Examination of witnesses (Questions 1
- 19)
MONDAY 8 FEBRUARY 1999
DR PATRICK
HAREN, MR
HARRY MCCRACKEN,
MR COLIN
FALLON and MR
OWEN MCQUADE
Chairman
1. You are most welcome. As you are four
rather than three, it would be helpful if your colleague could
be introduced to us as and when. I do not know whether there is
anything you would like to say to us, over and above the material
you very helpfully sent to us in advance, before we embark on
questions. We will try and make the order in which we ask questions
logical. If there are occasions when you would like to gloss something
that you have said in answer either here and now or subsequently
in writing, please do not hesitate to do so and, likewise, if
we have supplementary questions which, on analysing the transcript,
we feel we should have asked, we will not hesitate to send you
supplementary questions thereafter. Let me verify whether there
is anything you would like to say before we embark on questions?
(Dr Haren) Thank you for your welcome, Chairman.
The fourth member of the team is Mr Owen McQuade who has been
in contact with the Committee to set up the meeting today and
he will be involved if there are issues which we should be following
up on to the Committee. On the question of whether there is anything
additional that we would wish to say, I think in the memorandum
to the Committee we have tried to respond to what we understood
to be the main headings of questions. We have also passed to the
Committee a copy of the much further review report which tries
to cover the background to the storms and our response during
the storm and then also looking to the future as to the measures
that we see immediately that can be put in place and we have given
an indication as to how we see some further review and analysis
going forward over the next few months. My feeling probably is
that it may be better to rest on that documentation for the moment
and then attempt to refer to it in our responses to questions,
if that is satisfactory to the Committee, but maybe to begin by
taking the areas that are of particular interest to the Committee.
2. Thank you very much indeed for those
opening remarks, and they are helpful. We are conscious that the
memorandum which you have sent to us and the full printed document
which has literally just been published, although they tread on
the same subjects, were devised for slightly different purposes
and they are somewhat different in terms of the total information
that they contain. We have a slight disadvantage in that, although
I understand this document was published in Belfast on Thursday,
for reasons which we in no way complain about, they did not actually
reach our hands until this morning and therefore by definition
neither I nor my colleagues have really had an opportunity at
all to look at the longer document. It might be helpful if there
was the briefest word about what fuller information there is in
this that was not in the memorandum. We quite understand that
they were devised for different purposes.
(Dr Haren) I think the distinction I would make
between them probably is a distinction in the depth of analysis.
In the main report, there is all of the background to the recommendations
which we have broadly included in the memorandum which we sent
forward to the Committee and we deliberately tried to capture
as far as possible as many of the conclusions of the report as
possible in the information memorandum that we sent forward and
the Committee had asked not only to look at our response during
the storm and goodwill payments, but also to look towards the
future, and the conclusions are very much geared towards the future.
I think the distinction is perhaps more a distinction of detail.
There is a lot of analytical background within the report which
is simply the data that is available to us to measure what happened
on the system, to try to characterise the magnitude of the storm,
to try to provide some of the statistics which give weight to
the assessment that we make that this was one of the worst storms
that we have seen on the system, to try to advert to other evidence,
such as the evidence from other power systems in Scotland and
in the Republic of Ireland where the storm had a similar impact,
and to gather together that type of information as supporting
evidence for what guides us in reviewing our own performance during
the storm and also for reviewing what is possible. Then, underneath
the individual recommendations, there are clearly quite a number
of recommendations in the area of communications with customers,
which were a particular problem. We have tried to give some indication
of the detail of the understanding that we have of that problem
from communications that we have had from customers, from interaction
with district councils. We have tried to capture the sense that
everybody has of the level of frustration that people experienced,
the difficulty that they had in getting through on communications
lines, and then some specific areas, such as the issue of special
needs for individual customers and how to tackle those special
needs. What we have attempted to do is to identify the problems
and then to draw from those problems towards conclusions and recommendations
which would help to ameliorate that situation in the future or,
in fact, to eliminate or correct the problem entirely in certain
situations. I think it is mostly at the level of detail again
in the area of restoration and in relation to investments in networks
we have been able to go into a much greater level of detail in
the review report itself and to refer to the background to our
policy on refurbishment of networks. We referred to the interactions
between ourselves and MMC in relation to investment patterns and
again that leads towards a recommendation, which is that we should
have a slightly accelerated level of reinforcement programmes
going forward. We have given in that example the recommendation,
but we probably have not given as much of the background behind
that recommendation in the information memorandum as we have within
the review report. I think the information memorandum broadly
covers the ground although at a higher level.
