Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of witnesses (Questions 1 - 19)




  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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