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BUSINESS OF THE HOUSE

Ordered,


Ordered,


    That, in respect of the Northern Ireland (Entry to Negotiations, Etc) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.--[Mr. McLoughlin.]

17 Apr 1996 : Column 817

    Gas Supplies (Scotland)

Motion made, and Question proposed, That this House do now adjourn.--[Mr. McLoughlin.]

10.14 pm

Mr. John Home Robertson (East Lothian): Friday29 December 1995 was the coldest day in a week of perishing cold weather in Scotland. But when my constituents in Prestonpans, Cockenzie and Port Seton woke up that morning, many of them found that the frost was gripping their bedrooms and kitchens as well as their gardens, because the gas supply to 4,180 households had failed.

It took up to three days to turn the gas on again, so more than 10,000 people in my constituency had a horrible Hogmanay weekend, relying on emergency soup kitchens while the frost burst the water pipes in their homes. There was a similiar failure in the gas supply at Stonehouse in Lanarkshire, and my hon. Friend the Member for Clydesdale (Mr. Hood) may wish to refer to that later in the debate.

This major failure of the gas supply got some attention from the national media, and British Gas's distribution company, TransCo, had to bring in 150 engineers from as far away as Brighton and Cornwall to reinstate our local gas supply in East Lothian. I would like to express my constituents' thanks to those engineers, who did a good job in difficult circumstances when I am sure that they would have preferred to be spending the holiday week with their families at home.

Three months later, the Director General of Gas Supply published the findings of the Ofgas inquiry into this incident. I am sorry to say that the Ofgas report has whitewashed the minor points and missed the main points altogether. The main point surely is that the circumstances were not unpredictable, so the failure of the gas supply should not have been allowed to happen. I am not satisfied that my constituents' experiences have been taken seriously, and I fear that similar failures will occur elsewhere in the future if we do not take steps to impose better standards on this highly profitable privatised industry. That is why I am raising this matter in the House.

I will give a brief summary of the events in Prestonpans, Cockenzie and Port Seton at the end of December. As I have said, the weather was extremely cold. In Edinburgh, the temperature dropped to minus 8 deg C on Wednesday 27th, minus 12 deg C on Thursday, minus 13 deg C on Friday and minus 14 deg C on Saturday 30 December. But it was several degrees colder in other parts of Scotland. Both Glasgow and Aberdeen experienced temperatures of minus 20 deg C during that week.

Evidently the main gas supply into that part of my constituency was not big enough to meet the morning and evening peak demands when people were heating their homes and cooking meals. There is a gasholder at Preston Links that fills up when demand is low, to boost the local supply at times of peak demand. The gasholder is checked regularly, and on 27 December it had 20 per cent. less gas than it should have had, and the pressure in the system was low.

If TransCo had been paying any attention to the weather forecast, it would have realised that things were going to get worse, and it should have taken steps to avoid

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the crisis that followed. But it did nothing. On the night of the 28th, the gasholder stock ran out, the incoming supply could not keep up with the demand for gas and the pressure in the system fell dangerously low, so all the gas customers in the area--4,180 households, more than 10,000 people--were cut off early in the morning of29 December.

The gas supply system had collapsed, and it was in a dangerous condition because air could have been drawn into the supply pipes. So it was necessary to isolate street sections, check each householder's gas installation and bleed off the air in the system before restoring the gas supply. That was a major task, involving 150 engineers, including 100 who came up from England. Some households got their gas supplies restored within 24 hours, but the unluckier ones had to wait for up to three days in very cold weather.

East Lothian district council and Lothian regional council, together with the police and emergency services, had to go into action to provide support for elderly and disabled people, and to set up emergency reception centres and catering in the two local community centres. British Gas used its GasCare register to help to identify those most at risk, and information was provided through an emergency telephone service and the local media. TransCo helpfully distributed hundreds of electric heaters, but it was not altogether surprising that the resulting surge in demand for electricity in one street led to a temporary failure in the electricity supply, as if things were not bad enough already.

I kept in close touch with the situation, and I was advised that the official standards of service for the gas industry would require the payment of compensation of £20 a day to affected householders. But of course, at that stage, everyone was rightly concentrating on the main objective of restoring the gas supply, which was eventually completed just in time for Hogmanay. There were still burst waterpipes to repair on 1 January as people began to count their costs, and TransCo started looking for excuses.

TransCo rightly recognised the risk of a public relations disaster if it were to try to sidestep its liability to pay compensation. So it offered the two local community councils the princely sum of £1,000 each. It has not offered to contribute towards the substantial costs incurred by the local authorities--which I understand run into tens of thousands of pounds--but it did make the appropriate £20-a-day payments to affected householders "as a good will gesture". It stipulated that it was an ex gratia payment rather than fulfilment of any obligation, let alone an admission of liability. That bothers me, Mr. Deputy Speaker.