3. I am going to ask a very straightforward
question to start with simply to set the scene. What is the overall
length of your 33kV, 11kV and low voltage network respectively
and what proportion in each case is, first, overground and, second,
underground?
(Dr Haren) Chairman, I should have said that,
if you will allow, I would like to bring my colleagues in individually
on some of these questions and ask Harry McCracken to respond
in this area particularly, of networks and network investments.
(Mr McCracken) There are over 50,000 kilometres
of network altogether. Quite a considerable proportion of that
is underground in urban areas. In relation to the storm and the
extent of the network which was exposed during the storm, it was
the overhead network both at 11kV and 33kV levels. At LV level
some 6,000 kilometres is overhead. On the 11kV network some 20,000
kilometres is overhead, and on the 33kV network some 3,000 kilometres
is overhead. The totality of those subtracted from the 50,000
kilometres of network in total gives the remainder that is underground.
4. I failed to write down the final figure
you gave us for 33kV?
(Mr McCracken) 3,000 kilometres, Chairman.
5. What proportion of each was affected
by faults from the storm on Boxing Day?
(Mr McCracken) I think probably the easiest way
to think of it, Chairman, is that the totality of the network
would have been affected. As we look at the damage that has resulted
from the storm on the network, the total number of faults that
we had on the system on Boxing Day alone was some 3,000 faults
and out of that there were something like 600 to 700 high voltage
faults. Table 3 on page 11 gives a figure of 3,010 faults on Saturday
26th and that was the period of the storm in which the most damage
was experienced. Out of that there were 2,400 faults at the LV
level and approximately 690 to 700 faults at the HV level.
6. I am conscious of the fact that it was
the worst storm for 70 years. Colleagues on the Committee will
be familiar with my quoting the definition on Act of God in Blackstone's
Law Dictionary as being an act of God which no reasonable
man would expect God to commit! I do not know the extent to which
the storm that we had on Boxing Day and thereafter fits in with
global warming developments, but there is no question at all that
global warming is quite clearly introducing different patterns
of meteorological dynamic behaviour. Is that a subject on which
NIE have themselves taken any long-term advice on how the pattern
is likely to alter?
(Mr McCracken) I think it is too early for us
to say what conclusion should be drawn from the weather pattern
itself. Certainly we are very conscious as a result of the last
two years that the storm patterns have an extraordinary coincidence
with that particular time of year and they have a degree of predictability
about the way in which they arrived last year and this year out
of weather forecasts which are not forecasting the exact day of
the storm but are clearly indicating a level of storm activity.
I know that as we look across into the system next door in the
Republic of Ireland, they are saying that they feel that they
may need to go back and look at their policy in relation to undergrounding
in certain areas because there may be a need to be prepared for
this level of storm activity being much more frequent in the future.
We are certainly clear in our own minds that we will be looking
very carefully at the issues and opportunities for undergrounding
in certain areas, typically at the low voltage level where underground
is less uneconomic than it is to undergrounding at higher voltage
levels. At lower levels, where maybe ultimately it is less uneconomic
to do it, then we are conscious that it is at that low voltage
line level that we experience some of the greatest difficulties
in restoring the final groups of customers and a lot of the damage
which is done at that level is done by trees and by branches of
trees and if the system was undergrounded in those areas then
we would be able to shorten the restoration process. Normally
that requires a policy change, and the policy then is implemented
over a period of years, but we certainly feel that that is an
area that we should look very closely at. We have not been able
to come to a conclusion. I am not sure that we ever get definitive
information which allows us to come to a conclusion on that. I
think what we get is a sentiment which says this is something
that we should begin to look more closely at and invest more in
rather than less, e.g. in an undergrounding area.
Mr Grogan
7. What are your targets for availability
of each network and what level of storm damage are they designed
to resist?
(Mr McCracken) If I could approach the last question
first. A normally well-constructed overhead line is designed to
withstand wind speeds of 85 miles per hour with a safety factor
of some 2.5 in terms of strain, and if you do the arithmetic then
I think it brings the wind velocity up to something like 150 miles
per hour that an overhead line should be able to withstand. There
are many reasons why an overhead line probably will not withstand
that sort of wind speed. One is to do with the configuration of
the particular pole, whether it has transformers and other equipment
on it which reduces mechanical strength. Another one would be
to do with the siting factor in terms of the ground that the pole
may be planted in and how well it can withstand that sort of force.
Thirdly, it would be to do with the age of the pole and the extent
to which there has been deterioration in the poles. Poles normally
have an asset life of 40 years. Like any asset, as it approaches
the end of its useful life there is some level of deterioration.
