Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of witnesses (Questions 80 - 99)



  80.  I apologise for being slightly obtuse. If they had not spent it and yet still need to spend it, leaving aside natural justice, how do they defend the fact that it was delayed and therefore the expenditure still lies ahead of them?
  (Mr Coulthard)  They would probably defend their actions on the basis that by means of increased efficiency they were able to defer that expenditure but that they needed it in the next price control. So in other words they did not need the £96 million in the period 1992 to 1997 because they were particularly good at running their network, but they would need it in the next one and therefore could they have it again. That has the effect of continuing their receipt of the financing charges and depreciation for longer than it would have otherwise. That would be the normal defence.

Chairman:  We appear to have a Division in the House. I apologise to our guests.

The Committee suspended from 4.39 p.m. to 4.55 p.m. for a Division in the House.


  81.  Having in my last question played the part of obtuseness, now let me take over that epitome of acuity, the man on the Clapham Omnibus. The man on the Clapham Omnibus, or alternatively the man from Mars, would be puzzled by the fact that it is possible for the corporation to take in money in order to spend it for capital purposes, then not to spend it and then to ask for capital expenditure the next time round. I am in the mode of the man on the Clapham Omnibus; let us say for the purposes of argument I on the Clapham Omnibus by some trick of technology am a Northern Ireland consumer and I agree that geographically I am out of order, do I have any right of protest or creating impediment?
  (Mr McIldoon)  Geographically I believe you are the man in the Glengormley Omnibus.

  82.  I am happy to take on that role?
  (Mr McIldoon)  It may not be as good a service, I cannot answer for that. Theoretically I suppose if the Capex expenditure were allocated to a specific project and the company had claimed that it wanted £10 million for a specific new transmission line and it said: "Oh, we do not need to spend that money. We will keep it" and then in the next price control period they said: "We want to build that transmission line and we would like our £10 million all over again" then I think people would feel that is a bit unreasonable because in fact it would mean that customers would be paying for it not over 40 years, which is the normal period; they would be paying for it over 45 years and they would be paying for it almost twice. The trouble is that is not what the company asks for. The company says: "We have this amorphous requirement for capital investment for all sorts of things" and then "We did not need to actually spend all that because we made efficiency gains." Then you get into the next period and obviously some of the old plant is in need of replacement because it has aged to a certain extent or connections are required at a faster rate in some new town or for some such reason; there is a new range of requirements for capital expenditure and so the two sets of expenditure requirements are detached from each other. And because the customer, or the Regulator in this case, cannot make the connection, you cannot actually deny them that there is an objective need for a new raft of capital expenditure in the next price control period.

Chairman:  Well I can see that when my bus journey was over I might have a word to say to my neighbour in the pub about the manner in which my affairs have been conducted, but thank you very much indeed.

