Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of witnesses (Questions 40 - 59)



  40.  Can I move on to compensation payments. Can you tell us for the record about your compensation payments and your goodwill payments?
  (Mr Fallon)  Chairman, in a situation such as we had over Boxing Day, the normal guaranteed standard payments which are payable under the agreement with the Regulator do not apply and that is because of the severe weather exemption. What we did was we put in a regime of compensation payments which amount to a total of £115 for customers who are off supply more than 24 hours and that includes a figure of £50 which is intended to part-way compensate for the loss of freezer contents, but I would stress that these are goodwill payments. We do not consider that we should cover the full loss in this situation and, indeed, it is very difficult to make any payment which will replace the hardship that customers will have in a situation like this. Customers who were off supply from Boxing Day and remained off supply at seven o'clock on the thirtieth were offered a hot meal payment of £20 per head. Finally, on the thirty-first we repeated that for customers who were still off supply at seven o'clock and we added to that a figure of £40 which was intended as a bed and breakfast allowance for each adult and £20 for each child in the household and from the thirty-first onwards, if there was anyone still off supply after that period then they were entitled to a similar payment for the subsequent evening.

  41.  Thank you very much. How do these payments compare with payments being made by your counterparts in the Republic of Ireland and Scotland?
  (Mr Fallon)  These payments compare very favourably with the Republic of Ireland as they are not making any payments at all. As far as Scotland is concerned, I believe that they are following a pattern which is similar to the guaranteed standard that applies in England and Wales. We take a different line, which is to say that we regarded 24 hours as being a period where significant hardship occurred for all customers at that point and so we made a fixed payment, whereas in Scotland they made a scaled payment of a basic amount, I am not sure what the amount was, but it was the standard payment for a period up to 24 hours and then they incremented it for each 12 hours thereafter. Broadly speaking the package benefits the total mass of customers in Northern Ireland to the same extent as if we had applied a standard payment, but that is not including the bed and breakfast allowances which are over and above that.

  42.  You may be aware that the Committee has received a letter from a resident of Dungannon which highlights the extent of the inconvenience that they suffered. There is some concern expressed in this letter where they say, "So you can imagine how upset, angry and frustrated we had become. I am also deeply offended by their `goodwill payment'. I am being offered the same `goodwill' as someone whose power was restored after 24 hours!! Do the decision makers in NIE realise that we (1) hadn't a proper meal for five days; (2) hadn't a shower or bath for 5 days; (3) couldn't do any washing; (4) couldn't clean or vacuum our home—I could go on and on." Do you think it is fair that the structure that you have put in place in respect of compensation does not make a distinction between, say, someone that has been out for four days as opposed to someone who has been out for 24 hours and one minute?
  (Mr Fallon)  Chairman, as I said, we looked at a set of payments which we thought were pretty fair under the circumstances and they reflect the fact that hardship was applied to all customers from after about 24 hours. In addition to that, we discussed these payments with the Northern Ireland Consumer Committee for Electricity and they are on record as saying that they found the payments to be a "fair package". I think the distinction that I would make between ourselves and any other Regional Electricity company in GB is that we are making the payments automatically, so we are making payments to every customer who is affected without the need for them to claim. I would also say that our payments include £50 for freezer contents and that is a sum of money which perhaps does not cover freezer contents, but people should be insured for these. It certainly should cover their excess. Again that is something that, as far as I am aware, is not being applied any place else in the British Isles. We think it is a very fair package of payments and the overall cost to Northern Ireland Electricity will exceed the cost of making the equivalent guaranteed standards payments.

Mr Donaldson

  43.  Could you clarify for us what the rates of payment are laid down in your customer standards for qualifying periods of non-supply?
  (Mr Fallon)  I stress again that the customer standards do not apply in this instance. The basic payment for a customer off for 24 hours is £40. That is then incremented at the rate of £20 for each 12 hours thereafter and there are no payments included for freezer contents. Also, the payment is not automatic and it would require customers to claim to receive the payment.

