Central control on crisis management for DNOs?

Once again, the Christmas storms are in the headlines, with this morning’s coverage dominated by the £8 million UKPN and SSE are paying, in charitable donations and customer compensation. But buried on page 10 of the Ofgem-commissioned report by Energypeople is a potentially far more significant outcome: a comment which seems to indicate the possibility of a central body co-ordinating how regional resources are allocated in response to such events.

The report identifies the failure of long-standing gentlemen’s agreements between the networks to send one another emergency resources as a key reason for UKPN and SSE’s slow response to the storms.

There is no suggestion that the other networks were holding out unreasonably: they were recovering from one round of storms and braced for another.

As the report says, even in light of changes DECC is making to the informal agreement, “it will remain the case that companies will need to be confident they can successfully manage events affecting their own customers before loaning resources to others.”

However, the report goes on to examine some of the “key trade-offs” DECC is exploring.

It says: “In the face of a widespread severe weather event, either most companies must build additional resilience into their resourcing such that they can cope with the first 36 to 48 hours or so of very exceptional events with their own resources, make independent support arrangements or potentially a central organisation may be given the role of allocation of scarce resources at a strategic level for the industry as a whole. The latter option is counter to the autonomy of the companies and the voluntary basis on which they have supported each other since before the industry was privatised in 1990.”

This would be a major intervention, taking autonomy away from the networks at the very times of crisis when they most need to focus on their customers. It is likely to face opposition from the industry.

The report’s other findings were less controversial. As expected, it tackled UKPN and SSE on a number of failures, namely:

• Availability of overhead line staff to carry out repairs and call handling staff to talk to customers;
• Identification of multiple masked fault;
• Availability and deployment of back-up generators;
• Management of tree coverage.

It also acknowledged that the two networks were victim to a number of circumstances beyond their control, particularly the severity and duration of the weather, and its timing over the Christmas period.

With the publication of this report, and the £3.3 million donation to charity announced today in addition to £4.7 million of compensation already paid by the two southern networks, Ofgem and the industry hope to draw a line under the painful events of last Christmas.

But, as this document hints, they could have more far reaching consequences.