National Grid agrees to pay out £3m after failing to meet gas network repair targets

Press release

Publication date

Industry sector

Distribution Network

National Grid has agreed with Ofgem to pay out £3m to fuel poverty charity National Energy Action (NEA) after failing to meet the target for repairing non-urgent gas escapes on its gas distribution networks.   

Ofgem has also cut the amount of revenue National Grid can earn from its gas distribution networks by £2m after the company failed to meet targets on customer satisfaction.

National Grid missed the target for carrying out non-urgent repairs on three of its four distribution networks. The target was missed for the two years 2013/14 and 2014/15. National Grid has assured Ofgem that no lives were put at risk by their failure to meet this output. 

NEA is a national charity helping to eradicate fuel poverty. Ofgem shares the Government’s aim to cut the number of customers in fuel poverty.

Maxine Frerk, acting senior partner, networks, Ofgem, said: “National Grid recognises that it did not have proper management processes in place to meet these targets. National Grid has assured Ofgem that it has taken sufficient action to ensure they can be achieved in the future.  This pay-out is a signal to all energy network companies that they must meet outputs in their price control and deliver good service for customers.”

Notes to editors

  1. All gas distribution networks (GDNs) are required through legislation to attend gas escapes as soon is reasonably practicable. Escapes that present a risk to life or property should be repaired within 12 hours. All GDNs including National Grid have met their targets for this.  A GDN can decide after an assessment of a gas escape that a repair can be delayed if it doesn’t warrant emergency action. Part of the assessment would be to consider the potential risk any escape has to life and property.

    GDNs must monitor non-urgent gas escapes until they can complete permanent repairs. A risk score is given to each gas escape that needs to be repaired. The score depends on several factors including proximity to buildings and how long it is likely to take for the gas escape to be repaired.  All GDNs have a set annual risk score that they must not exceed. If they do exceed it, as National Grid did, they fail the target.

  2. Ofgem has reported on the performance of all eight gas distribution networks in its RIIO-GD1 Annual Report 2014-15 published today.  2014/15 was the second year of the companies’ 2013-2021 price control.  The second year performance showed that all other GDNs apart from National Grid achieved, and in some cases substantially exceeded their annual output commitments in all areas, including customer service and safety.
     
  3. Measuring customer satisfaction with gas distribution networks

    In Ofgem’s price controls the GDNs earn financial rewards if they beat customer service targets. But if they miss the targets they are automatically penalised. This means Ofgem reduces the revenue they earn by charging users of their network. All four of National Grid’s GDNs failed to meet target measures of satisfaction among customers affected by planned interruptions. And three of National Grid’s GDNs did not reach the target score for connection surveys where customers are asked for opinions about work completed on a new or existing gas connection. As a result Ofgem has reduced National Grid’s revenue by £2m.

  4. National Grid’s four gas distribution networks are in London, the North West, West Midlands and East of England.  The other gas distribution networks in GB are owned by Northern Gas Networks, Scotia Gas Networks Limited (owner of the Scotland and Southern England networks) and Wales & West Utilities Limited. 

About Ofgem

Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.

For facts, figures and information about Ofgem’s work, see Energy facts and figures. 

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