APPENDIX II
NORTHERN IRELAND ELECTRICITY PLC RESPONSE
Letter to the Clerk of the Committee from
the Managing Director of Northern Ireland Electricity plc
I have pleasure in enclosing our response to the
principal conclusions and recommendations of Northern Ireland
Affairs Committee's Second Report—Electricity Supplies in
Northern Ireland: Impact of the 26 December 1998 Storm.
Our reply is in effect a summary of the progress
that we have made since our experience during the severe weather
over the 1998 Boxing Day period. The ongoing programme of investment
in the network will provide more resilience to severe weather
although no network can be guaranteed to sustain supplies through
storm conditions. We believe that the actions we have taken can
give our customers renewed confidence in our ability to manage
future emergencies. While it is not possible to provide a human
contact with every customer who calls us at the beginning of a
major incident, we believe that improved information on our messaging
systems and swifter communication with the media will give our
customers greater reassurance that we are aware of their supply
problems and are taking action to restore supplies.
The commitment I have given to all customers in our
new customer charter published last month is that "NIE staff
will be working night and day to do everything humanly possible
to keep any interruption —whatever the cause —to an
absolute minimum".
We hope that Northern Ireland does not experience
anything like the hurricane storm of Boxing Day 1998 ever again.
But if we do, then we believe NIE is significantly better positioned
to handle whatever the elements may have in store for us.
I would be delighted to clarify or expand on any
part of our reply, or arrange a visit for your committee to view
our new incident management centre at Craigavon.
Harry McCracken
3 November 1999
Response from Northern Ireland Electricity
plc
Recommendation (a)
We note that NIE plans to implement measures to
improve the information available to call handlers and to improve
its media communications strategy. We welcome this. It is clear
that customers found performance in this respect in relation to
the Boxing Day storms lamentable, a fact which NIE, to its credit,
frankly admits. As we recognise that it will never be possible
for the system to handle this level of calls, the priority should
be to seek to minimise the need for customers to call to obtain
information, so that as many lines as possible are free for customers
seeking to convey information about supply failures, which can
only help to plan the reconnection process. To that end, we recommend
that the comprehensive media communications strategy in the event
of a major disruption to electricity supplies should be designed
so as to minimise the need for queries about reconnection times,
etc. We also recommend that the NIE should publicise widely its
plans for providing information in such circumstances, perhaps
by periodically including an appropriate insert in account mailings.
(Paragraph 32)
RESPONSE
Communications Campaign
We have informed our customers of the work that we
have done to improve the quality of service to them during severe
weather damage to our system - be it snow and ice, lightning,
storms or floods.
We implemented a communications programme for Winter/Spring
1999-2000 to improve customer understanding of, and confidence
in, NIE and to meet expectations as we head into the winter period.
The campaign is made up of TV, press and radio advertising,
all featuring NIE staff, and a customer information pack[1]
which has been mailed directly to all customers. We have also
met with local authorities and political parties and our new eleven
local Customer Service Centre Managers are being promoted in the
local media as the new, local face of NIE.
The Customer Service Centres are situated at: Ballyclare,
Ballymena, Bangor, Belfast, Campsie, Coleraine, Craigavon, Downpatrick,
Dungannon, Enniskillen, Lisburn, Newry and Omagh.
The Customer Information Pack
Each one of our 683,000 customers has received a
special customer information pack during the week commencing October
25. The pack included a letter from Harry McCracken, NIE Managing
Director, a severe weather advisory leaflet, a fridge sticker,
customer charter information and a leaflet encouraging people
to test their smoke alarms.
Harry McCracken's letter includes a detachable 'credit
card' size information card, which has a customer number and postcode
already printed on it. The card has our emergency number on it
as well as some useful advice in the event of a power cut.
The severe weather advisory leaflet has useful information
on how to cope with power disruption caused by severe weather.
It also includes important safety messages and information on
our special needs register, and advice on getting information
from NIE during severe weather power disruption.
The Customer Charter Leaflet lists NIE's six Charter
Pledges as well as our new overall and guaranteed standards. It
invites customers to call 0847 455455 to order their copy of the
Charter.