In the main, that level of deterioration, even up to 40 years
of age, still gives a reasonably serviceable pole. The fact of
the matter is that under these sorts of conditions, the pole is
not serviceable, so you will certainly have to look at an earlier
pole replacement programme and, in fact, that is one of the recommendations
that comes out of the report. We do not set availability factors
for overhead lines. We would want to have a frequency of interruption
rate which would be lower than six times per annum and this is
a figure that has been debated internationally. There is no internationally
accepted figure and I think it was probably Electricite de France
that originally proposed this figure and it is becoming more widespread
in its adoption. That would be the nearest that anyone would have
in terms of the availability of a single overhead line.
8. What was the effect of the storm on the
capacity of the primary distribution network and the secondary
distribution network? Were any of the failures the result of the
distribution system being unable to carry the weight of local
demand?
(Mr McCracken) No. The failures that we experienced
during the storm were all what I would call mechanical failures
of the components of the network. I am not aware of any failures
that we experienced being due to the unavailability of the network
to carry the customers' demand.
9. What was the effect of the storm on the
capacity of the networks?
(Mr McCracken) I am not quite sure that I understand
the question. Capacity in the sense that we would use it would
be the capability of the network to carry the load on the network,
that would be the customer demand and the effect of the storm
would have been to reduce the capacity of the network to meet
customer demand, but with any lines that would have been out due
to the storm, then naturally the customers connected to those
lines would have been out as well. To the extent it affected lines
at the higher voltage level—and there were some lines affected
at the transmission level, although I think there was only one
damage fault at the transmission level—the overall capacity
of the network would have been to some extent affected, but it
would have been quite minimal.
Mr McGrady
10. I think we all agree about the extent
of the great failure of supply over the Christmas holiday period
of 1998 even after the 1997 event. Dr Haren has already stated
that there is a certain predictability of this event, if not to
the day then certainly to the season. Is it not the case that
one of two things happened? Firstly, that no real cognisance was
taken of what happened in 1997? (and that was to be repeated in
1998 and indeed may be repeated in the future unless dramatic
action was taken?) Secondly that the age of the network and the
fact that it is largely a rural network coupled with the lack
of investment in it over the past number of years, particularly
since privatisation, that have given us a supply system which
is simply not dependable? How can you assure the Committee that
this will be remedied in the immediate future?
(Dr Haren) As to the predictability point, there
is a forecast for a storm and what transpires is that there is
a storm. The magnitude of the storm is not always well predicted,
and certainly the impact of the storm is not well predicted and
that is in terms of which parts of the network will be most hit
by the storm, where the storm will pass and what the damage is
to the network as a result of the storm as it passes. We have
referred to the level of damage on rural networks and a lot of
the damage was due to a direct wind effect on conductors and on
conductor components. A lot of it was due to trees and fallen
branches at low voltage network level and some of it was due to
broken poles. In fact, the percentage of poles that were damaged
on the network, while the impact of damage was very significant
in that we had on Boxing Day a total of 160,000 customers affected,
was just over 1,100 and that represents only 0.3 per cent of a
pole population of 400,000. What we are talking about are impacts
upon rural networks and those impacts having very definite effects
on customers, but they are by no means an indication that the
networks are networks that are under-invested in or networks that
are in some sense much of a lower standard than they ought to
be. I think what Mr McCracken indicated is that one of the policy
issues that arises is whether you are dealing with 40 year asset
lifetimes in a pole looking forward into the future or whether
we should say, as we recognise, that a pole coming towards the
end of its useful life in the period of 30 to 35, 35 to 40 years
is going to have to be replaced at a much earlier stage or at
an earlier stage than it is today. That is an investment decision
and ultimately it is a pricing decision because we are very conscious
of trying to manage both the investments in the networks and also
the impact of price on the customer. I will ask Colin Fallon in
a moment to comment on what it is that we did since last year
and I will ask Harry McCracken to comment on investment since
privatisation, but broadly speaking we were looking at a storm
impact this time which was a multiple of five to ten times greater
than the impact of the storms last year, depending on which parameter
we use. We are looking at a level of communications attempts by
customers which is several orders of magnitude different to what
it was last year. What we did since last year was we geared up
very substantially in the area of communications to be able to
handle much higher volumes of calls. We continued on the networks
with network reinforcement and refurbishment programmes and those
refurbishment programmes post-privatisation are running at broadly
twice what they were pre-privatisation. It is not a question,
therefore, of there being under-investment in networks post-privatisation
as there is a much higher level of investment in networks post-privatisation.
In a particular area, which is the area of 11kV networks, we will
be making the case that, as we go forward, we should be looking
at a somewhat accelerated level of refurbishment on 11kV networks.