  44.  In terms of the goodwill payments, again you are saying that those are automatic payments, what steps are you taking to seek out customers in receipt of those goodwill payments rather than relying on them to contact you? What is the methodology being adopted for that?
  (Mr Fallon)  Chairman, we are endeavouring to pay all customers who are affected automatically and we do that by relating them to the lines that we had off supply, looking at the period in excess of 24 hours, the customers who are connected to that line and making the automatic payments to them. There will be instances where we miss customers, perhaps instances where the time off supply has not been recorded properly or there may be instances where customers were reconnected but had low voltage. In these circumstances, we are communicating with customers through their electricity bills and if they have not had a payment on their electricity bill then they should contact us. When they contact us we are dealing with that immediately. If a customer contacts us with an electricity bill in front of them, about to make a payment to their electricity bill and thinks that they are entitled to a goodwill payment then what we are inviting them to do is not to pay their electricity bill and we will credit the bill. They should see the amount credited on their next bill. We are endeavouring to take all the steps possible to make this as easy as possible for customers and that is another reason for making it a single payment rather than a staged payment. Although Mr Salter read out one particular letter in connection with this, in general this is not causing a major problem for customers. We have now made over 40,000 credits to electricity bills and we are dealing daily with customer enquiries. If customers are calling us and saying that they are not happy with the credit to their bill we are arranging to make a credit refund to them. Most customers seem to be satisfied with the response that they are getting.

Mr McWalter

  45.  I would like to endorse the commendation Mr Salter made to your staff for the enormous amount of work they did on 26th and 27th December under very difficult circumstances. Although there are some quibbles about the amounts of money you are making available under the compensation scheme, I think I would like to commend you for the way you are making it. I think that is a very good example for other boards in the United Kingdom to follow. One of the issues that came up in the correspondence we have had which was from the Consumer Committee was that very few customers have got battery powered radios. I would have thought that it would be sensible for all of your customers to have battery powered radios given this record, would it not? And maybe you might give them all a cheap battery powered radio with advice on where they can get information from so that, if this sort of thing occurs again, all your customers would have some access to an information system which does not depend upon the mains.
  (Mr Fallon)  Chairman, I think we can assume from the amount of comment we have had from customers requesting information on local radios that it is a fair proportion of them that do already have battery radios. As far as getting communication to customers in future is concerned, obviously when supplies are off in most households the telephone is the one remaining access that customers have for getting through to us and certainly we would prefer to make the investment, as we are doing, in our telephone services to improve the level of response when customers try to call us on telephones.

  46.  I was suggesting that you make better use of the radio. Your comment that most customers have got these radios is inconsistent with the Northern Ireland Consumer Committee for Electricity who wrote to us on 22 January and said, "Very few customers appear to have battery powered radios". They were also very worried about the use of radios which they had suggested you might use after the 1997 crisis and you simply made very little use of it in 1998 either. If they are right then perhaps you need to address the fact that a radio system is a much better way of telling people what is going on because the phone system largely failed and, in fact, was responsible really for the enormous anger which people felt about NIE and maybe part of your compensation might be to think about letting everybody have a £10 radio so they could get in contact with you. You are dismissing that idea, are you?
  (Mr Fallon)  I am not sure whether we or the Consumers Committee give any definitive figures on the use of battery powered radios in Northern Ireland, and perhaps a starting point would be to find out exactly how many people have battery powered radios. Obviously it would be a very useful thing for anyone to have in the event of a future circumstance like Boxing Day. As I said earlier, we did not make as good use of local radio as we could have. Part of the difficulty there would be in getting local radio and the national Northern Ireland radio channels to take any information that we give to them. We intend to explore that with them and get them to take information that we have available as a public service announcement so that it can be distributed in future to those people that do have battery radios.

