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SSEAnnouncement

06/09/2014 20:29

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RNS Number : 1952N
OFGEM
24 July 2014 
 
24 July 2014 
 
SSE AND UKPN PAY OUT £8 MILLION FOLLOWING CHRISTMAS STORMS 
 
·      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 24 hours 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." 
 
 ends  
 
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. 
 
For more information please read the open letter
https://www.ofgem.gov.uk/publications-and-updates/open-letter-consultation-potential-changes-severe-weather-related-guaranteed-standards-performance-gsop-following-december-2013-stormsand
the Energypeople report: 
 

ttps://www.ofgem.gov.uk/publications-and-updates/stage-two-review-christmas-2013-storms-impact-electricity-distribution-customers 
 
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. 
 
For further press information contact: 
 
Lisa O'Brien:                020 7901 7426 
 
Dafydd Wyn:                020 3263 9943 
 
Out of hours media contact number:  07766 511470 
 
This information is provided by RNS
The company news service from the London Stock Exchange