- Publication date
- 24th July 2014
- Information type
- Policy area
- Ofgem secures an additional £3.3 million following its investigation into how SSE and UKPN handled last winter’s storms
- The firms have already paid customers £4.7 million and committed to improvements
- Ofgem will more than double minimum payments to those affected by severe weather incidents in future and has put the industry on notice that it must learn from the lessons of last winter
Ofgem has today secured an additional £3.3 million from SSE and UKPN after its investigation into the companies’ performance during the exceptional storms last Christmas in the south of England. This is in addition to the £4.7 million already paid out to consumers under the guaranteed standards and in goodwill payments. This brings the total paid out by the companies to £8 million.
Ofgem’s findings showed that while SSE and UKPN’s southern arms were particularly badly hit by the storms, they could have done more to get customers reconnected faster and to keep them better updated on what was happening. In light of these findings, the companies have agreed to make donations totalling £3.3 million to organisations like British Red Cross, which play an important role in helping vulnerable customers during power cuts and severe weather.
Britain experienced severe storms over Christmas 2013 with power cuts affecting nearly a million homes. Both SSE and UKPN experienced the brunt of the weather but agree that there are lessons to learn from their performance during this period. Around 16,000 customers were left without power for more than 48 hours. The companies have recognised that they must improve their procedures for any future major interruption and Ofgem has today put the industry on notice that any repeat of last year’s performance issues will trigger further action.
Ofgem has also today confirmed improvements to the guaranteed standards payments made to customers who face long power cuts in severe weather. These will come in to force in April 2015 and will include:
- more than doubling the minimum financial payment to £70 from £27 if consumers are without power for at least 24hours during a severe weather event
- substantially increasing the cap for payments made to customers from £216 to £700
- making automatic payments to affected customers, when possible
Increasing the payments for customers affected during severe weather will further strengthen the incentives for the companies to act quickly and reconnect customers as soon as possible.
Maxine Frerk, Ofgem’s Senior Partner for Distribution said: “A power cut at Christmas time is the last thing anyone needs. While we recognise the hard work of the companies and their staff who were out working to reconnect customers during the severe weather, the companies could have done more to plan for the weather and keep customers informed. This is why we have secured an additional £3.3 million, bringing the total payout to £8 million.
“Ofgem is constantly striving to drive up standards for customers. That is why we have more than doubled the payouts that firms will have to pay if customers are without power during severe weather events from £27 to £70. Network companies need to learn the lessons of last winter as a repeat performance will trigger further action from Ofgem.”
Notes to editors
1. Company performance at Christmas
The two southern distribution network operators (DNOs) of SSE and UKPN were affected more significantly than other companies’ networks, each having almost 1100 incidents, affecting a quarter of a million customers on their networks. Between them they restored power to over 95% of customers within 48 hours. However, almost 16,000 customers remained affected for more than 48 hours.
Further lessons need to be learned by network operators on how they prepare for this scale of weather event, how they handle large volumes of customer calls, particularly their ability to provide timely and accurate information on restoration times, and how resources are shared amongst different DNOs during major weather events.
2. Customer payments
The total represents a payment of £8 million which is at least five times more than the minimum they would have been obliged to pay under Guaranteed Standards. The additional £3.3 million payout Ofgem has secured will go to organisations which have an important role in helping vulnerable customers during power cuts and severe storms.
|DNO||Charities||Guaranteed standards and goodwill payments||Additional payment to charity|
|SSE||British Red Cross, Age UK, National Energy Action, Macmillan Cancer Support and establishment of a new community fund||£2.3m (£0.6m directly under Guaranteed Standards)||£2.3m|
|UKPN||British Red Cross, Royal Association for Deaf People, Carers Trust and Citizen’s Advice||£2.4m (£0.6m directly under Guaranteed Standards)||£1m|
3. Consultation on Guaranteed Standards during severe weather
In March, Ofgem issued a consultation with proposals to improve the Guaranteed Standards of Performance (GSOP) following the December 2013 storms.
The Guaranteed Standards of Performance are specific minimum service levels that customers should expect from network companies. If a DNO fails to meet these, the affected customers are entitled to financial payment for the inconvenience.
For the RIIO-ED1 price control, which runs from 1 April 2015 to 31 March 2023, the initial and payments for each subsequent 12 hour period for severe weather events were due to increase from £27 to £35. Now this will further increase to £70. We are also increasing the cap on payments for any given event to £700.
We have also confirmed that network companies should proactively identify customers affected by an interruption. When they have clear evidence of an interruption, they will need to automatically pay all customers directly. This means that consumers should not need to write to request payment.
4. Ofgem’s Network Regulation framework
In addition to the GSOP, there are other things we have done that help drive the DNOs to improve their customer service. As part of the price controls, they face reductions in their allowed revenues if they fail to meet targets for customer interruptions (measured in terms of total minutes lost) and there are also incentives linked to customer satisfaction with call handling.
Over time, these incentives have led to a significant improvement in network performance with the number of power cuts reduced by 30% since 2002.
Companies also have certain obligations set out in their licence, such as the requirement to provide an emergency response telephone service. Failing to meet these obligations can lead to enforcement action.
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