Power Cuts (North Finchley)

Ben Wallace Excerpts

Tuesday 9th December 2014 Westminster Hall

[Mr Ben Wallace (Wyre and Preston North) (Con)]

May I say what a delight it is to serve under your chairmanship, Mrs Main? I congratulate my hon. Friend the Member for Finchley and Golders Green (Mike Freer) on securing the debate. I know from my constituency postbag how important it is for businesses to be able to do business at this time of year. In this economic environment, it is vital that they can keep their doors open to get custom.

Overall, electricity networks across Great Britain are among the most reliable in the world, but that does not mean we should ever be complacent. It is vital that those affected by interruptions to their supply have their power restored as quickly as possible, and that networks ensure that their infrastructure is sufficient.

By way of background, I will tell my hon. Friend about what has been going on. Demand has incrementally increased over the past two years in North Finchley owing to changes in use in and around Ballards lane. There has been a corresponding increase in faults on UK Power Networks’ low-voltage network. On each occasion, UKPN responded to restore supplies as quickly and safely as possible. Network infrastructure has been repaired and new equipment installed. UKPN has some 134,000 km of underground network as well as, obviously, an overhead network. Work to reinforce the network has been under way, as my hon. Friend pointed out, for a number of months, and it is hoped or planned to be complete by Christmas 2014. So far, more than £2,000 has been paid in compensation.

The increase in demand above the capacity for which the low-voltage network was originally designed can result in potential weak points failing. That is why UKPN is carrying out works to reinforce that network. As my hon. Friend said, it has so far invested £60,000 to £70,000 in doing so. Following a high-voltage fault in January 2013, customers near Briarfield Avenue substation were affected. Following restoration and repair of that fault, UKPN yet again invested in new high-voltage equipment to improve the reliability and operational flexibility of the local network. In December last year, a fault developed at Friern Park substation that interrupted some local supplies. Repairs were carried out, the network was stabilised and customer supplies were restored. Shortly afterwards, UKPN invested in a new substation, as well as reconfiguring the local network.

In 2014, there have been 11 separate incidents on Ballards lane, affecting different circuits on the low-voltage network supplied from Gaumont substation in Finchley. The demand profile in that specific area has increased over the last 18 months. As my hon. Friend rightly pointed out, changes of business use have led to higher usage of electricity, which has increased loading on low-voltage cable circuits. We are talking about restaurants, coffee shops and so on.

This is what has happened so far as a result. Compensation to date has included the following. Five businesses have received four good-will gestures totalling £424 and one electricity guaranteed standards payment totalling £54. Also, 28 domestic customers have received 19 gestures of good will totalling £1,072 and nine electricity guaranteed standards payments totalling £520. Actions have been taken to rectify issues and faults. For example, in February 2014, UKPN installed a low-voltage link box in Ballards lane to split up the network and to balance loading across local substations.

We should not forget that at this time of year vulnerable customers are affected by power outages. Network operators are required by Ofgem to offer a range of free services, known as the priority services register, to their most vulnerable customers. The scheme is available to all household gas and electricity customers who fulfil any of the following criteria: being of pensionable age, having a disability, having a hearing and/or visual impairment and/or having long-term ill health. Those customers listed by UKPN on its register have a dedicated freephone priority number. If my hon. Friend is unaware of it, I would be happy to write to him with the details.

The Electricity (Standards of Performance) Regulations 2010 define the guaranteed standards that we can expect from our power suppliers. They cover a range of network reliability circumstances in which customers are entitled to payments when distribution network operators fail to meet those standards. They are established measures of performance that apply in the current electricity price control period, covering the 2010 to March 2015 period, and that will be continued—and, importantly, tightened—in the next price control period, RIIO-ED1, commencing in April 2015. That is a catchy title if ever there was one.

Currently, in normal weather conditions, business customers are entitled to a payment of £108 if power is not restored within 18 hours and a further £27 for each further 12 hours off supply. For multiple interruptions, defined as four interruptions of at least three hours or more in a 12-month period, customers are entitled to £54. To help to reduce the duration of power cuts and to incentivise improved performance, Ofgem has proposed—the Government fully support this—that the minimum standard for restoration of supplies in normal weather conditions be reduced from 18 hours to 12 hours from next year. As has already been pointed out, in normal weather conditions, payment levels will increase to £150 for business customers and a further £35 for each further 12 hours. For multiple interruptions, the level will be raised to £75. I recognise that that is not exactly in line with the calls made by my hon. Friend, but it is going in the right direction. It is about tightening up obligations on suppliers to ensure that they bear the responsibilities to customers that we would expect today.

As we head into winter, with forecasts for severe weather in parts of the country over the next few days, I should add that Ofgem proposes to double the payments that DNOs make to customers following a prolonged period without supply caused by severe weather. Those will be £70 after the initial period of interruption, followed by an additional payment of £70 for each successive period of 12 hours without supply. The cap per customer, for both business and residential customers, will be increased to £700.

It is important to recognise that the guaranteed standards of performance are in recognition of “inconvenience” to customers, rather than being a reflection of the full cost of a power cut to a customer. The level of payments reflects a balance between the impact faced by customers from periods without power and the amount of expenditure that each customer pays to their local electricity distribution company through their bill. Currently, distribution costs make up about 16% of an average electricity bill. If payments for loss of supply were far in excess of the amount paid for the service, that would result in increased network charges and higher customer bills, which we all wish to avoid. Indeed, Ofgem research indicated that customers did not place a high value on higher compensation levels if those ultimately led to higher customer bills.

It is important to recognise at this stage why, unlike some other products, electricity has certain conditions around it that often make it hard—this has been the case for decades—for consumers to seek recourse through the civil courts. An electricity supplier has a duty to connect; it has to serve the customer. In addition, the nature of a network means that continuous supply in one area may cause damage elsewhere, and that may require a switch-off or an adjustment. Effectively robbing Peter to pay Paul, with damage in one place rather than the other, is not good for the overall impact of the network. The other issue is the very nature of electricity. It is hazardous, and it is always difficult to guarantee it 100% of the time for 100% of customers. Those extra duties and difficulties mean that it is often harder to make a pure economic case for loss of business as opposed to actual damage to one’s property through a direct fault. That has an established place in law and has done over many years. It is not of great comfort to businesses, but the Government recognise, as does Ofgem, that things are moving in the right direction. The consultation on an increase in penalties is a move in the right direction, although we certainly wish to do more.

On the important issue of notifying network operators following change-of-use permissions, my hon. Friend brought out an incredibly good point. I will ask my right hon. Friend the Minister of State to write to the other relevant Departments and colleagues regarding the possibility of ensuring that we notify network operators following change-of-use permissions, to try to reduce the number of incidents of this sort occurring in the future. Forewarned is forearmed. I certainly agree with my hon. Friend that if we ensure that people are prepared for what is coming down the line, then hopefully, by the time we get to next Christmas or the next peak period, the network will be in a better position to make accommodation for that.

Question put and agreed to.