Firms to pay £10.5m over blackout actions

RWE and Orsted have agreed to pay £9 million for failings leading up to last August’s major power cut, while UK Power Networks (UKPN) will also pledge £1.5 million after reconnecting customers too early.

In a report on the lessons learnt from the 9 August blackout, Ofgem has also said “important questions” needed to be answered about the structure and governance of the National Grid Electricity System Operator (ESO).

The report confirmed that Hornsea One offshore wind farm (co-owned by Orsted and RWE) and RWE’s Little Barford combined-cycle gas turbine plant did not remain connected after a lightening strike. The loss of these two large generators plus the smaller loss of generation at a local level, triggered the disconnection, which saw one million customers lose power.

Hornsea One Ltd and RWE have agreed to pay £4.5 million each into Ofgem’s redress fund as a consequence.

The payment from UKPN is because it began reconnecting customers without being asked to by ESO, which Ofgem said could have jeopardised recovery of the system. However, the regulator stressed that this action had no impact in this case and that UKPN had taken swift action to address the underlying problem.

The report also says issues were identified around ESO’s management of the system and that a review of its structure and governance, which is already underway, will be accelerated. The regulator said it would work closely with the department for business, energy and industrial strategy ahead of its position paper on system governance in 2020.

Jonathan Brearley, executive director at Ofgem, said: “Consumers and businesses rely on generators and network companies to provide a secure and stable power supply. August 9 showed how much disruption and distress is caused to consumers across the UK when this does not happen. That is why it is right that companies that were unable to keep generating have paid into our consumer redress fund.

“Our investigation has raised important questions about National Grid’s Electricity System Operator, which is why our review will look at the structure and governance of the company.

“As the energy market changes it is vitally important we futureproof the networks to ensure consumers continue to benefit from one of the most reliable electricity systems in the world.”

This morning (3 January) also saw the publication of the Energy Emergencies Executive Committee (E3C)’s report into the blackout. The committee, which is made up of representatives from across industry and government, called for 10 actions, grouped around the following categories:

• assessing the need for improvements to the governance, monitoring and enforcement processes for large and smaller generators
• reviewing the pros and cons of requiring ESO to hold additional back-up generation
• supporting essential services owners and operators to put in place more robust business continuity plans
• rolling out new communications processes to ensure the general public receives regular updates during any future disruptions

BEIS secretary Andrea Leadsom said: “The disruption caused to people and businesses by the power cut in August was unacceptable. However, customers can be confident that we have one of the most robust energy systems in the world and today’s report will help us reduce the risks of it happening again and ensure our energy sector is better prepared in the future.”