A special peel on and off fridge sticker is included
in the pack. It contains useful information on what to do in the
event of a power disruption, as well as our emergency telephone
number, and advice on getting information from NIE during severe
weather power disruption.
The Smoke Alarm Awareness Leaflet has been prepared
by the Fire Brigade as part of their 'No Battery No Chance' campaign.
NIE is very happy to be involved in the campaign and we are including
this in our pack to underline our commitment to safety, particularly
during power disruptions.
A media action plan has been drawn up for use during
a major supply loss. It was tested successfully during the storms
of 17/20 September 1999.
The basis of this plan is that if sufficient notice
is available, advance warning and safety messages will be provided
through media and advertising. During an emergency, power supply
up-dates will be continuously issued, particularly through radio
broadcasts, in addition to advertising and Internet.
Improving communications with customers during
emergencies
Our Call Handling Capacity has been increased as
shown in the table below. We have sub-contracted to BT for provision
of Call Handlers to supplement the resources available from our
Sx3 sister company, and company volunteers.
| | Christmas 1998
| October 1999 |
| Lines to Call Handlers | 134
| 280 |
| Lines to Messaging Systems | 100
| 318 |
| Total Lines | 234
| 598 |
A planned escalation procedure is in place to deploy
call-handling staff within two hours from the declaration of an
emergency.
We have modified our call routine arrangements to
provide automatic escalation of up to 36 Call Handlers instantaneously
for a single major fault during working hours. We can escalate
progressively to 280 Call Handlers within four hours.
When fully escalated we will be able to handle in
excess of 6000 calls per hour using operators.
A new Interactive Voice Response system (IVR) was
commissioned in September. This can offer up to 35 localised messages
on 118 lines, equating to over 15,000 two minute calls per hour.
The first stage of our new Customer Service IT system
improvements will be introduced at the end of November 1999. The
first phase of this will be the implementation of a new call handling
and Trouble Management System for approximately 25% of our rural
customer base. All Northern Ireland customers will progressively
move to this system by May 2000. We have also increased the capacity
of our present call logging system from 500 calls per hour to
3400 calls per hour.
The message link service has been increased to 200
lines and is in use as a back-up for our IVR system.
We have issued a letter of intent to place a contract
with BT for an advanced messaging system to deal with major fault
situations to be progressively introduced between November 1999
and May 2000.
Five separate direct lines have been provided at
our main Customer Service Centres for public representatives.
These are in regular use.
Fault information is now provided from Customer Service
Centres, mailed electronically to our incident centre, collated
and dispatched to Call Handling Centres and our media communications
group. The information is structured to provide meaningful information
to Call Handlers and hence customers.
A comprehensive call handling training programme
is underway to be finished by the end of November. 160 Call Handlers
had been trained at 20 October.
More than 1800 staff throughout the Viridian Group
have volunteered to assist in an emergency. Tasks have been allocated
and induction training will be completed during November 1999.
Special Needs Response Units will be established
at five main Customer Service Centres in an emergency. We are
aiming to contact and provide Acute Care Register Customers with
best possible information and advice within the first few hours
of an emergency. We will maintain contact as required with special
needs customers throughout the duration of the emergency.
We have established links with the health services
and we intend to substantially increase the number of customers
contacted through these links, and ensure regular updating.
We have formalised arrangements with providers of
vital services (water, communications, hospitals and transport)
to ensure that appropriate contacts are maintained. All these
services will be contacted within 3 hours of the incident and
action taken to ensure that, wherever possible, supply is maintained
and restored. Additionally we have provided the owners with ex-directory
contact numbers for use in an emergency.
Our thirteen Customer Service Centres have a major
role in an emergency. Each centre has a manager who will be responsible
for leading the local restoration effort. Eleven Customer Service
Centres Managers were appointed in April 1999.
Each Customer Service Centre has a local emergency
plan conforming to a Best Practice Model. This provides for the
analysis of faults, provision of information to the Incident Centre
and Management of Restoration, and local contact with media and
elected representatives.
Recommendation (b)
We believe that BT should review the operating
arrangements for its 0345 numbers. Its evidence reveals a substantial
apparent weakness in the Message Link service in that NIE could
not update its own messages. This was not due to a fault, as originally
thought; it was due to an inherent design problem in the service.