  47.  My general interest here is with the capacity of the system to withstand harsh conditions and I note that in their letter, in response to your document, Ofreg say that your report is short in analysis and in the relationship between the age of the network and the vulnerability to storm damage. I am told you have not seen this yet. It is a letter dated 5th February. Ofreg say that there is not an analysis about the age of the network and the vulnerability to storm damage and that comes out particularly on the issue of the poles. You say you have got 400,000 poles. I think it would be very useful to see what age they are as that will allow us to assess your culpability for these events because although you pointed out that there were certain levels of investment that were lower in the early 1980s than in the late 1990s, the margin does not look that great when you bear in mind that a lot of the fabric of the system was 20 years old in the early 1980s and is hence pushing 40 years old now. It does seem to me that the levels of investment that one would have expected in the 1990s would have been far higher than they have been and that it would have been culpable management to have deferred £100 million-worth of investment. I would like to see, Chair, some assessment of the age of the poles, the number that they are thinking of replacing, the effect of the promise given earlier to my comrade Mr Salter that there was going to be a move down from the 40 year decommissioning to 30-35 year decommissioning, whatever it is and the impact of that on your programme because without that data we cannot see whether you have let the fabric of the system degenerate far more than is consistent with good management.
  (Mr McCracken)  At the risk of repeating some of the ground that we have already covered in relation to investment——

  48.  Pardon me, I do not want you to do that. I heard all of that. I want to know what is happening about the poles.
  (Mr McCracken)  I think your last remark in relation to allowing the fabric of the system to deteriorate directly relates to the earlier evidence that I gave. If I do not need to repeat it, I will not do so. The fact of the matter is that the substantial under-investment that we found in the earlier years was one that we addressed almost immediately post-privatisation with this refurbishment programme. We are not going to replace any poles because they are 30 years old. We are going to replace poles because we judge them to be deteriorating to such an extent that they need to be replaced because they would not withstand this sort of weather condition if we met it in the future. We determine whether or not poles need removing by foot patrolling the network and assessing the damage of each pole on the network. We do have records of that. We believe those records are good, and those records would be used now in this pole replacement programme that we are about to enter into. This pole replacement programme is over and above the pole replacement programme that is a normal part of the refurbishment programme. As we go down a line and refurbish it we replace practically all the poles down that line. We are going to do 1,000 kilometres of overhead line in relation to this parallel programme and we have paid particular attention to our 33,000 volt network, because that is a crucial network in relation to experiencing damage and resulting in loss of supplies to large numbers of customers. In relation to the programme that we have in place and the fact that we have decided to look at that programme again, I have to go back and say that, in relation to whatever it is that you have as evidence from Ofreg, Ofreg were the group that we sat across the table from in negotiating what the capital programme was at the last price control and Ofreg's view was that we did not need to refurbish 1,500 kilometres of line per annum. Our view was that we needed to do more and the MMC ended up in the middle. I reiterate that up until this point everyone has thought that the programme that we have had to date—apart from ourselves who tried to make it larger—has been a perfectly adequate programme. We have come through this event, we have learned a lot in relation to the ability of the network to withstand this sort of damage and we have formed a view as to what would be the solution to addressing those problems.

  49.  Are you saying the people responsible for the under-investment in the end were Ofreg, the MMC and, of course, God for inflicting the storm on you?
  (Mr McCracken)  The under-investment I think we have already tried to deal with in relation to what categories of expenditure were avoided in that first regulatory period. Those categories of expenditure that we have mentioned were ones that we looked at and decided at that time could be deferred. That was thoroughly assessed at the MMC. In relation to the amount of money in the first price control that Mr McGrady referred to, the MMC decided the customers had paid that and that was some £25 million the customers paid to finance that £100 million of investment. The MMC decided that £7 million out of that £25 million should be clawed back for customers. So the MMC in reaching that decision had decided that the vast majority of that deferred or avoided spend was one that the company should be credited with. Similarly, as we look forward into this price control period, customers are receiving a benefit of some £50 million as a result of the deferment of that expenditure.