We made the same point when we were in discussions on our price
control at the MMC, and the broad view then was that we should
have a slightly lesser programme rather than a slightly greater
programme. At the end of the day, we still all must be looking
at assets which are capable of lasting for 30 to 40 years and
what we are talking about is changing at the margin how it is
that those assets might be re-invested in earlier. Some of the
programmes of refurbishment that we have indicated also in our
recommendations are to go back again over areas of network and
try to spot on an individual basis where it is that individual
poles may need replacing, and to try to address those poles, but
we are broadly satisfied with the investment levels that have
been going into the networks, with the type of refurbishment programmes
that we have and the difference between the experience that we
have, in the Northern Ireland network and the Republic of Ireland
and Scotland is not great. What we see are very similar patterns
of customers off supply, very similar patterns of restoration
times and very similar patterns of communication problems. Perhaps
I could ask Colin Fallon to address the communications question
and Harry McCracken the investment question.
(Mr Fallon) Chairman, since Christmas 1997, we
have put a contingency plan in place which was built round our
24-hour services that exist normally at our four control centres
and at our call centres. We had built this contingency plan on
the basis of responding to another event like Christmas 1997 and
the structure of this was round an incident management regime.
We have a duty manager working on a 24-hour basis who is able
to respond to an emergency and manage any incident that should
arise. That was put into place after the Christmas 1997 storms
and that is something that we used in this event. That team involves
an incident manager, it involves another manager who is responsible
for managing resources, it involves someone who looks at the status
of the network, someone who arranges our internal communication
within the organisation to make sure that everybody is moving
forward consistently as a team to approach whatever emergency
should arise, and it also involves someone who looks at our external
communication and that is dealing with customers and dealing with
the media. That plan was put into action prior to Boxing Day.
I think the problem may have been that the scale of what we dealt
with on this occasion during Boxing Day was something like 162,000
customers off supply, whereas in Christmas 1997 the equivalent
figure would have been 60,000 customers off supply, so it was
a much greater emergency than perhaps we had planned for. Since
Christmas 1997, we had increased by a factor of three our capability
to take telephone calls and that meant that our maximum call handling
capacity was roughly 1,500 calls an hour as compared with something
like 560 after Christmas 1997. We have also installed a messaging
system which is the second line of response to customers. When
all call handlers are busy, the messaging system is able to give
a recorded message to customers and we have increased its capability
by a factor of 14 from Christmas 1997 and, in fact, during the
emergency we took 153,000 calls on that messaging system. We felt
that we had put in place adequate plans to deal with a similar
emergency to 1997, but in the event what faced us in 1998 was
something that, by whatever measure, was very much greater. Indeed,
in terms of call handling capacity, we had to deal with something
like seven times more calls in 1998 than we had to deal with in
1997.
11. Mr Fallon, what you are saying is that
the contingency plan in place for incident management response
which you put into effect as a result of the 1997 storm, presumably
only dealt with the parameters that were applied to that (the
1997) storm. Did you not build into that contingency plan a much
"greater incident" management factor to deal with factors
which could be greater than the 1997 event? There seem to be two
elements of this. You talk about the age of poles and their dependability
after a certain life-span, and you talk about branches of trees
falling on lines and I can accept all that. Surely normal practice
maintenance would indicate that trees in proximity to lines would
be maintained in a proper way and would not normally be causing
a problem during a storm. Secondly, surely, the poles carrying
the lines would be regularly inspected and replaced and not lead
to the widespread problem, which we had. There is quite a lot
of criticism implied by the fact that in the first six years of
privatisation you underspent by £109 million. Why was that?
(Mr McCracken) I will come back to the question
of trees and how we deal with those at the moment and how we propose
to deal with them in the future after I get through my view of
the investment programme. I would like to give some figures going
back to 1982/83 through to 1986/87 and then 1987/88 through to
1991/92. In the five-year period from 1982/83 to 1986/87, there
was £111 million invested in the network (and these are all
at the same price base). In the five-year period 1987/88 to 1991/92
there was £206 million invested in the network. In the five-year
period 1992/93 to 1996/97, which is the first period of our price
controls as a private company and it is the period which Mr McGrady
refers to when he refers to an underspend (I do not know if I
recognise the figure of £109 million, but I am sure we can
agree the figure is about £100 million), the expenditure
was £242 million and, in the five-year period that we are
now into for 1997/98 through to 2001/2002, the expenditure will
be £330 million. As Dr Haren has said, ten years before privatisation
compared to ten years post-privatisation there will be about twice
the amount invested in the network. At the moment we also invest
something like £90 per customer in the network. The average
of the GB companies is about £60 per customer. All the investments
we make in the network feed directly through to customer prices.