Mr Beggs

  83.  I note in your correspondence to us that you recognise that there is no Northern Ireland factor which justifies the fact that Northern Ireland prices may be the highest in the European Union and that privatisation has not led to lower electricity prices in Northern Ireland. What further action can you undertake in the interests of consumers and what should others be doing?
  (Mr McIldoon)  There are three components to electricity prices. There is the cost of generation, which has always been higher in Northern Ireland for a long time because we were locked entirely into oil dependency at a time when oil prices started becoming unfortunately high. We have carried out a series of investigations into how we could get generation costs down. There are a series of proposals now available which I believe could bring generation costs down and those have been progressed separately. Certainly the work that my consultants did in looking at generation costs would indicate that there is no reason why we could not generate electricity as cheaply in Northern Ireland as we could in Great Britain. There are some reasons why it is dearer, but there are also some reasons why the generation of electricity is actually cheaper in Northern Ireland. If our power stations paid the same rates bill as they would pay if they operated in England we would have another £20 million added on to our electricity bill, so there are benefits actually in Northern Ireland which could be harnessed. The second component, about a third of the cost, is transmission and distribution and it was, from all the evidence that I can gather and certainly all the figures that NIE produced over the years, it was as economical in Northern Ireland as anywhere else in Great Britain in the period before 1993 and what has gone wrong is that NIE was given a very generous price control at privatisation and that meant that prices had to fall quite dramatically in 1997 and they were not allowed to fall dramatically in 1997 because the MMC intervened and until that is put right that element will not be reduced. One of the annexes I think in the memorandum that we sent to you showed that even if we had generation costs at English levels the electricity bill would still be, for the average domestic customer, about £20 dearer than it is in Great Britain. The final element is the supply element, the retail bit, the people who send you the bill, who read your meter and so on and that is, as I said earlier, better in Northern Ireland than anywhere else. So the action that is required is action on generation costs and there is a process in place which could bring all that about, but it will require co-operation from NIE and the generators and I think it will require political momentum behind it. I think the community, through its political representatives and through Ministers, have to say that they want this to happen for it to happen, because there are forces of inertia and vested interests which could get in the way of its happening. The issue of NIE's price control and T&D are still not resolved because the question arises will it go to the House of Lords, will the House of Lords overturn the Court of Appeal in Northern Ireland? If the House of Lords does not do that, the question then arises should the legislation be changed because the legislation is clearly working at the moment to the detriment of customers in Northern Ireland.

  84.  Thank you. Why, in your opinion, are generating costs not regulated in Northern Ireland?
  (Mr McIldoon)  There was a lot of argument at the time of privatisation and I have read the papers and the debates quite carefully. There were a lot of people who argued at the time that because it would be so difficult to introduce competition in Northern Ireland—I believe you were one person who did argue this—that it would be necessary to put some kind of price control into generation contracts. As I understand it, the argument on the other side was that if you wanted to maximise the revenue from the sale of the power stations you had to sell contracts which were as untrammelled as possible. If you put in a price control in the power stations, the Treasury would not raise so much money and I think that appears in the view of most people to have been the case. You could have sold the power stations with price control and I think in retrospect everybody would agree that it was unfortunate that that was not done.
  (Mr Coulthard)  I think there was also the issue that the contracts were structured to incentivise the companies who bought the power stations to be efficient or to increase their efficiency. I think where that fell down was that they actually increased their efficiency quite significantly more than anybody thought they could and the structure of the contracts, if you will, did their job too well.