  50.  The second thing I glean from your remarks is that if I asked you how many of your poles were over 35 years old you would not know.
  (Mr McCracken)  If I could refer you to page 13 of our review report. We know the age of our assets and that is why we are able to formulate table 7. In relation to an earlier question about what proportion and what age the poles were that were damaged, that table gives an overall global picture of total damage, but within that there will be a more detailed table which deals with poles alone and another table that deals with conductors, stirrups and binders etcetera. Quite clearly we are able to pinpoint out of the damaged equipment what age each item was.

  51.  So you would know and you would be able to furnish us with that information if we asked for it?
  (Mr McCracken)  Yes, we have age data on all the assets on the system.

  52.  Thank you. The table said "age of damaged overhead line component" which obviously in a sense is a pole and because it is in the ground it seemed to me possible not to be included within that. In the end you are proposing an enhanced programme of refurbishment beyond that which the MMC thought was reasonable for you. What will this cost?
  (Mr McCracken)  I think the additional refurbishment programme will cost £24 million over three years.

  53.  How much is it going to cost you in this compensation package which you are giving to customers as a result of the events of the latter part of last year?
  (Mr McCracken)  I think our best estimate of that is approximately £5.5 million.

  54.  Bearing in mind that clearly you do not want that to happen again, is the investment that you are going to produce likely to enhance the security of supplies?
  (Mr McCracken)  Chairman, obviously the additional investment package that we are recommending after our review is one that we feel strongly will address a number of the problems that we experienced as a result of this storm. There was not any real new knowledge that came out of this. We understood back in 1994 what the remedy was to an under-performing rural network, and that is what gave birth to the original refurbishment programme. What has happened now is, having come through this event, we are saying we just need more of this and that is what the recommendations in this report are saying.

  55.  I am certainly not saying it, but the letter from Ofreg goes well beyond the £24 million that you talk about. It says in the five-year period after privatisation, while expenditure was at £243 million, which was barely above the amount in the previous five years, customers actually paid electricity bills which would be calculated on the basis that expenditure would be £339.4 million. So the customers have paid for a large amount of investment which appears not to have been carried out. Do you have plans for a much more substantial regime, particularly involving what you called "undergrounding"? I notice that that word does not seem to appear in your report at all, although you might be able to point to my omission. It would appear that a much more extensive use of underground provision would actually get around many of these difficulties.
  (Mr McCracken)  It is absolutely fundamental to proper regulation that companies are given the right incentives in relation to customer expenditure. In fact, the company has an incentive to make greater investments because that quite naturally grows the asset base and if you grow asset base in a regulated company you can actually increase the profitability of that company because it is allowed a return on that asset base. The fact of the matter is that incentives should work in a way that incentivises the management of the company not to spend, not to make investments if those investments cannot be very rigorously shown to be to the benefit of customers and that is the way incentive regulation should work. That should be acknowledged by Ofreg. I am not sure why it is not. The only issue at question here is out of that original capital programme, could and should more money have been diverted from the expenditure which did not need to take place towards a refurbishment programme? This was purely a rural network problem we faced. There were half a million customers in Northern Ireland who did not experience any loss of supply as a result of this storm and they were all the customers on the urban network. The issue is about how to prioritise investment out of a total capital programme which allows the customer the maximum benefit at the least cost and the refurbishment programme does that. At the risk of repeating myself at the third or fourth time, can I say that up until this point in time we have all thought that that was a very substantial programme, substantial by any measure now in terms of investment per customer etcetera, etcetera. We have a fairly sizable undergrounding programme in a lot of the provincial towns in Northern Ireland. There is undergrounding of the LV network where it is clearly shown that undergrounding in that part of the network is one that will provide benefits in relation to greater reliability to customers. The company took a policy decision two years ago not to overhead any new LV, so all new low voltage construction for the last two or two and a half years has been undergrounded.

