Examination of witnesses (Questions 80
- 99)
WEDNESDAY 10 MARCH 1999
MR DOUGLAS
MCILDOON,
MR CHARLES
COULTHARD and MR
CHRIS THOMAS
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.
Chairman
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.
Chairman
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?
|