TransCo has claimed that the failure of the supply was due to exceptional circumstances under its contractual standards of service, and that the company was under no obligation to maintain the supply or to pay any compensation. Amazingly, Ofgas has now endorsed that interpretation, and I put it to the Minister that those standards of service must be amended to avoid the risk of similar failures in cold weather in the future.

Key standard 6 in British Gas's standards of service stipulates criteria for continuity of supply with an exception for


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Ofgas has defined "exceptional circumstances" as anything with less than a one in 20 chance of occurring, which means that British Gas can avoid responsibility for any supply failure in Scotland if the effective temperature falls below minus 6 deg C. That calculation in this instance was made on a national basis, with bizarre consequences: the lower temperature in Glasgow and Aberdeen, where the supply did not fail, has been used to help to justify the cut-off in East Lothian, where the weather was less severe.

As things stand, it appears that, if the weather gets very cold, and if there is more than a marginal increase in customer demand for gas--just 12 per cent. in the case of East Lothian in December--this massively profitable privatised utility has no contractual obligation to keep the gas flowing. The company will go on paying Cedric Brown's £247,000 pension and Richard Giordano's £450,000 salary plus perks, but the poor old customers can freeze as far as it is concerned.

I suggest a variation to the proverb: if you can't stand the cold, don't use gas in your kitchen. As climatic change seems to be leading to colder winters, Ofgas's one in 20 criterion is probably out of date. Do we seriously believe that it will be 80 years before the weather gets as cold as it was last winter? I do not think so.

The experience of my constituents makes it painfully clear that British Gas must be required to upgrade inadequate parts of the supply network or face penalties if things go wrong. There are other areas with potentially dodgy supplies that depend on gasholders, including parts of Glasgow.

The crisis should have been predictable. TransCo knew the limitations of the local supply system and knew that British Gas had taken on a lot of new domestic customers in new housing developments in the area. A total of 441 new houses have been built in the Prestonpans, Cockenzie and Port Seton area since 1990--almost all of them with gas central heating.

We now know that TransCo had plans to upgrade the supply and to do away with the Preston Links gasholder. I hope that the Minister will be able to assure me that the work will be completed before next winter, but I am afraid that the gasholder is still there--I saw it on Monday. The margin between capacity and possible demand should never have been so finely balanced in the first place.

Paragraph 4.2 of the Ofgas report, under the heading "Action to Prevent a Recurrence", makes a significant tacit acknowledgement that all is not well in the system. It states:


It will take more than studies--we need assurances that the necessary work will be funded and carried out. It is imperative that the national criteria for the supply system be amended to guarantee the requirements of customers at times of greatest need; otherwise, it is quite possible that whole cities could be cut off as my constituents were last December

No doubt British Gas and other commercial gas suppliers will be reluctant to pay their share of the cost of upgrading TransCo's pipeline network. However, Ofgas

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must surely have an overriding duty to protect customers' interests by stipulating proper criteria for security of supply to avoid this kind of breakdown. Ofgas has seen fit to make excuses and to quote escape clauses for the failure of the supply in East Lothian last December. It is up to the Minister and the House to tell the Director General of Gas Supply to put public interests before the commercial interests of gas suppliers in the future.

The risk of supply failures can and should be minimised--that is the important point that the Minister must address. However, it will never be possible to eliminate the risk altogether. We must have the best possible contingency plans and systems to provide for the needs of elderly, disabled and vulnerable people in the event of a gas cut. The GasCare system seems to have worked reasonably well in this case, although I understand that the register is far from complete.

I am told that up to 1 million eligible customers are not registered under the current set-up. I gather that the threatened diversification of domestic gas suppliers could play havoc with TransCo's GasCare database in the future. I am advised that the register will show only the account number and address of elderly and disabled customers, so it will be a complicated task to find their names and telephone numbers in order to provide support and advice in an emergency, such as the one that occurred in December. The Government are promoting this market madness, so is it too much to ask the Minister to take account of the consequences for vulnerable people?

In conclusion, I inform the Minister that a large number of my constituents are very angry about the failure of their gas supply last December, and they have not been impressed by the dodging and weaving of British Gas, TransCo and Ofgas in the aftermath of that failure. I am grateful to Prestonpans community council, Cockenzie and Port Seton community council, the local members of the East Lothian and Lothian councils and Mr. Euan Robson of the Scottish Gas Consumers Council for making representations on behalf of gas customers. People are entitled to expect appropriate action, especially in East Lothian and other parts of the country where the system may be risky.

The clear conclusion is that this sort of predictable and avoidable gas supply failure must not be allowed to happen again in East Lothian or anywhere else. Effective contractual safeguards must be set and enforced. When I wrote to the Minister for Small Business, Industry and Energy in January, he replied:


and said that these were matters for the Director General of Gas Supply.

Sadly, Ofgas has whitewashed the incident and fudged the lessons, so I put it to the Minister that he has a duty to intervene to set proper standards for the gas supply industry.


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