Inaccurate and out of date messages were one of the complaints
of customers who did get through to the Link. BT should provide
dedicated updating lines as a matter of urgency. There would also
appear to be a case for BT to review the overall level of capacity
on the national 0345 platform; it appears fortunate that the bulk
of the burden from the storm fell on a holiday weekend when there
was little other traffic to these numbers. This was pure chance.
(Paragraph 36)
RESPONSE
The problems experienced with the BT message link
service on Boxing Day 1998 have been overcome by increasing the
capacity to 200 lines. These are in two banks of 100. Each bank
is taken out of service separately to allow the message to be
changed.
Recommendation (c)
It is clear that NIE field staff faced many difficult
challenges in restoring electricity supplies on December 26 and
subsequently. Not only was there substantial damage to the electricity
network, the storm had also damaged NIE's private communications
networks. Continued adverse weather hampered repair teams in the
field who were undertaking damage assessment and restoration work
against a background of continuing damage caused by the weather.
We pay tribute to the dedication and skill of the field staff
in particular, who worked throughout the period 26 to 31 December,
often in atrocious weather conditions, to restore supplies to
customers. (Paragraph 38)
RESPONSE
We thank the committee on behalf of our staff for
the warm tribute to the dedication and skill of our staff and
have publicised the comments to all our staff.
A revised NIE Emergency Plan has been completed bringing
together all processes and procedures adopted to deal with emergencies.
A Duty Incident Centre Team is on standby each week
and manages the escalation process associated with emergencies.
This team carries out regular risk assessments, based on weather
reports and other relevant information, and mobilises appropriate
resources for emergency response, including call handlers.
A new Incident Centre has been opened at Craigavon
and this is manned by the Duty Incident Team during emergencies.
The Incident Centre is responsible for tracking the
use of resources during an emergency and supplementing NIE resources
when necessary. Formal arrangements have been made with other
electricity companies in Great Britain and the Republic of Ireland
to provide additional resources- teams and equipment will be available
at short notice to assist in fault repair. Formal contracts have
been agreed with local plant hire companies and helicopter providers.
Formal arrangements have also been made with suppliers for the
supply of materials during emergencies and specifically over holiday
periods.
New processes and systems have been developed to
improve our ability to quantify the scale of an emergency and
to provide quality information to customers. Information flows
from Control Centres, Customer Service Centres and field staff
are collated through the Incident Centre with regular updates
to call handlers, messaging systems and the media.
A plan has been established to ensure the installation
and maintenance of standby supplies at key telecommunications
installations. Additional links are to be provided on the private
digital network to reduce the impact of multiple digital faults.
Additional mobile phones are available for operational staff during
an emergency. A review is underway to ensure that operational
staff are provided with mobile radios. This communications hardware
is critical to the restoration effort.
Recommendation (d)
We note that OFFER is to consider the quality
of supply achieved during storms in the light of the historic
capital and operating expenditure of PES in Great Britain. If
OFFER deems companies to have been inefficient in their allocation
of expenditure, they will be dealt with through the forthcoming
distribution price control review. We consider that a similar
mechanism would be appropriate in Northern Ireland in the context
of the 2002 revision of the NIE price control. (Paragraph 53).
RESPONSE
We are confident that, when required to do so at
the next price control review, we will be able to demonstrate
that all expenditure on the network has been allocated efficiently.
In particular, we are convinced that the superior performance
of the refurbished circuits during the storm is evidence of the
benefits to customers of the significant investment we have been
making in our overhead line refurbishment programme.
As regards the allocation of additional expenditure
to improving the resilience of the network to storm conditions,
rather than wait until the next price review to debate the efficiency
of that particular expenditure, we considered it appropriate to
discuss with Ofreg our intention to reallocate resources to fund
the accelerated refurbishment and supplementary programmes. In
April, we submitted to Ofreg details of our plans, together with
comprehensive information on storm damage statistics, evidence
of the superior performance of the refurbished circuits, the relationship
between network age and its vulnerability to extreme weather conditions,
details of the refurbishment specification, the capability within
the overall capex programme to reallocate expenditure, the costs
and the benefits.