  85.  To move on to another element, could I ask what discussions you have had with NIE about its response to the storm problems subsequent to the publication of the NIE report? What action are you pressing them to take?
  (Mr McIldoon)  We had a series of discussions at officer level with NIE to find out what went wrong and indeed we gave them a questionnaire—Mr Thomas was heavily involved in some of those discussions. First of all, we went back to the period in 1997 when there were storms at Christmas and there were a whole series of meetings in the course of 1998 as to what might be done to improve the situation for the following year. I think NIE were to some extent unfortunate in that they had geared themselves up to deal with the repeat of 1997 and 1997 was not repeated, it was 1998 and it was considerably worse than 1997. So it is difficult to be precise as to whether or not the improvements that were put in place in 1998 would have avoided the same kind of supply losses as occurred in 1997 if a similar incident had occurred. Since Christmas we have been trying to gather information. They produced a report as you know and frankly I think it is a report that begs more questions than provides answers and we are trying to get at the bottom of the relationships between some of the things that they are saying and what actually happened. Mr Thomas, would you like to talk about that very long meeting that you had when you asked them 70 questions, I think it was?
  (Mr Thomas)  Yes, but I promise not to be quite as long as the meeting was. NIE over the years have proved singularly adept at providing a large amount of information which actually tells you very little. A lot of the problem with overhead lines is that you cannot ascribe an age to an overhead circuit, in that the circuits are made up of very many components which themselves may be of substantially different ages due to replacement over time. It is also important to remember that while it is alleged that lightning never strikes twice, bad weather certainly does and it does not always come from the same direction so a line that may come out completely scot-free from a south easterly gale may be flattened by a south westerly one. You will never, I think, build an overhead system which is completely and utterly immune to the effects of the weather. Yes, you can build them to withstand any force of wind you care to name, but when the force of the wind is carrying before it an uprooted tree or other wind-borne debris it is very difficult to build overhead lines that are proof against that and when you start talking about impact. NIE after the 1997 incidents did a fair amount of work investigating what went wrong, why, what they could do. They have identified in their report they are spending money, investing money at a higher rate on line refurbishment than any of the British companies, but I think to put it in context, what they do not say and what you ought to know is that that is perhaps against a much lower base. During the 1980s very little maintenance was done on some of these lines so there is an element—or more than an element—of catching up to be done. So they are spending a significant sum of money in upgrading the lines, but they are upgrading them or restoring them to the condition in which they were when they were built. In other words we are working very largely to a 1950s specification. There have been many advances in the technology available in the construction of overhead lines, not least of which now is the availability of insulated overhead conductors. It seems a great shame that these advantages are not being taken benefit of in that bare conductors are still being erected even in areas which are known to be prone to tree damage or tree intrusion. So you are bound to get interruptions by that sort of thing. Towards the end of last year, November, 1998, the particular meeting we had with NIE which was held at their Control Centre in Castlereagh, NIE were actually asking me, on behalf of OFREG, what I wanted them to do regarding further reports on the 1997 incident and what I wanted them to tell me to satisfy me that they had done everything they could. With the imminence of winter I replied that I did not want them to do any reports; I wanted them to spend all their time getting their line and equipment in order to withstand 1998. I did not realise at the time quite how prophetic that remark would prove to be. We do strive to try and push them to do as much as they possibly can and we do try and do this in a way that causes them the minimum non-productive work because at the end of the day reports tend not to be too productive. They did a lot of work, they identified certain problems following 1997. 1998 was far more severe; the Met Office have said that it was, I think, the worst in 70 years that struck in parts of the network so that you were bound to get some damage. But what they have failed to learn, I think, is that they are just not following a policy of upgrading their equipment or bringing things up to modern standard. This is disappointing. Their technical staff on the ground acted reasonably fast, as well as they could reasonably be expected to given the appalling nature of the weather and the physical restoration of most customers took place quite quickly. Where they seem to have failed again and where they have totally failed to grasp the lessons of last time round is that they were still unable to communicate what they were doing.

  86.  Thank you. In your letter to the Committee of 3 February, you commented that you intended to prepare a consultation paper on the NIE report highlighting the matters which most require public discussion. What progress have you made with this and when will the document be published?
  (Mr McIldoon)  I have had a draft in existence for some weeks. The difficulty is that I have not yet got some of the information that I want to analyze and I am actually now thinking that it might be sensible to break this into two different parts. I had said in October that I wanted to produce a document on the way in which the company planned its capital expenditure and chose its priorities because it has always seemed to me to be wrong that the company, without reference to anybody, should decide how much customers should spend on improving the network without consulting customers and what those priorities should be because clearly there are tensions between different priorities that the company might have. So I was in any case minded to publish a document in which I would have invited local authorities, members of the public, elected representatives and so forth to express opinions as to whether or not there should be a degree of accountability for the way in which the network investment was prioritised. Also the way in which the financing of that network expenditure should be carried out; I am not altogether satisfied that the way we do it at the moment is best in the long-term interest of customers. That paper will certainly be published some time in the course of the next two or three months. The storm raised all sorts of other questions which got to the heart of things like whether the rural network was being given the priority it merited and it begged questions as to whether or not the company should, in fact, not consult local authorities about what its investment plans were in each local authority area over the next two or three years. I welcomed the fact that the company's own report seemed to go much further towards openness and communication with the public than had been the case in the past and I thought that was a step-change in the way the company was conducting itself. Now the company actually needs to communicate better with the public and particularly with district councils because there is a public resistance to new overhead wires, to transmission lines, to sub-stations. There is even a public resistance to improvement in the network because it means planned interruptions and it seemed to me that it was both in the company's interests and customers' interests that there should be an effective dialogue established between customers, local authorities and the company as to how you manage this whole process and it seemed that the storm and the aftermath of the storm and the need to deal with it could be a catalyst for creating a new relationship between the two. So I wanted to encapsulate that in the report and, as I say, the report could be written fairly soon but I do not have the information that I need to find out the sort of relationship between the age and state of the network, the amount of Capex that is available and the vulnerability of the network to bad weather conditions and until I get that sort of information that part of the report cannot be published. That is why at the moment I am toying with the idea of splitting it into two bits, one of which could ask the general questions of principle because I think this thing cannot be allowed to drag on forever, and the second, which is possibly much more scientific and number crunching, which could come after we have spent some more time collecting the detailed information and combing over the numbers.

