Compensation cap for storm power cuts rises to £2,000

Customers who lose power during severe weather events will be entitled to claim up to £2,000 from electricity networks under new rules announced by Ofgem.

The regulator has increased the compensation cap from the current £700 maximum as well as reducing the time customers have to wait before receiving additional recompense.

Regulations are also being updated to allow compensation to be delivered via bank transfer and to update payment levels in line with inflation.

The changes follow the reviews conducted by Ofgem and government last year into the networks’ response to Storm Arwen, which saw one million homes and businesses lose power during the November 2021 storms.

The regulator has warned that networks failing to abide by the new rules could face “multi-million pound fines”.

Previously, a £70 payment was available after 48 hours without power, with an additional £70 for every 12 hours thereafter off supply, capped at £700.

Under the new rules compensation levels will depend on how storms are categorised and how long customers have been without power.

Under the most severe level – a Category 1 storm – customers will be entitled to £80 if supply is not restored after 24 hours. For Category 2 storms the payments will kick in after 48 hours.

For both categories, there will be £40 available for every further six hours with the maximum compensation capped at £2,000.

Akshay Kaul, Ofgem’s director general of infrastructure, 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.”

Lawrence Slade, chief executive of the Energy Networks Association, said the formal recognition that compensation should be higher reflected the disruption and inconvenience customers had suffered.

He added: “Network operators continue to work hard with the regulator and government to make processes like claiming compensation more straight forward and fully implementing recommendations to enhance our customer services during extreme weather events. Network operators have also identified areas which will need increased investment to provide better energy security and service for customers in the long term. This is particularly important as severe weather events unfortunately become more frequent.”