Financial News

  • 25 July 2014, 6:25

Storm Failings Cost Power Firms Millions More

The UK's energy regulator says two power network operators are to pay an extra £3.3m for failures related to last winter's storms.

Ofgem said it had now secured a total of £8m from SSE and UK Power Networks (UKPN) after its investigation into the companies' handling of the bitter weather event ahead of Christmas.

The south of England was worst affected by the stormiest December since 1969 - and the windiest since 1993.

The combination of strong winds and heavy rain - running at more than double the seasonal average - brought havoc to many towns and villages as river levels rose and power lines were brought down.

The firms had already paid out £4.7m to consumers who were among one million households left without power at some stage though approximately 16,000 suffered lengthy reconnection delays of over 48 hours.

There were 500 premises in the UKPN and SSE Southern regions that were without supply for over five days - with the firms also slammed for poor communication with those affected and for failing to recall enough staff from their Christmas break.

Ofgem said the British Red Cross - which plays a role of helping vulnerable people during severe weather - would be among the organisations to benefit from the latest instalment of cash.

The watchdog said its new compensation regime - due to come into force next April - would guarantee standard payments of at least £70 for customers left without power for more than 24 hours.

Ofgem said the previous cap of £216 per household would rise to £700.

The announcement was made as the Competition and Markets Authority (CMA) set out details of its investigation into Britain's wider energy market to establish whether the 'big six' providers of gas and electricity need to be broken up.

It confirmed it had started work but was only releasing details of the scope of its inquiry at this stage.

Roger Witcomb, chair of the Energy Market Investigation Group, said: "Given the importance of energy supply to households, businesses and the economy, we very much encourage submissions on the issues we have identified and whether these cover the areas we need to investigate.

"We are looking to identify the underlying causes, at both wholesale and retail level, which could be leading to the widespread concerns that have surrounded this market in recent years - including rising energy bills, service quality, profitability and uncertainty over future investment.

"This is a market which is very complex so it is important at an early stage to focus the investigation on the most relevant issues."

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