A rigorous assessment is carried out at any time that one faces
an investment consideration of any type and it should only be
done if clearly there is a benefit to customers. In 1993, this
company did not have a refurbishment programme in the network
at all. We inherited a network with one of the poorest reliability
records of any network of any company in the UK—Scottish
Hydro was the one that was worse, that was given in the report.
It was quite easy to determine at that time that the capital programme
we had did not address the most pressing problem that we had in
the Northern Ireland network, and that was the poor reliability
of the rural network. We designed and put in place a refurbishment
programme which has been referred to many many times now and that
refurbishment programme was designed to address the totality of
our rural network at the 11kV level within a period of 15 years.
At that time we thought that that was a considerable programme
and the measure we used for that was it was then, and still is
today, the biggest refurbishment programme of any electricity
company in the UK. That programme was further tested at the MMC,
as Dr Haren has mentioned, when we went there to discuss our new
price controls. We actually put forward a case for increasing
that refurbishment programme. The MMC decided, on the basis of
arguments of other parties and against the price background in
Northern Ireland, that the 1,500 kilometre per annum programme
was sufficient. It was against that background that we have the
programme that we have in place today. If I could move on and
deal with the question of the underspend. The period that we are
looking at is the first revenue period from 1992/93 through to
1996/97. I have already referred to the fact that we altered our
capital strategy at that stage to incorporate the refurbishment
programme. There were a number of projects mainly at the transmission
level within that programme, and for a number of reasons those
projects could have been deferred and they were deferred. For
example, we are doing a project in Belfast at the moment which
is the laying of underground cables and that is something like
a £6 million project. The transmission projects are very
expensive and it does not take a lot of them to add up to quite
a considerable amount of money. That project for cable laying
for a new transmission substation in Belfast did not go ahead
on the first recommendation and is going ahead now. The underspend
is probably more rightly regarded as a deferment. I have no doubt
as I sit here today and look at the type and categories of expenditure
which were deferred at that time that it was right to defer that
expenditure. One of the consequences of that deferment is that
customer tariffs are two per cent lower today than they would
have been if we had spent that money. I can see no project within
that deferment that we made at that time which would say to me,
if I had made that investment as the capital programme as it stood
at that time things would have been any different during this
storm. The fact of the matter is that it was quite simple what
happened during this storm, i.e. a lot of wooden poles broke and
a lot of trees came down through overhead wires and there was
nothing in the investment programme that would have avoided that.
The more correct question is, if you had that money available
to you, why not put more of it into the refurbishment programme
and it is only the refurbishment programme that directly addresses
the problem of the rural network and that is a perfectly valid
question. My only answer to that is that, at the time, we thought
we had a more than adequate programme of 1,500 kilometres per
annum. We tested that at the MMC in 1996, two years later. The
MMC, although we put an argument for a 1,750 kilometre per annum
programme, decided that we did not need it. This programme, until
we went through this storm, had been thought by everyone against
whom it was tested to be a very adequate programme. There is also
a view around that I would need to address, and that is in relation
to a view that we seem to have a capital programme that was built
up component by component, tested against the public interest
issues at the MMC, and once we have built it up component by component
we should forget about how it was built up and regard it as an
amount of capital that we will spend in whatever way we choose,
and I find that quite a perplexing argument. The components that
have built up the capital programme were each individually tested
for their public interest issues and I fail to understand how
it is that, once we have been through that very detailed argument,
we can then regard the programme as having total flexibility.
As has been pointed out, this is customers' money, and customers
will have a view as to whether it should have been spent in the
way it was originally argued or not. On the issue of trees, it
is a relatively simple solution in relation to trees but it is
not an easy solution. In fact, it is quite difficult to get access
to land to trim trees. There is a fair amount of opposition not
only from interest groups but from the farming community. In fact,
I saw some comment in the press from the Ulster Farmers Union
following the announcement that I made that we were going to be
much more aggressive about getting in to cut trees in future.
We will cut some 3,000 kilometres of trees over lines this year
and we are looking, as part of the report, to push that up to
5,000 kilometres per annum. If we do that we will cover the whole
network once every five years and if the trees are cut properly
they should not grow back through the lines quicker than that.
There were some 3,000 trees down during the storm, many of which
came down through our lines and the fact of the matter is you
will never get permission to cut down a tree because once in every
30 years it may come down through your line.