  56.  You said that you were saying things for the third or fourth time. I think I will repeat for the third or fourth time as well that many people would regard the level of investment that you made as utterly insufficient given the age of the system that you were seeking to operate, but that is clearly going to be a cause of conflict between us and no doubt you will see more of that in our report.
  (Dr Haren)  If I could try to touch again on that issue as I understand it because I understand the difficulty and in terms of dealing with these issues, I would ask the Committee to understand that the issues are extremely complex. They were issues which were debated during a six month inquiry by the MMC into our price control for the current five-year period. They are issues which have been studied by consultants from Ofreg, by engineering consultants given a remit by the MMC to try and understand what is an appropriate level of investment in certain categories of investment and what is it that is best from a customer point of view, reconciling the tension between quality and reliability and price and that is the function of that price control discussion. If I could try to state just a couple of facts which might help to penetrate some of that complexity. There are within the MMC report in this area of capital expenditure something like 17 categories of capital expenditure listed. Each of those categories of expenditure were subject to scrutiny and discussion. Each of those categories of expenditure broadly speaking was contested by Ofreg within the MMC price control where they had a particular view of what capital expenditure should be and we were offering a programme which we thought was appropriate from a customer viewpoint. Let me make it quite clear that in terms of the responsibility that we believe we have, we believe that that responsibility extends to absolutely all of our constituency, which extends extensively into the remit that we have from customers to manage what is ultimately a customer resource because once we make investment in the system, that is ultimately an investment that is going to be paid for by the customer and we have no hesitation about the responsibility that we have and the need to manage that responsibility against this tension of good value for money, of price to be paid and of quality and reliability to be delivered. There are 17 categories of expenditure which would have been the subject of discussion within the MMC price control. One of those categories of expenditure relates to the overhead refurbishment programme on 11kV networks which, as Mr McCracken has indicated, was an area which we felt was particularly effective from the point of view of making a return in quality and reliability terms. We proposed at the MMC that we should have a programme which was in line with the programme that we had previously been conducting during the first price control period and that that programme should run at the level of 1,750 kilometres per annum and that was not a facile suggestion, it was a studied suggestion in terms of returns to the customer, value for money. Ofreg's position going into that discussion was that an appropriate level of investment would be 1,200 kilometres. The difference between 1,200 and 1,750 is very substantial in terms of the impact on rural networks. The MMC conducted their own study. They said that in the light of the information they had from their study, in the light of the tension that they saw in the price equation, their preference would be to remit at 1,500 kilometre per annum on 11kV networks and that would be built into the price control as part of the capital expenditure allowances. So at one level it is complex and at another there are not very many mysteries in relation to this. This was an area that was discussed. There was a contest as to what was an appropriate level. We came out with a certain level which we felt was broadly satisfactory in the sense that we have to go in and listen to what is the representation of the public interest consideration. We have to listen to what it is that other people are saying about what they believe to be in the interests of customers, and we came out of that MMC price control with a programme which is 1,500 kilometres per year. What we have said in this report is that, in the light again of the impact on rural networks of this type of storm, we believe that we should move that programme up again. We are not saying that we should double it. We are saying that we should move it up again towards the 1,750 kilometres per annum of refurbishment. We are seeing increases next year to 1,750 and then 2,000 in the remaining two years. We have also said we believe as we go into the next price control we will be arguing to sustain the level of refurbishment at that level. We are conscious of what the arguments and counter-arguments are. There is not an A to Z of engineering and scientific analysis which tells anybody exactly what that programme should be. All you can do is to make judgments on the basis of the best information available to you and the best understanding of what the system is that you are dealing with and how that system impacts upon quality and reliability of supply at a customer level. That is my attempt to try and deal with the question in as straightforward a way as I can and on as factual a basis as I can. If I can refer you on another question which you had, to page 33 of our review, section 8.3.1, where you will see the third paragraph in the section which says, "In order to improve the resilience of the LV network to storm conditions, we propose to accelerate our long-term programme of replacing overhead lines and under-eave wiring in urban areas. We will also extend this programme to include some of the open wire systems on the outskirts of urban areas. These will be principally replaced by underground cabling ..." That is where we have tried to address and capture the issue of undergrounding of low voltage networks, which was a separate issue from this issue of refurbishment and investment in refurbishment programmes.

