms to the Guaranteed Standards in severe weather would mean that:

  • DNOs would have to double payments made to customers to £70 if they fail to meet the minimum levels of service
  • Cap for payments made to customers would increase substantially, from current £216 to £700
  • Payments for customers are made automatically wherever possible

Ofgem has already introduced a major change under normal weather conditions, with the contravention time reduced from 18 hours down to 12 hours as part of our RIIO-ED1 price control. Increasing the payments for customers affected during severe weather conditions would further strengthen the incentives for the companies to act quickly and reconnect customers as soon as possible. 

Guaranteed Standards, set by Ofgem, are the absolute minimum levels of service customers should expect from DNOs. If a DNO fails to meet these Standards, the affected customers are entitled to a payment. The companies are able to provide additional payments to consumers affected by power cuts.  

Hannah Nixon, Senior Partner for Distribution said: “Many parts of Britain have seen some extreme weather conditions over the last few months and Ofgem has been proactively looking at ways to help consumers who face disruption to their energy supply in these situations.

“We are committed to ensuring that consumers are provided with a reliable electricity service. During the 2013 Christmas storms, 95% of customers who faced power cuts were reconnected within 24 hours, but we remain concerned about the 5% whose supplies were off for an extended period. Increasing the financial payments would send a strong message to the network companies that they need to do all that they can to reconnect all customers as fast as possible.”

The consultation will be open for eight weeks and interested parties are invited to share their views on the proposed changes. Ofgem will publish its decision by 1 July 2014.

-Ends-

Notes to editors

1.    Consultation on Guaranteed Standards during severe weather

For the RIIO-ED1 Price Control, which runs from 1 April 2015 to 31 March 2023, the current initial and subsequent payments were due to increase from £27 to £35. Today’s consultation proposes to further increase this payment to £70. We are also proposing to increase the cap on payments for any given event to £700.

We are also consulting on whether DNOs should proactively identify customers affected by an interruption and where they have clear evidence of an interruption requiring the DNO to automatically pay all customers directly without the need for consumes to write in requesting compensation. 

The consultation can be found on our website.

2.    Ofgem’s Guaranteed Standards of Performance

The Guaranteed Standards of Performance are specific minimum levels of service customers should expect from DNOs. If a DNO fails to meet these Standards, the affected customers are entitled to financial payment.

The Standards cover a range of activities – including restoring supply during an unplanned interruption and notice periods for planned interruptions. The amounts paid vary depending on the activity involved.

The amount paid to customers depends on many factors including cause of the interruption and the amount of time the supply was interrupted. Payments under the guaranteed standards compensate for the inconvenience caused by loss of supply. They are not designed to compensate customers for subsequent financial loss.

3.    About Ofgem

Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority’s powers and duties are largely provided for in statute, principally the Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act 1998, the Enterprise Act 2002, the Energy Act 2004 as well as arising from directly effective European Community legislation.

For further press information contact:

Dafydd Wyn: 020 3263 9943
Lisa O’Brien: 020 7901 7426
Chris Lock: 020 7901 7225
Rory Edwards: 020 7901 7246
Out of hours media contact number: 07766 511470