Mr McGrady: The five-year
programme which you indicated ran from 1992/93 to 1996/97 you
spent £243 million on. It is interesting to note that the
customers over that same period had embedded in their electricity
bills capital expenditure provision which would have given you
funding of £339 million, almost £96 million additional
to that which you spent. What you are saying to me appears to
be that the problems of 1998 and 1997 were not specifically or
dramatically as a result of under-investment but simply of inadequate
or impossible management, whichever it may be. We will have to
look at what you are saying in detail and come back to that at
a later time. Thank you.
Mr Beggs
12. In addition to the faults which occurred,
would you outline for the record the range of faults which had
to be dealt with by NIE?
(Mr McCracken) Could I refer Mr Beggs to pages
12 and 13 just by way of an element in the report. In general
the type of faults that we experienced on the network were faults
that resulted from mechanical strain placed on the components
of the network as a result of the very severe winds. I have already
mentioned that a chief component would have been the poles themselves,
but that would also have applied to the overhead conductors, the
insulators, the stirrups and binders and they would be the main
components which make up an overhead line. We have already mentioned
the fact there were quite a number of faults which were due to
trees coming down and bringing lines and poles down with them.
There would have been a fair amount of airborne debris involved
in faults as well. I am not sure if there is a more particular
aspect of the damage that you would be searching for in that question.
13. The question of preventative maintenance
comes in. Many of the poles which came down—and there are
still many poles down throughout the country—were completely
overgrown with ivy and so the poles were actually falling on trees
and catching them. Surely this kind of maintenance should have
been on-going. Many of the problems with poles being blown out
of the ground could have been attributed to the lack of preventative
maintenance.
(Mr McCracken) Chairman, can I come back again
just to re-confirm the fact that the level of work going into
the rural overhead line network today is by far and away in excess
of whatever went into it before. As Dr Haren has said, there was
1,133 poles damaged out of 400,000. Statistically that is an extremely
small proportion of the total pole population that was affected
by this. Ivy was one of the lessons that we learnt from the 1997
storm and what we put in place was a programme to go round and
remove the ivy from all the poles. I cannot guarantee as I sit
here today that the ivy has been removed from all poles, but what
I can say is that we have a programme for doing so. In fact, we
are being asked if we could not go round and remove the ivy from
trees, because one of the problems we face is the fact that the
trees that are covered in ivy are the ones most likely to come
down because they are rotten and they obviously present a much
larger surface area to the wind. That is a problem we recognised
last year and we have addressed it. It is like any programme you
put in place to address a network which is 30,000 kilometres long,
it takes a finite period of time to roll through that programme.
Our recommendations in the report are designed to put in place
some of these remedial measures faster than what we had thought
was required to date.
14. So you are accepting that historic underspend
in network capital expenditure contributes to some extent to the
problems experienced?
(Mr McCracken) Yes. I think the point I am making
is that while in the public sector the network was considerably
underfunded.
15. To what extent were repair efforts hampered
by inclement weather subsequent to the rainstorm on Boxing Day?
(Mr McCracken) Repair efforts on Boxing Day were
nearly impossible until some time after midnight and the winds
abated. Repair efforts were got under way before light the next
morning. The very poor weather conditions continued throughout
Monday and Tuesday. The Sunday immediately following Boxing Day
was particularly bad. The weather was a significant factor in
about the first two to two and a half days in getting repairs
carried out. One of the main problems was that, to understand
the nature of the event that we were involved in, it was necessary
to inspect the network. The network throughout Northern Ireland
was affected by this storm. There was 30,000 kilometres of network
which we needed to look at to find all the damage. We use helicopters
both during circumstances like this and in normal operations to
inspect the network, but the fact of the matter was that the flying
capability of the helicopters for at least two days after the
main event was very limited due to very poor weather and to very
restricted daylight hours. All these were quite significant factors
in allowing us (1) to understand the size of the problem that
we had on our hands and (2) to address it.
16. Has any assessment been done by NIE
on the extent to which the closure of any centres has contributed
to the delay in effecting repairs or do you intend to continue
what is perceived to be purely a cost-cutting exercise in closing
centres and centralisation?
(Mr McCracken) We have 13 customer service centres
and that number has been a number that we have had for quite some
time. We have rationalised some of the work centres. As we approach
any decision about where resources are required, obviously that
is considered very very carefully in terms of both normal workload
and against our ability to respond in severe weather conditions.
We have given an undertaking in the report to go back and look
at that carefully again and ensure that we understand, in the
light of what we have learnt out of this particular occurrence,
that the regional network that we have on the ground is sufficient
to deal with this sort of circumstance. We have more people involved
in climbing poles than we have ever had, so our ability to bring
people to bear in this sort of situation and to be able to manage
this sort of situation I would not agree has been significantly
affected by any rationalisation that we have carried out over
the last three to four years, but we are acutely aware of the
need to look at it as a result of our findings in this particular
experience. This was a radically new learning experience for all
of us.
