Companies pay £10.5 million over 9 August power cut

Publication date
3rd January 2020
Information types
Policy areas
  • Hornsea One Ltd and RWE agree to pay out £4.5 million for not remaining connected after the lightning strike
  • UKPN will also pay out £1.5 million after a technical breach of rules
  • Ofgem also identified issues surrounding National Grid Electricity System Operator’s (ESO) management of the system
  • Ofgem will accelerate its already planned review of ESO’s structure and governance

Ofgem’s investigation into the power cuts of 9 August found that the combined loss of two large generators, as well as the smaller loss of generation at a local level, together triggered the subsequent disconnection, loss of power and disruption to more than one million consumers. 

This included many rail passengers. Ofgem has worked closely with the Office of Rail and Road which has today published its findings into rail companies’ roles in the disruption. It found that software flaws on some trains caused extended delays for commuters.

Ofgem has concluded that two large power stations, Hornsea One Ltd (co-owned by Orsted) and Little Barford (operated by RWE) did not remain connected after the lightning strike. They have agreed to make a voluntary payment of £4.5 million each into Ofgem’s redress fund.

Ofgem found that local network operators disconnected and reconnected consumers in response to the loss of power as expected. However, UK Power Networks began reconnecting customers without being asked to by the ESO, which could have potentially jeopardised recovery of the system. This has no impact on 9 August and UK Power Networks has recognised this technical breach, taken swift action to prevent any future reoccurrence, and agreed to pay £1.5 million into Ofgem’s voluntary redress fund. All parties have fully cooperated with the regulator throughout its investigation. 

Ofgem’s investigation has raised questions about how the ESO’s management of the system is carried out. The incident has underlined the importance of ESO adapting to the complex and changing world it operates in.

Ofgem has already announced that it will be conducting a review into the structure and governance of the ESO, and the concerns raised in this investigation will inform this work. Ofgem will consider a number of options for how the system operator is structured, governed and managed, and work closely with BEIS ahead of its position paper on system governance in 2020.

Ofgem has also made recommendations to ensure the UK continues to have one of the world’s most reliable electricity systems in the world, particularly as more small scale generation is connected to the system.

Jonathan Brearley, Executive Director, said:

“Consumers and businesses rely on generators and network companies to provide a secure and stable power supply. August 9th showed how much disruption and distress is caused to consumers across the UK when this does not happen. That is why it is right that companies that were unable to keep generating have paid into our consumer redress fund.

“Our investigation has raised important questions about National Grid’s Electricity System Operator, which is why our review will look at the structure and governance of the company.

“As the energy market changes it is vitally important we futureproof the networks to ensure consumers continue to benefit from one of the most reliable electricity systems in the world.

Notes

  1. An offshore wind farm operated by Hornsea One Ltd and a gas power station operated by RWE and both stopped generating on 9 August shortly after a lightning strike. These technical issues were unforeseen and quickly resolved although they did contribute to the power cut. At the same time, approximately 150MW of smaller generation, known as distributed generation, also went offline and stopped generating. NGESO activated back-up power generators to make up some of the shortfall of the two large generators and distributed generation to balance the system. However, when there was not enough back-up power generation available, local network operators automatically disconnected some consumers from the grid in order to prevent further system-wide disruption.
  2. All customers were reconnected by the Distribution Network Operators within 45 minutes of the lightning strike.
  3. UK Power Networks early restoration of customers across parts of its network, had no bearing on the original loss of power or the outcome of the event. However, it could have had an impact on the recovery of the system.   
  4. The biggest impact was on the rail network due to design flaws on some trains. Those affected by the rail disruption are able to apply to rail operators for compensation.

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