The energy regulator has fined electricity network providers SSE and UK Power Networks £3.3m after an investigation into prolonged power cuts over Christmas concluded that they could have handled the situation better.
Ofgem said the two companies recognised they could have done more and have agreed to donate the £3.3m to organisations such as the British Red Cross, which plays an important role in helping vulnerable customers during power cuts and severe weather.
The fine follows a £4.7m customer compensation payment by the two companies, bringing the total amount they have paid out for the winter storms to £8m. The regulator also announced plans to raise the minimum payout for customers who go 24 hours without power from £27 to £70, with the total amount of compensation they can receive rising from £216 to £700.
Britain experienced severe storms over Christmas with nearly a million homes being cut off at some point. SSE and UKPN customers bore the brunt of the weather, with about 16,000 of their households in the South of England left without power for more than 48 hours.
SSE and UKPN are two of a handful of operators that take power from National Grid’s “motorway” network of high-voltage pylons across the country and deliver it to households through their local “A-road” network.
“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,” an Ofgem spokesman said.
The regulator warned that it would become increasingly vigilant if the slow response over Christmas is repeated.
“A power cut at Christmas 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 severe weather, the companies could have done more to plan for the weather and kept customers informed,” said Maxine Frerk, Ofgem’s senior partner for distribution.
The payouts were announced as Britain’s top competition watchdog, the Competition and Markets Authority, separately raised concerns that the energy market was being hurt by a lack of price transparency, the dominance of large utilities which both generate and supply energy, and an uncompetitive retail market.
The CMA revealed the scope of an 18-month investigation into the energy sector, due to complete at the end of next year, saying it would look at underlying causes, at both wholesale and retail levels, which could be leading to widespread concerns about rising energy bills, service quality, profitability and uncertainty over future investment. Roger Witcomb, chairman of its Energy Market Investigation Group, said these were topics to be looked at, with no conclusions so far.