Recommendation (e)
The level of security of supply through the overhead
supply network is, and will remain, lower than that through the
underground network: customers served through the overhead high
voltage network suffer on average an annual level of Customer
Minutes Lost nearly ten times greater than those served through
underground network. Given that customers pay the same price for
their electricity whatever the means of supply, we believe that
NIE's concentration on enhancing the resilience of the overhead
supply network is reasonable. (Paragraph 59)
RESPONSE
We are pleased that the committee has supported our
concentration on enhancing the resilience of our overhead network.
A Refurbishment Steering Group has been set up to
project manage the accelerated programme of refurbishment and
tree pruning. Each element of this year's programme is on target
for completion by the end of March 2000. The 33kV overhead lines
refurbishment programme has been increased to 350km with associated
tree pruning. A further 600kms of supplementary maintenance (eg,
decayed pole replacement), with associated tree pruning, will
also be completed. On the 11kV network, which was most affected
by the severe weather, the refurbishment programme has been increased
from 1,500 km to 1,750km this year, with associated tree pruning.
A further 500km of supplementary maintenance with associated tree
pruning will also be completed. 800 km of LV refurbishment with
associated tree pruning will also be completed.
Each element of this work will provide a more secure
network which will be more resilient to severe weather conditions.
This is a continuous programme which has been on-going since 1994.
The vamping up of the programme will be maintained for at least
the next 3 years.
We have increased the number of Senior Authorised
Persons available to us (a safety authorisation level required
to permit work teams to undertake work on the network). We have
also increased the capability of our contractors to undertake
similar duties.
A further 3 live-line working teams have been trained
and are operational on the network. This technique for working
on the system while it is live reduces the inconvenience experienced
by customers caused when they are taken off supply for a period
to facilitate work on the network.
Recommendation (f)
Establishing how much more consumers themselves
are willing to pay is an essential input to decisions on what
consumers should be prepared to pay. We emphasise that this exercise
should be completed before the price control and the allowed level
of capital expenditure are re-set in 2002. (Paragraph 60).
RESPONSE
We have established a Working Group to oversee a
customer survey to be conducted by an independent firm of market
research consultants. The objectives of the research involve determining
customers' views on supply reliability and how much more customers
are willing to pay to fund improvements in the quality of supply,
including the reliability of supplies during storm conditions.
The methodology will employ focus groups together with a customer
survey and will seek the views of both urban and rural customers.
We are currently involved in discussions with the
Northern Ireland Consumer Committee for Electricity and we intend
also to consult with Ofreg in order to build a consensual approach
to the survey as recommended by the Committee. The work will be
completed over the next few months with a view to having the results
available in February 2000. This timescale will provide ample
time for the outcome to be taken into account when the next price
control is being set.
Recommendation (g)
Given the difficulty of ascertaining how far capital
underspends are due to genuine efficiency gains, we support the
Regulator's proposal that NIE should provide cost-benefit evidence
that proposed changes in the capital expenditure programme during
a given price control period are economically efficient and more
beneficial for consumers than the original capital expenditure
programme approved by the Regulator. Like any well run company,
NIE is certain to make such calculations before it decides to
defer particular projects. (Paragraph 61).
RESPONSE
The MMC made it clear that in adopting a particular
level of capex for the purpose of setting the existing price control
they were not prescribing an investment programme. They recognised
there would be competing demands on the capital budget which would
give rise to a need for NIE to determine priorities among those
demands.
In exercising discretion in the management of the
capital budget, we acknowledge the need to justify any reallocation
with a rigorous investment appraisal. That is why we presented
cost/benefit information to Ofreg in support of our decision to
reallocate expenditure to the accelerated and supplementary refurbishment
programmes.
However, the benefits attributable to one category
of expenditure are not always readily comparable to the benefits
from a different category. For example, the primary benefit which
flows from load related expenditure is the ability to meet increased
customer demand for electricity whilst complying with statutory
and licence standards. On the other hand, expenditure allocated
to overhead line refurbishment delivers a different package of
benefits including an improved quality of supply to rural customers.
Comparing one set of benefits with another is therefore not straightforward
and inevitability a degree of subjectivity is required.