  87.  Thank you. What view do you take of the adequacy of the goodwill payments which NIE has made to those affected by the storm and how do those compare with the payments offered by the regional electricity companies in Great Britain and are these being credited automatically as NIE's are?
  (Mr McIldoon)  I think that the company has done very well in this respect. It has got guaranteed standards of payment for people who are off supply in normal circumstances and most customers are going to get more than they would have got under the guaranteed standards and certainly none of them will get less than they would have got under the guaranteed standards and some will get considerably more. In some cases payments could be £200 or £300 and against an annual average electricity bill of £327, that is quite a substantial amount of money. It may not compensate people for the anguish and the misery they had over Christmas, especially if they had friends and relations gathered from all over the world for Christmas back home, but nevertheless it is costing the company, we think, £4 or £5 million. It is a substantial contribution to trying to restore the company's relationship with its customers and as such I welcome it. I think the Consumer Committee deserves a great deal of credit for pressurising the company and I think that it was the sort of iteration between the company and the Consumer Committee which achieved this level of customer benefit. It certainly is as good if not better than was achieved for customers in other parts of the United Kingdom and in the Irish Republic, ESB being a publicly owned company anyway does not pay these sort of compensation payments. So that part of it, I think, was something we can all take a degree of satisfaction from.

Chairman:  I do have a supplementary I am going to ask Mr Thomas in due course, but Mr Donaldson's questions are still in the same section, so let me ask Mr Donaldson to ask those.

