Further Memorandum submitted by Northern
Ireland Electricity plc
There are several recent letters in which you
have requested clarification or further informaiton to assist
you in the drafting of the Committee's report. I am pleased to
respond as follows:
In your letter dated 23 June 1999 you asked
us to provide information to support our statement that urban
and rural customers are exposed to starkly different experiences
of customer minutes lost (CML).
Figure 6.4 in the MMC report (attached) was
based on information which NIE provided to the Commission during
its inquiry into NIE's price controls. It demonstrates that customers
in predominantly urban areas such as Belfast and Londonderry,
where the distribution network is largely underground and the
population relatively dense, experience relatively low CML levels
compared to customers in rural districts such as Newry and Dungannon.
There the network is predominantly overhead and the customer base
is widely dispersed and CML levels are an order of magnitude higher.
The MMC commented (in paragraph 6.21 of their report) that this
pattern is also evident in GB.
This urban/rural differential is also reflected
in an analysis of average annual CML on underground and overhead
networks respectively as requested in your letter. Whilst the
underground/overhead split is not an exact proxy for the urban/rural
split (indeed a significant number of urban customers are supplied
by a mix of underground and overhead network), the analysis is
indicative of the wide variation in quality of supply experienced
by different groups of customers.
Table 1 below, provides the breakdown of customer
minutes lost associated with faults and pre-arranged outages on
the HV network over the seven year period from 1992, excluding
the Boxing Day storm.
HV Network CML/CCAllocation on
the basis of affected overhead or underground component (excluding
Boxing Day 1998)
|Overhead Network (CML/CC)
||Underground Network (CML/CC)
|7 year average||470||
The customer minutes lost associated with overhead and underground
components respectively are each normalised by the number of customers
in each category by assuming that 40 per cent of customers have
an overhead supply. The range of values provides an indication
of the best and worst of the seven years included in the analysis.
This analysis indicates that the number of customer minutes
lost per connected customer due to outages on the overhead network
is an order of magnitude higher than those attributable to the
This is consistent with the results of the inter-district
comparison presented in Figure 6.4 of the MMC report and supports
the statement that urban and rural customers are exposed to starkly
different experiences of customer minutes lost (CML).
In your letter dated 23 June 1999 you requested clarification
of the assumptions underlying our breakdown of the domestic customer's
bill into the three componentsgeneration, transmission
and distribution, and supply. The assumptions and methodology
are as follows:
We have based our calculations on an annual consumption
of 3,300 units as this is the basis on which tariff comparisons
between supply companies are normally made.
The total annual bill (£297) is calculated
by reference to our published Home Energy" tariff which is
9.0p per unit for a domestic customer using 3,300 units per annum.
The generation component (£171) was calculated
by applying the published NIE bulk supply tariff (the form of
which is approved by Ofreg) to a Northern Ireland domestic load
profile. The load profile consists of electricity demands in kW
for each half hour time period in the year. This profile was produced
by the Electricity Association in 1997 following load research,
carried out by them at our request on a sample of domestic premises
The transmission and distribution component (£117)
is calculated by reference to the charges for supplies to domestic
premises contained within our published Use of System statement
(which is also approved by Ofreg).
The supply component (£9) was then calculated
as the balancing figure between the total charges (£297)
and the sum of the generation costs (£171) and the transmission
and distribution costs (£117).
We discussed this approach in detail with Ofreg on 6 July
and Ofreg understand our methodology and will respond to you separately.
In your letter dated 29 June 1999 you requested clarification
the total number of customers who lost supply
over the period 26-31 December;
the number of customers off supply for longer
than 24 hours;
the number of customers receiving goodwill payments;
the cost of the goodwill payments.
As explained in previous correspondence (4 June 1999) the
NAFIRS system associates each network incident with a network
device (circuit breaker or fuse) rather than with individual customers
affected. Our estimates of the number of customers affected were
derived from the number of interruptions reported in NAFIRS by
applying a scaling factor to take account of, inter alia, double
counting of some interruptions where restoration of supply was
completed over two or more stages.
This limitation of the NAFIRS system in terms of its ability
to provide precise data on the number of customers affected in
circumstances where there is widespread network damage is well
recognised. In their recent report on the Boxing Day storms in
GB, OFFER highlighted its concern about the lack of ability to
accurately identify the number of customers off supply.
With the benefit of additional information which became available
through the goodwill payments exercise, our best estimates of
the number of customers affected are as follows:
|number of customers affected during Boxing Day
|number of customers affected during 26-31 December
|number of customers off supply less than 24 hours
The figure of 65,000 customers off supply for longer than
24 hours respresents 26 per cent of the 246,000 customers affected
over the period 26-31 December. The 19 per cent which appears
on page 19 of the Storm report was estimated on the basis of our
standard scaling factor. In light of the more detailed data which
became available during the work on goodwill payments, the 19
per cent figure was amended. (We believe there is no need to revise
the figure for the number of customers affected during Boxing
Day and our estimate remains at 162,000 as per the Storm report).
In addition to the 65,000 customers who were off supply for
longer than 24 hours and who were therefore entitled to goodwill
payments, we made a further 16,000 goodwill payments to customers
who suffered low voltage or where representations were made that
the duration of interruption was so close to the 24 hour threshold
as to merit a payment. The total number of goodwill payments made
to date is around 81,000, and as the payments are tailing off,
we expect this to be close to the final figure.
The total cost of goodwill payments to date is £9.5
162,000 customers were affected on Boxing Day.
246,000 customers were affected during 26-31 December.
65,000 customers were off supply for longer than 24 hours.
81,000 goodwill payments have been made at a cost of £9.5
6 July 1999