  57.  I think much of that has been very helpful. I think it would be helpful in some of the supportive material if the case that was made for 1,750 kilometres was made available to us so that we can assess the extent to which you have pushed for that case. It has to be said that Ofreg would have been unlikely to have allowed you to increase prices to consumers if it looked as if you had been raising too much money off consumers under the heading of provision for capital expenditure and then not spending it. That is a matter which, in the end, we are going to have to evaluate.
  (Dr Haren)  First of all, we can give you the references very easily within the MMC report where all of these issues are transacted. Perhaps I could add some additional thoughts in relation to the underspend within the first price review period. I think what we are trying to convey is that we recognise the importance of capital expenditure and investment in the system to have a good system. We also recognise the importance of proper management of those capital investments such that the system is not over-invested, so the customer is not paying more than they should be paying to get a given level of quality and reliability of supply. Mr McCracken mentioned the issue of incentives within price controls. We are certainly responsible as the licensees for the system for managing those capital investment programmes in the tightest possible way, and there are a number of ways in which a capital investment programme can be affected. At one level, I think the question that we are being invited to address is that you just refuse to make investment in the system. We did not make a refusal decision which said, "No, we will just not invest very much in the system even though there have been allowances within the capital programme beyond the level at which we were spending-in the first price review". There were a number of things that took place in that programme which were again very extensively discussed at the MMC. The first one is that you have a job to procure materials at the tightest possible cost that you can as you make your investment. The alternative to that is that you tarmac the car parks in order to make sure that the capital investment occurs and you are not incentivised to do that. What you have to do is to manage the capital investment programmes as tightly as possible, and one dimension of it is the way in which you procure materials. We have worked extremely hard on the issue of procurement of materials internationally, and from the very early stages of our privatisation we were out to international procurement ahead of other electricity companies. We were very much in parallel with what some of the continental European utilities would be doing, looking at the total supply availability from continental Europe and from eastern European countries and trying to get the very best materials costs that we could to reduce the price of components going into the system, while still making sure that those components are meeting an absolutely rigorous standard and going to be fit for the purpose. There is another way in which investment can be changed in the system and that is that you believe that you need a certain level of investment to reinforce the system against new demand which is being placed on the system. I think that is a question which came up earlier, perhaps in relation to the capacity that you have within the system and whether that was a problem during these storms. You need a certain amount of capacity as new load growth occurs in the system. We have had on the Northern Ireland system a demand management incentive to customers which has enabled us to reduce the level of transmission expenditure that we would have otherwise incurred in order to meet the peak demands on the system. We encourage customers to manage load off the system at peak times, which gives a benefit in pricing terms to the customer and gives a benefit to the system in terms of us having a lower capital investment need. Then there are other areas, such as investment in the transmission side, which could not take place because of delayed planning decisions where we went for planning and had an expectation that we would get planning within a certain timescale and planning took much much longer than anybody would have anticipated on the first day. Then I think there are the areas which Mr McCracken touched upon, which were re-phasing or deferrals, when you looked again at the system and said what has the load growth been, what is it that we thought we needed to do, what is it that we think we need to do now? In a dynamic way, you reorganize your investment programme in order to give the best effect for the customer. This area of the investment programme was executed in the first price review and the appropriate investment programme to execute in the second price review was the bread and butter of the MMC price control. The MMC took full account of the explanations that we gave for the deferrals, for the re-phasing, for the changes in the investment need because of demand side management and all of those were factored into the price control to give the effect that Mr McCracken indicated, which is that the customer today is paying less than they would otherwise have been paying if those programmes had been executed within the first price control period. The issue of how to balance what was done in the first price period as against prices today has been fully factored and fully taken account of by the MMC. As we conduct discussions on these issues with Ofreg we find that that understanding seems to escape Ofreg, and the way in which they address these issues is to go back to arguments which have been already very fully transacted, as we understand them, within MMC and we believe that we ought to be moving forward and looking at what are the investment needs of the network now in the light of the best experience available and we anticipate that there will be an element of discussion which again will have to take place between ourselves and Ofreg before we can convince them that the new levels of planned investment are levels which are appropriate and, of course, it is necessary for them to have available to them the best information that we can provide to justify those programmes. What I would like to say to this Committee is that we are not dealing here with some kind of black magic and we are not dealing with people who are keeping cards under the table. What we are trying to do is to deal with this issue in as transparent a fashion as we can. We dealt with it transparently at the MMC. It was very fully investigated and discussed at the MMC and we came out of that MMC saying that that is now the investment programme that we have available for this portion and this category of assets and expenditure going forward.