Mr Donaldson

  88.  Gentlemen, good afternoon. May I ask you what view you take of the proposals made by NIE for enhancing its capacity to respond to customer enquiries in future emergencies and the proposed enhancements of its contingency plans for responding to priority users, particularly those with special needs? Is it realistic to assume that the telephone system in Northern Ireland can ever have the necessary capacity to cope with the level of calls in an emergency such as the one experienced during the Christmas holiday period is likely to create?
  (Mr McIldoon)  I think Mr Coulthard can deal with the technicalities of the call centres and whether one would ever be able to cope. One of the things, though, we did in OFREG was look at the experience in Scotland and look at the experience in the Irish Republic and it is clear that if you want to communicate with customers during an emergency like that which is going to last for several days, so that the customers get useful information and also are led to understand that things are, by degrees, happening to resolve the situation, you can do it without a state of the art telecommunication system and you have always got to have something that is effective if the state of the art telecommunication system falls over. It was actually fascinating the extent to which in other places, particularly in the Irish Republic, there was not the backlash from customers about a failure to reconnect customers which was at least as bad, if not worse, than what happened in Northern Ireland. There certainly was a region in the Irish Republic where there were 400,000 customers of whom 200,000 were off supply. Many of them were off supply for much longer and yet there was nothing like the outcry from customers there because there was a very effective system of steam radio type of communication and I think NIE will not only have to get its telecommunication system right, but it will also have to have a fall-back which will enable it to communicate with customers should that fail and I agree with you, there is bound to be a sort of critical level at which any telecommunication system will fail.
  (Mr Coulthard)  I think the position with the call centres was that they were overwhelmed. Now we had been informed after the storms at Christmas 1997 that the company was going to introduce a new and more advanced call centre network for this winter just gone. In fact it has not yet been installed and that may have exacerbated what I think was always going to be a problem of being able to pick up calls from customers who were off supply. I think there is, in effect, a practical limit to the number of calls any system can cope with—I mean BT's or NIE's—but I do not think NIE particularly helped themselves by their tardiness in bring their new call centre in in time for last winter and which was promised. I hasten to add that the Consumer Committee were told that it would be in in time. That has got to come in and I think it has to be tested and we have to see whether or not it will cope with any reasonably severe weather. I do not think it will ever cope with the sort of storms we had on Boxing Day. I think in terms of, if you want, making do and mending, I think that the company were actually quite tardy in staffing up. Really the storm started off early Boxing Day and it was late on the 27th, 28th before they really, I think, appreciated the seriousness of the situation. I think there are questions that need to be answered as to why the company did not recognise—I think the company probably thought it was going to be a short and severe blow and then things would get back to normal and they could get on with tidying up. I do not think they realised it would continue, despite the Meteorological Office warnings. I think that is an area we are looking at with the company, ensuring that their speed of management response in effect is up to scratch on that. They certainly did not, I think, take advantage of the media as ESB did in the Republic in terms of being able to keep their customers informed, well, basically: "We know you have a problem and it will take X to solve it". ESB were actually—what they did when they received information through their own engineers that an area was off supply they made an estimate of when they would be able to cure it and they basically issued media messages through radio, local television and so on and so forth and said: "Look, we know you are off supply and you will be off supply for four days". To that extent they could plan their response whereas NIE to some extent ran around a bit like a headless chicken. As things came in they sort of rushed out engineers and so on and so forth with the result that nobody knew how long they were going to be off supply and really nobody knew what NIE was doing and I think that is where they actually scored very, very badly because customers did not get a good impression of their ability to manage the sort of situation whereas, in the Republic, ESB did. Sorry, the special needs you mentioned?

  89.  Yes?
  (Mr Coulthard)  Again, I think it was part and parcel of the fact that they were pretty slow on the take-up and it was really not until late on the 27th that they actually started looking and to ensure that their special needs customers were being looked after properly, if you would, in terms of supply. Once they had got up and running on that, however, they were in fact very good in terms of providing mobile generators and prioritising areas where there were special needs customers, to ensure that those who did have a special need were off supply as little as possible.

  90.  You drew the analogy with the headless chicken in terms of referring to NIE's strategy. Could it be that the head of the chicken was on holiday in England and maybe because the Director of Communications was not present during the crisis, that in fact, that contributed to NIE's communication strategy and their failure to affect a coherent strategy in terms of providing the public—perhaps through the media, given the inadequacies of the telephone system—to give the public more information about their efforts to restore supplies?
  (Mr Coulthard)  My response to that would be to say I always thought strategies were not planned in the heat of the moment, but were planned in advance and therefore capable of being implemented when the temperature rose. To that extent one would have expected NIE to have had a strategy already. Other than that, the question of whether or not—I think one looks at whether or not NIE staff themselves up properly and at the right level by their results and I have to say that we are not happy at the way they handled the crisis in terms of communication. Whether that was because certain individuals were not present I do not know.

