Power Cuts (North Finchley)

Mike Freer Excerpts

Tuesday 9th December 2014 Westminster Hall

[Mike Freer (Finchley and Golders Green) (Con)]

It is a pleasure to serve under your chairmanship yet again this afternoon, Mrs Main. I welcome my hon. Friend the Member for Wyre and Preston North (Mr Wallace), who is acting in locus ministries, if I have got my Latin correct.

I will give a little background on the situation that has affected businesses and homes in and around High road, North Finchley. During the past year there have been a series of power cuts: on 4 September, 16 and 18 October and 16, 18, 23 and 24 December 2013; and on 6 and 7 January and 13 and 14 November 2014, just a few weeks ago. I make the point of listing those power cuts to stress the ongoing impact and disruption not just to householders but to businesses in North Finchley. In particular, last December, in the run-up to Christmas—the busiest part of the year—businesses struggled to recover the customers and profits that they lost because their shops were closed in that period.

A series of issues has caused the power cuts; one problem has cascaded into another. First, in September last year, the outages were caused by water ingress into a UK Power Networks box, which meant that, quite reasonably, the current had to be isolated on safety grounds. The power then had to be redirected to the remaining circuits, but because those circuits were old, that led to the October outages and the first two outages in December, which were the result of power redirected to the neighbouring circuits overloading the cables: they could not cope and they failed.

Just before Christmas last year, the low-voltage board of the main substation that supplied the circuits failed, which caused yet more outages. That problem reoccurred in January this year. Then, in mid-November—just a few weeks ago—the insulation on the cables supplying this part of North Finchley failed yet again.

I want to put on record that UK Power Networks has been as helpful as it can be. I have met with its officials on a regular basis and they did bring forward a £70,000 investment to remedy the issue. The ducting for the cables to this part of North Finchley has been replaced, the substation has been upgraded, and next week the cables will be replaced through the new ducting. Barnet council has also been helpful in waiving the usual restrictions that prevent major works in the Christmas period so that that can be undertaken in an effort to ensure no repeat of last Christmas’ loss of business.

Although the repair and upgrade programme has taken more than 12 months, we seem to be on the brink of having a—hopefully—permanent solution in place. However, the power cuts that occurred in the past year or so have highlighted a couple of weaknesses in how the electricity is supplied and how customers are dealt with in such events.

One of the factors that contributed to the failure of the cables and the failure of the low-voltage board was increased demand. We have all seen the retail proposition changing: traditional shops, such as clothes shops and newsagents that are relatively low power users, have been replaced with cafés and restaurants. If such shops become restaurants, their power usage profile will be very different. Although the change of use goes through, the builders go in and the electricians assess the supply and say, “Yes, Mr Retailer, the power supply to your unit can cope,” what is missed is the cumulative effect of changes to the connections of that shop and neighbouring shops. Initially, the supply network simply absorbs the increased demand, but that strains the existing, and probably old, infrastructure.

The weakness in the system is that change-of-use permissions at the planning authority, which I appreciate fall under the remit of the Department for Communities and Local Government and not the Department of Energy and Climate Change, are not automatically fed to the network providers so that they can monitor and plan their infrastructure investment and ensure that they can cope with such changes in electricity usage. Perhaps the Minister could arrange that co-ordination with colleagues across Government, so that a system to monitor cumulative impact is put in place.

Finally, there is the issue of compensation, which I have raised with both UK Power Networks and Ofgem. UK Power Networks is helpful, but it is firm that it is bound by the regulations. Ofgem, while sympathetic, says that it holds the power suppliers’ feet to the fire through its internal mechanisms, and that it cannot be held responsible for all the consequential losses that the traders and householders incur through a series of power cuts.

The current arrangements do not provide adequate compensation to householders or businesses, nor do I believe that they hold the infrastructure providers’ and energy suppliers’ feet to the fire. A householder receives only £54 and a business £108 in compensation. That might be bearable if that were per power cut, but it is not. That compensation is payable only when there have been power cuts of at least three hours on four or more occasions in any 12-month period. A business therefore has to be interrupted for a minimum of 12 hours before it gets its £108, which is £9 an hour. That is hardly compensation.

Even though compensation is to increase in April to £150, that is still only £12.50 an hour. That is not compensation; it is barely a gesture. A restaurant that has 12 power cuts of only two hours could lose 12 lunch times but get nothing. I ask the Department to consider instructing Ofgem—or to ask it, if it cannot instruct—to replace the compensation thresholds with a scheme that pays out for each power cut, rather than having that unreasonably high bar. A greater financial penalty may result in faster repairs and investment in the network’s resilience. I have a background in business, where we always work to the motto: “If you grab people by the budgets, their minds will follow.”

In conclusion, we need to join up the change-of-use approvals so that increased energy demand is monitored. We also need a new compensation scheme that treats customers fairly and incentivises the power companies to invest in a resilient supply network.