17. Finally, how do you plan to help your
own customers to help you to identify where problems are?
(Dr Haren) I think the most difficult part of
this storm from the point of view of customers was their inability
to make contact with the company and to register the information
with the company that they were off supply. We believe that in
similar storm conditions and from the experience of other electricity
companies around the world, including companies which are dealing
with hurricane conditions, such as in the southern states of the
US, the evidence is that it is not possible to allow 160,000 customers
to simultaneously make contact with the company immediately after
a major storm event, but what the customer does want to be able
to do is to make contact over time with the company and the systems
that we are trying to put in place and are investigating to add
into the systems that we have already will be aimed at providing
a much better level of communication directly with the customer
and that level of communication is very important from our point
of view and I think that is the dimension that I would relate
to Mr Beggs' question, i.e. that we need to know from the customer
what it is that is happening on the ground in order to get a full
picture of the restoration problem. We have a very broad picture
of the restoration problem, but at a detailed level we eventually
have to be dealing with an understanding about each individual
customer's situation or what small pockets of customers are off
supply as we get into the latter stages of the restoration process.
The aim would be to have a better level of communication with
the customer than we were able to have this year.
(Mr Fallon) I do not think it is correct to say
that we have closed many sites. We still have 13 customer service
centres operating throughout the Province. Where we have reduced
staff at these customer service centres, it is genuinely in the
interest of customers because we have more people working from
home, more people working flexibly and they are going straight
to customers' premises in the morning to carry out work or they
are going straight to sites to carry out work. Many people have
commented on the fact that these same centres might form a focus
for dealing with telephone calls and, as Dr Haren has said, it
is very difficult to deal with high volumes of telephone calls
in any type of situation, and to disseminate it over a number
of locations proves even more difficult. There is no simple answer
to this, but we believe, like many of our colleagues in the industry,
that the answer will include probably fairly advanced information
technology and technological methods for dealing with telephone
calls. The escalation plan is actually part of an overall programme
of improvements that we have put in place, but we should be aware
that these IT solutions and things like interactive voice response,
which is a messaging system, are not easily delivered, they do
take time. The improvements that we have put in place since last
Christmas were adequate to deal with a storm the size of the one
last Christmas or a storm of much greater severity. In the end,
when we were tested with something which was about ten times the
size of last year, they did not meet up to that demand. What we
are doing now is putting in an interactive voice response system
that we had already planned from last year, but, as I said, procurement
of these systems can be difficult, especially where there are
technical problems along with them. It is necessary to provide
this sort of thing to deal with high volumes of telephone calls,
but the interactive voice response is a voice response of such
quality that it will give customers much more information than
the single message that we provide this year currently would.
There is an improvement path that includes interactive voice response
and it also includes a trouble management system. Our escalation
plans this year were part of that plan. Our report is accelerating
some of these recommendations, bringing them forward. It is also
proposing that we enhance some of the facilities that were provided
so that we can continue this improvement path, provide a better
response should a similar event occur next winter, but that will
be part of this continuing improvement and the systems that we
hope to put in to provide a much better service to the customer
will be completed during the year 2000.
Mr Robinson
18. Leaving aside the analysis and recommendations
contained in the report, I would like to hear from you how you
assess the performance of NIE in what is generally perceived by
your customers to have been an absolute shambles and a very poor
performance in the way the company, conducted itself? Nobody blames
you for the storm. Many people blame you for the lack of response
to it. Quite frankly, if you were a private company most of your
customers would have been looking to your competitors by now.
I think many people out there are wondering why there are not
some changes at a management or board level as a result of what
was a deplorably poor performance?
(Dr Haren) We all have to deal with what are the
objective facts of the crisis that we faced and those objective
facts indicate that this was a storm which was totally unprecedented
in a period of 30 to 70 years. It was certainly unprecedented
in 30 years in terms of its impact upon our networks. The level
of customer communications that we had to try to handle was unprecedented.
In the period of a week we were trying to dealing with 600,000
customer calls. We had major difficulties dealing with those calls.