  91.  Are you implying that there was the absence of a strategy or at least a coherent strategy to deal with this situation? I mean, I received the kind of assurances that you did after the storms in 1997 that there would be all kinds of measures put in place to deal with a similar problem should it arise in the future and it strikes me, from the evidence you are presenting, that there were significant inadequacies in terms of their response measured alongside the commitments they had given after the failure of the response in 1997?
  (Mr Coulthard)  The report would indicate that they had a strategy. I think my view would have to be that it was not terribly successful when tested.
  (Mr Thomas)  I think it is worth pointing out in this regard that the telephone calls coming in from customers are not just a service that the NIE provides to the customer. The customers are in fact providing a service to NIE. There is no, or there is very, very little, automatic reporting back into NIE of the state in terms of live or dead of the 11,000 volt or the mains voltage networks. NIE do not know the power has gone off until the customers phone them up and tell them so if they cannot take the incoming phone calls they are not going to find out where power is off. So that is one very important feature. The second important feature of course is that the customers are out there on the ground. The customer can often tell NIE that: "Oh, and by the way it is the pole across the road that has fallen over. It is at point X". This is very, very valuable information to NIE if they can but get it, and in this respect I echo the comment of my colleagues completely in that the staffing up of the call centres seems to have been very, very slow with the result that very many phone calls, especially on the 26th, the first day, just could not be answered. Now it does not matter how good the rest of your systems are, if you cannot get the information you cannot act on it.

  92.  This was an issue we addressed with other witnesses in terms of the type of communication system that NIE need to put into place. Would you share the view expressed by others, that it is not sufficient just to have some kind of answering service that gives out a bland message that tells people something they already know, for instance that their electricity is off and will be restored as soon as possible, but that in fact what they need is a system that identifies where the caller is calling from so that if they cannot get person to person contact there needs to be some means of identifying the source of the call, so that NIE can plot or map out where the calls are coming from and at least have some indication of where the problems are located?
  (Mr Thomas)  Yes, I agree. The technology to do this exists. There are already some quite clever electronic systems on the market which identify the number of the incoming call and can align that number with a particular customer. It aligns that to a location and the result is the computerised system actually builds up a picture of where no-supply calls are coming in from and will actually build that into an electronic version of a supply network to try and pinpoint where the fault is most likely to be. They can even go further than that and compare the likely faults with the staff that are available and their qualifications so that they can direct people straight there. But apart from that, I think that interactive messaging has another valuable position to play. Many customers are merely phoning up to say: "We are off supply". If they get a message—and it clearly has to be a regularly updated message—that says: "We are aware that customers in the Glengormley area" (to choose the omnibus) "are off supply. We are working on it; we estimate it will take at least six hours or at least 24 hours" or whatever it may be, if you have no further information to impart: "Thank you for calling". If you have further information to impart on matters of safety or whatever, you either press a button on the phone or remain on the phone to be connected to an operator and that is a very useful way of filtering out an ordinary: "We do not have a supply" call from something that says: "This is where your system has fallen over". So, yes, I think interactive messaging systems have a very valuable part to play, especially if that system can identify the location of the incoming caller because that is valuable information to NIE.

Mr McWalter

  93.  Of course that would mean investment, would it not?
  (Mr Coulthard)  As I understand it, Mr Donaldson, the improved centre, the improved call handling facility that was promised for last year, included the facility of identifying the location of callers. That is the one that is not yet in.

Mr Donaldson

  94.  Thank you. Finally, you refer to the NIE's efforts, for example to restore the power to their 33KV supply and indeed to the 11KV supply. It seems that they prioritised the reconnection of those supplies as what they felt was the best method of reaching as many consumers as possible in the initial phase of attacking the problem. What are your views in terms of the manner in which NIE prioritised their repair approach to the crisis, and are you satisfied that this means of prioritising was the most effective way to maximise the overall rate of restoration of customers?
  (Mr Thomas)  Yes, I think to a large extent it is the only practical way of doing it. Electricity supplies to our man on the Glengormley omnibus once he gets home is that they will come from the transmission system at 275 or 110KV and they will gently work their way down through the system. It is rather like the sap in a tree rising up the trunk and eventually arriving at a leaf by a very, very thin twig. If you cut off the source of the sap at the base you can muck around at the low voltage end—or the leaves—as much as you like and the power will not come back on. It really is a case of cascading it back stage by stage. Until you get 11KV back on you are not going to find out whether the low voltage system beneath it is healthy or not because you have no means of trying to energise it. So yes, you do have to work at a higher level and also clearly by putting on a major 33KV sub-station which might, for example, feed the whole of Newcastle you have the potential there to bring a lot more people back on in one go than reconnecting a low voltage supply with six customers on the end of it. So yes, I do think it has to be done that way and I think it is entirely logical that it should be done that way.