Within those constraints, we have set out in our
submissions to Ofreg our appraisal of the costs and benefits involved
in the reallocation of expenditure in response to the changed
investment priorities post the Boxing Day storm.
In addition, over the past six months we have been
co-operating with Ofreg and its consultant in the development
of an agreed approach to capex monitoring and investment appraisal
covering all aspects of network investment. As indicated above
in our response to recommendation (d), we expect to confidently
defend any substantive deviations from the expenditure levels
in each of the categories which was adopted by the MMC for the
purpose of setting the current price control.
Recommendation (h)
Given our general support for measures to improve
the resilience of the overhead distribution system to storm damage,
we welcome the assurance from the Regulator that meeting his target
for reducing domestic electricity bills, which, if achievable,
will no doubt be widely welcomed in the Province, does not depend
on a substantial reduction in transmission and distribution expenditure.
(Paragraph 64)
RESPONSE
We also welcome this assurance. High generation costs
are the principal cause of higher electricity prices in Northern
Ireland.
Recommendation (i)
We consider that the scope for using some of the
£40 million remaining from funds announced in 1995 to reduce
the cost of electricity in Northern Ireland to improve the resilience
to storm damage of the overhead electricity supply network in
Northern Ireland should be investigated. We recommend that, before
any of the £40 million is allocated to reducing generation
costs, a thorough study be carried out of the case for investing
some at least of that sum in strengthening the resilience of storm
damage of the overhead supply network. (Paragraph 71)
RESPONSE
We have investigated a range of options for the use
of the £40 million which remains within the Government Support
package with a view to determining which option delivers the best
value to customers in net present value terms of the price reductions
achievable. Options include the base case option of "drip
feeding" an annual amount to reduce tariffs, using the money
to secure a reduction in the Ballylumford contract payments, application
to Orimulsion at Kilroot, and application to the transmission
and distribution regulatory asset base (which in effect reflects
the option suggested by the Committee).
In all, 10 options have been examined. Leaving aside
the option of applying the fund to the conversion of Kilroot to
Orimulsion (given the uncertainty which currently surrounds the
likelihood of that project proceeding quickly) our analysis shows
that the best option is to apply the fund to buy down the Ballylumford
contract payments. This provides additional value to customers
of between £1m-£4m (depending on assumptions as to the
future availability of the generating units) over and above the
option of using the fund to offset network expenditure. We have
therefore recommended the Ballylumford contract buy-down option.
Recommendation (j)
Since we took evidence from NIE, OFFER has published
its own report on the experience of Public Electricity Suppliers
in Great Britain in responding to storms caused by the same weather
system. We hope that NIE will study this report carefully and
the recommendations that it makes, as many of these may also have
potential application in Northern Ireland. (Paragraph 73).
RESPONSE
We have carefully studied the recommendations contained
within OFFER's May 1999 report and we consider that OFFER's recommendations
are covered in the steps which we have already taken and the plans
which we have in place.
Recommendation (k)
We note that the Regulator plans to publish very
shortly a comprehensive report on the lessons to be learned from
the storm. We look forward to receiving copies of this report
in due course. We would also like NIE to let us have a comprehensive
progress report at the time that the Government replies to this
report on the implementation of its plans, on some of which they
have made interim announcements, to minimise the impact of future
severe storms on the electricity distribution system in Northern
Ireland. We would like that report to include a list of all outstanding
steps to be taken, with a firm timetable attached to each. (Paragraph
74)
RESPONSE
At the time of writing, Ofreg's report had not been
published.
We have outlined in our responses to the Committee's
principal conclusions and recommendations a comprehensive progress
report demonstrating that we have already implemented practically
all our plans as outlined in our Boxing Day Storm Report. We have
included implementation dates for those plans still to be fully
implemented.
Many of our measures have already been tested during
a weekend storm on the 17-19 September this year in a way
which we consider confirms the effectiveness of the actions we
have taken since the Boxing Day Storm. A copy of our report[2]
to Ofreg is attached. (Annex A)
1 Copies of the pack were submitted to the Committee with this Response. Back
2 This report was set out in a letter of 21 October 1999 from the
Regulation Officer. Back
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