- Publication date
- 6th March 2014
- Information type
- Policy area
- Ofgem to investigate UKPN and SSE’s performance compared with other DNOs
- Ofgem will look into increasing payments to customers without electricity for an extended period of time during severe weather
- Distribution companies must learn storm lessons and report back to Ofgem on how they will improve their performance in the future
Ofgem’s review of the electricity Distribution Network Operators’ (DNOs) handling of the 2013 Christmas storms shows wide differences in outcomes for consumers, with initial findings showing UK Power Networks (UKPN) and Scottish and Southern Energy (SSE) to have been the slowest in responding to customers and in reconnecting their electricity supply.
The speed of response for restoring electricity supply varied significantly between the DNOs. Around one million customers were without power for at least three minutes with 95 per cent of them reconnected within 24 hours. Approximately 16,000 households suffered lengthy cuts of over 48 hours. Of these, more than 500 premises in the UKPN and SSE Southern regions were without supply for over five days. There was also a lack of consistency when it came to handling customer enquiries. One in five callers in UKPN and SSE Southern regions decided to hang up before speaking to an adviser whilst Western Power Distribution (WPD) answered calls almost immediately.
Ofgem will be investigating UKPN and SSE’s performance in comparison with other DNOs. As part of this work, Ofgem is requiring all companies to review their processes and report back within two months. The investigation will be concluded in July 2014 and further action has not been ruled out.
Ofgem will also consult to increase payments for customers during severe weather, especially for those customers disconnected for an extended period of time. The DNOs have estimated that 26,000 customers could be entitled to claim £2 million in guaranteed standards payments following the Christmas storms, with UKPN and SSE expected to make 26 and 67 per cent of these payments respectively. Ofgem welcomes the fact that UKPN and SSE have committed to paying an additional £7.5 million to affected customers.
Hannah Nixon, Senior Partner for Distribution said: “Being without electricity is difficult for customers at the best of times, let alone during a holiday period. Whilst we recognise the hard work of the DNOs’ operational staff during the severe weather over Christmas 2013, we are very concerned with the variations in the effect of the storms on customers in different areas.
“Our principal duty is to protect the interest of consumers. We will be looking at increasing guaranteed standards payments during severe weather. If our further investigation into the performance of UKPN and SSE during the 2013 Christmas storms suggests that these companies have breached their licence conditions, we will undertake enforcement action that could result in a financial penalty.”
Notes to editors
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 may be 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.
Ofgem will consult in May 2014 on increasing minimum payments for consumers off supply for extended periods to recognise the additional inconvenience and to ensure companies have clear incentives to reconnect all customers as soon as possible.
3. Ofgem’s call on DNOs to review their arrangements during severe weather
Ofgem expects DNOs to undertake a comprehensive review of their procedures during severe weather. Whilst Ofgem expects each DNO to take responsibility for their own arrangements, it is vital that they approach this review collectively to identify best practice.
As a minimum this review should consider the following:
- Pre-event readiness: eg maintenance, tree cutting.
- Weather forecasting: what systems are in place? How is the potential impact on the network assessed? What is the procedure for deciding how and when a DNO should implement contingency plans in anticipation of severe weather?
- Resourcing: what level of resource - linesman, scouts, engineers, technicians - is required to manage incidents? How does the DNO ensure that the required resource is available? How is resource deployment managed to ensure best use is made of available staff? What is in place to ensure all available staff have access to equipment and training to support incident management?
- Sharing resources: What changes can be made to the North East West South Area Consortium (NEWSAC) arrangements to ensure that as an industry the impact of severe events on GB customers is minimised?
Communicating with customers
- Planning: What contingency plans are in place to respond to an increase in calls during severe weather? What level of call centre staff is required? What telephone system is required to manage peak demand?
- Communications channels: What use is made of alternative communication channels (eg social media, SMS, website etc.) to relay messages to the public? How is this co-ordinated into the contingency plans during a severe weather event?
- Messaging: When are customers advised on their estimated time of restoration? How is this updated if events change?
- Priority services customers: What arrangements are in place to ensure that customers that may be especially vulnerable during an interruption are identified? What additional assistance is provided to these customers? How is this co-ordinated?
- Guaranteed standards payments (including ex-gratia payments): Identify a proactive and customer friendly approach for providing customers with information on their eligibility for and, where appropriate, the means for claiming payments following interruptions.
Each DNO should report back to us on the above by no later than 1 May 2014 with their findings, recommendations and the changes that they have made.
4. Ofgem’s further investigation
Ofgem will investigate UKPN and SSE’s performance in comparison with other DNOs. Ofgem wants to understand why it took these companies longer than others to restore supply and their communications methods will also be reviewed.
The investigation will be concluded in July 2014. Our investigation will consider whether there is evidence to suggest that any DNO failed to meet the requirements of their licence or other regulatory requirement. Enforcement action could be taken which may results in imposing a penalty on the relevant licensee.
6. 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.
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