We had particular difficulties dealing with the calls in the first
36 hours of the storm when we were looking at 160,000 customers
that were affected by the storm as against 60,000 customers that
were affected last year. What we found was a problem of a magnitude
which was considerably in excess of the problem that we had experienced
last year. The evidence by which we have to make judgments is
the evidence of what we find on the ground in terms of our restoration
process. That restoration process in turn affects the communications
process. One of the complaints from customers was that we had
an inability to predict when it was that customers would be back
on supply. Our ability to predict when we can get customers back
on supply is not just simply a resourcing issue, it is also an
issue of the complexity of the faults that we face on the ground
and, of course, the overall volume of faults and the volume of
customers affected. The experience that we had in that area which
affected one aspect of communications was not different from the
experience in the Republic of Ireland and Scotland and the problems
that were experienced in the Republic of Ireland and Scotland
were no less in any of these areas, i.e. in the area of restoration,
in the area of total numbers of customers affected within a geographic
area and in terms of the communications stress and their inability
to deal with that communications stress. The problems were similar
and the responses from the individual companies were similar and
when we make as objective a comparison as we can with those companies,
then we can certainly see room to find steps that can be taken
which will improve the situation in the future but not something
which says there is a magic wand solution to the problem of dealing
with vast numbers of customers off supply trying to communicate
with the company. In terms of the overall impact upon customers,
out of the 162,000 customers affected by the Boxing Day storms
almost 100,000 of those were restored by midnight and, of all
the customers affected by storms during the week, 81 per cent
of the customers were restored within 24 hours. So by any measure
we would say that we dealt with that crisis in as strong a way
as we possibly could, given the magnitude of the crisis. We have
clearly said that we had major difficulties on communications.
The problem of communications that we experienced is not just
a problem which is unique to the electricity network. We know,
for example, the communications system itself run by BT here and
in Scotland experienced its own stresses. The volumes of calls
are signalled objectively as being of such a magnitude as to be
recognised as unprecedently large volumes flowing on the telecommunications
networks and we can only point to those as objective evidence
of the magnitude of the crisis that we faced. We have already
had discussions with Ofreg and with other companies and we have
not seen any new information which comes to us which says that
this could have been entirely different, but we certainly believe
that, as we go into the future, there will be technological-based
solutions which are not ones available sitting on the shelf that
can be applied overnight but ones that we have to work on and
develop with some of the communications suppliers which we hope
will change this by a factor going into another storm, but we
will never be able to deal with 162,000 customers wanting to communicate
immediately with the company.
19. I take it from that answer that you
consider that the company did a remarkable job. You do not seem
to think, as perhaps the overwhelming majority of people in Northern
Ireland think, that it was a very poor performance. All we had
there was a series of reasons why there were problems as opposed
to why the company had not planned adequately to deal with the
kind of problems that would arise. Of course emergencies arise
and nobody is blaming NIE for the storm, but I think everybody
recognises that a company with the responsibility that NIE has
would make adequate preparation to deal with those kind of emergencies
in the circumstances. There seems to have been fairly poor planned
maintenance. There was no adequate means of contact, no adequate
response service and apart from people being on after 24 hours,
there were people over a week after the event who still had not
got their service back. You consistently missed deadlines that
you gave publicly when services would be restored, none of which
allowed people to put much confidence in NIE for the future.
(Dr Haren) I reject entirely the suggestion that
there were very poorly planned maintenance programmes. We have
described at length to the Committee the type of planned maintenance
programmes that we have. We have set those planned maintenance
programmes in the context of a comparison to what is performed
by other utilities. We have set them in the context of the type
of discussion that we had at MMC during our price control which
measured those planned maintenance programmes as to their adequacy,
as to their desirability in terms of price and as to their comparability
with any other system of the same type of mix of rural and overhead
networks as we have ourselves. Our response to the storm was not
an inadequate response, it was a response which restored 80 per
cent of customers within 24 hours. The fact that there were some
customers out for a week is exactly similar to the experience
on Scottish and Republic of Ireland networks which were similarly
affected and the pace of restoration and the extent of restoration
were broadly similar between our system and theirs. As to whether
we missed deadlines, we can only give the best information that
we have available during the crisis. I referred to the difficulty
of giving good and accurate information during a crisis when you
are dealing with large volumes of faults and when you are dealing
with extended networks and very difficult working conditions,
where storm-type conditions were coming back during the week of
progress. Again the evidence from other networks in the Republic
of Ireland and Scotland, which were similarly affected, would
show that the experience there was very similar to ours. I did
not pretend to say that this was a satisfactory experience from
the point of view of the customer. We have said very clearly in
our review document that we regard this as being quite unsatisfactory
from a customer viewpoint. What we have said is that the solutions
which everybody would like to believe are very easily found are
not so easily found and I referred in particular to the issue
of communications where the solutions are by no means easily found,
but our intention is to find the very best practice solution that
is available and to apply it.
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