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Distribution Network Operators (DNO) should be able to avoid bearing the brunt of the cost of storm Desmond, according to PricewaterhouseCoopers (PwC).
PwC’s general insurance leader Mohammad Khan said DNOs should be able to claim repair and compensation costs, which would otherwise be bourne by shareholders, through their business interruption insurance cover.
“This should ameliorate any losses they incur,” he said.
DNOs affected by the storm have yet to fully determine both the full costs of repair work incurred and the likely bill for compensation pay-outs.
Scottish Power Energy Networks said around 800 customers are eligible for compensation after experiencing supply interruptions exceeding 12 hours.
Each customer is eligible for at least a £75 pay-out from the company, putting the total compensation bill at around £60,000.
A total of 16,500 experienced “some form of interruption” due to the extreme weather.
More than 50,000 customers lost power in the North West following flooding of the main substation in Lancaster, despite investment totalling £13 million in flood defences since 2007 at 51 key sites, including at the affected substation.
Customers in Lancaster were finally reconnected by Electricity North West (ENW) on Tuesday while 1,000 customers in Cumbria remained without power for more than six days.
Ofgem said customers are entitled to compensation when their power supply has been interrupted for 48 hours continuously, however this only takes effect after it is “reasonably practicable” for the DNO to make repair works.
The company said it is yet to address compensation claims and will be setting up a dedicated task force in January to process applications, but compensation payments would be made in line with the severe weather event guaranteed standards set for DNOs.
ENW’s reconnection efforts were hampered by continuing flooding at local substations, many of which were only accessible by boat, and the DNO also experienced issues accessing empty homes left by homeowners in the wake of the floods.
ENW is also able to make additional payments to customers if it wishes, Ofgem said.
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