  58.  The points I am going to put to you now are ones for you to follow up in writing,[1] I am not requiring a response at this juncture, but I am following up on the questions from the exchange which you have just had with Mr McWalter. This Committee is itself incapable of conducting an analysis on the relationship between the age of the network and the vulnerability to storm damage, but it quite clearly something to which you have given time and attention. There is not much of it in the report per se and it would be helpful to have a note on your analysis of that relationship. I will remark absolutely in passing and not in order to be provocative and say that the expenditure which you did carry out during the period in question, the £243 million to which Mr McGrady and Mr McWalter have referred, is actually smaller than the figure that you would have spent under the negotiations with Ofreg as well. There is still a margin below the Ofreg figure quite apart from the much larger figure under negotiation with the MMC. My second question on which I would like, if possible, for you to come back on is in paragraph 8.3.2 of your report on page 34, immediately above table 12, where you say, "Taken together, the full refurbishment programme and the supplementary programme when extended into the next price control period will ensure that the complete 33kV and 11kV networks have been improved by one or other form of refurbishment within the next six years." It would be helpful to us to know what that would mean in terms of the amount of work you will have had to have done on components, but perhaps more important, what the implications would be for subsequent work once you had actually brought it up to that state, because that is quite clearly a target of your own. The third question, which again can be dealt with in writing after the event, is to do with page 9 of your report, figure 2, where you give the comparison for customer minutes lost for electricity utilities. It is a figure you have quoted on a number of occasions during the day. When you turn to the next page where table 2 occurs, I infer that, partly because of the asterisk, it is calculated in a different manner from figure 2 on the previous page. It would be quite helpful to know if there is either an update of figure 2 by which we can compare NIE by figure 2 calculations or, alternatively, whether there is an update for other utilities which compares with the figures which appear in table 2. How you handle it I will leave to you, but it would be helpful so that we get away from comparing apples with pears. My final question in this respect is very brief and this you could answer verbally. To what extent do you rely on the goodwill of landowners to carry out your projected increase in tree pruning? Do you need any additional statutory powers in order to accomplish your objectives?
  (Mr McCracken)  Under the wayleave agreements that we have with landowners, which permits our equipment to be on the land, we do have powers to maintain the line and that does include tree pruning from above the line. The fact of the matter is that those statutory powers probably in practice are not that useful because, if you get to the depths of a relationship with landowners such that you are having to enforce statutory powers, then it becomes a very difficult relationship indeed and becomes unworkable and very extensive tree pruning programmes, have indicated up to 5,000 kilometres per annum on the basis that you are having to rely on statutory powers to gain entry.

Mr McCabe

  59.  I have got two simple questions about costs. I wonder if you could tell me what you estimate the total cost to Northern Ireland Electricity has been of the storm and what you estimate the total costs of the improvements in the wake of the storm will be?
  (Mr McCracken)  I think the total cost of the storm will probably run to something like £10 million. I have indicated earlier that £5 to 5.5 million of that would be the goodwill payments and the rest will be made up of materials and mainly labour costs after that. The total cost of the programme that we have in here—this is quite a short-term programme that we have in here, we are not looking extremely far into the future—is £24 million on the network and an additional £2 million in call handling technology and advancing £12 million of investment on trouble management systems and customer service IT systems that were already planned.

1   For NIE's response, see Ev p. 28. Back

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Prepared 29 July 1999