  95.  I take it that was Newcastle-on-Tyne rather than Newcastle, County Down?
  (Mr Thomas)  County Down I was talking about.

  96.  That is probably helpful for purposes of clarification. The other questions I was going to ask and I am not seeking to hold up my colleagues, you mentioned that there is a problem in determining the age of overhead transmission equipment. I take that problem exists in Great Britain as well?
  (Mr Thomas)  Yes, but I do not think it is a problem we should dwell too much on. I am far less concerned about the age of equipment as I am about its fitness for purpose and its condition of maintenance. There is both sides of the Irish Sea very considerable quantities of quite ageing equipment. There are cables under the streets of London which are 80 years old and still working perfectly adequately. There is no wonderful justification in replacing stuff just because it is 40 years old. If it is fit for purpose and as good as the day it was put in, then leave it. The problem surely is to target your investment on that which is known to be failing, but of course you can only do that if you know that it is failing.

  97.  Therefore your remark about the 1950's specifications, in terms of replacement, was irrelevant?
  (Mr Thomas)  Not at all. My remark about the 1950's specification, clearly that was the best available technology in 1950 when the specification was drawn up. Things do move on. Restoring something to the standard in 1950 will essentially give you a 1950's quality of supply which most of the time is fine; these things do not fall over every five minutes. But times have moved on, we do now have better technology available and it is possible to put up equipment which performs better in bad weather than was possible with the limitations in 1950's technology.

  98.  And is the 1950's technology being installed because those who are responsible for its installation are unfamiliar with alternatives?
  (Mr Thomas)  I think they are well aware of the existence of the alternatives. It would be quite unfair of me to say otherwise. It does require a little more money to put in the different technology because you will find, for example, that the insulators which take a bare wire are not big enough to take an insulated wire because inevitably the insulated wire has a larger cross section. But when you are doing a major line refurbishment a lot of the insulators are changed anyway. It is not the answer to every single situation but it is the sort of thing that should be considered when major refurbishment is taking place. Do we merely refurbish back to as-built, or do we take a wider view and upgrade? Refurbish in NIE terms does appear to mean put it back to the condition as it was built as new. Which is fine; as I say it will restore it to a decent condition, but I think where they miss out is in taking the opportunity to upgrade at the same time in order to enhance the performance of the line to better than the 1950's specification could be expected to do.

  99.  One last question before I turn to Mr McGrady. You were saying that it is difficult to know what should be upgraded, replaced, refurbished because until it is unfit for purpose it cannot be identified. I may be paraphrasing imprecisely what you said. I can see the work that goes on where quite clearly there has been malfunctioning—I have no difficulty in understanding that—but are you saying that because of the uncertainty about the fitness of the equipment any other work tends to be of a somewhat random nature?
  (Mr Thomas)  No. I think we have to be clear that there are two different functions going on here. One is the ongoing routine maintenance and replacement of assets and the second is putting everything back together when it falls over and they are two distinctly different activities. Clearly when something falls over in a storm you do whatever you can to get it back up as quickly as you can, but in terms of the capital expenditure and the refurbishment of networks, where you do actually have time to sit down and work out what you are going to do, hopefully to maximise the benefit obtainable from the expenditure, then this is where you really ought to be considering more than merely putting things back to the condition in which they were built.

Chairman:  Thank you very much. Mr McGrady?

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