Compensation for businesses that lose power as a result of severe weather events has risen to a maximum of £2,000 – up from £700 – under new rules announced by Ofgem.
Following the findings of its review into the response to Storm Arwen by distribution network operators (DNOs) – the companies responsible for linking up homes and businesses to the electricity network in Great Britain – the regulator has updated the statutory regulations all six operators are required to follow. Network companies that fail to follow the rules and protect consumers’ interests could face multi-million-pound fines.
The changes include:
- Increasing the compensation cap for loss of supply due to severe weather from £700 to £2000, and increasing the initial payment from £70 to £80.
- Reducing the length of the time consumers have to wait for additional compensation from 12 hours to 6 hours after the initial payment period (24 hours for category 1 storms, and 38 hours for category 2 storms).
- Updating regulations to allow all compensation payments to be made by bank transfer to simplify and speed up the payments process.
- Removing Category 3, which will increase the number of compensation payments for inconvenience, as it reduces the time consumers would need to be without power before they are eligible for payments.
- The introduction of an inflation adjustment mechanism, so compensation payments remain in line with inflation.
These changes will mean more customers will be entitled to higher levels of compensation to better reflect the impact of being cut off power for extended periods.
Storm Arwen saw nearly one million homes and businesses in Great Britain lose power in November 2021, with 40,000 consumers cut off for three days and almost 4,000 having to cope without power for over a week in parts of north England and north-east Scotland.
Akshay Kaul, Director General of Infrastructure for Ofgem, said:
“It’s unacceptable that thousands of households were left without power in freezing conditions for a prolonged period during Storm Arwen, often with poor information about when their power would be restored. Many also found it hard to get the compensation they were entitled to afterwards, and that’s why we’ve put tough new rules in place to make sure network companies prepare better for severe weather; customers get accurate and honest information about power cuts in their area; and those who are off power in bad weather are rapidly and fairly compensated.
“Lessons have been learnt by the industry following our review into Storm Arwen, but the frequency of extreme weather events is only set to increase, so we need to make sure network services are resilient. “Network operators and suppliers should get ready for the coming winter. We will not hesitate to hold them to account if they fall short of the standards customers have a right to expect.”
