APPENDIX 2
Memorandum by the Department of Trade
and Industry
INTRODUCTION
1. The DTI welcomes the Trade and Industry
Committee's decision to conduct an inquiry into the effectiveness
of the electricity supply industry's contingency plans and their
progress in dealing with the issues identified following the storms
of 27 October 2002. This memorandum sets out the background and
how the Department has been involved. A discussion on areas for
further consideration is included.
2. The Committee is also reviewing arrangements
for the payment of compensation to customers affected by power
failures and the processing of claims arising from 27 October.
These matters are covered by Ofgem in a separate memorandum.
BACKGROUND
3. On Sunday 27 October 2002, storms with
winds gusting up to 100 mph hit much of England and Wales, causing
widespread damage to electricity distribution networks. These
storms were severe both in their intensity and their impact.
4. Major storms affecting the electricity
infrastructure in the UK have been infrequent but they are not
unusual. Other notable examples include the 1998 Boxing Day storm,
the Burns Day Storm of 25 January 1990, the Great Hurricane of
16 October 1987 and two major blizzards in the winter of 1981-82.
In more recent memory a severe storm swept across northern France
in the winter of 1999-2000 causing widespread damage to power
lines.
5. On 27 October 2002 up to two million
customers in England and Wales were affected by loss of electricity
supply due to storm damage; most customers were reconnected within
18 hours, but supplies were not fully restored until Tuesday 5
November, nine days later. There were significant differences
between similarly affected regions in the speed with which the
distribution companies were able to restore supplies and in the
way in which companies communicated with their customers. Energy
engineering consultants British Power International (BPI) were
appointed by DTI to conduct an investigation which was published
in December 2002[1].
GOVERNMENT RESPONSIBILITIES
FOR ELECTRICITY
SUPPLY
6. Legal responsibility for energy security
is shared by the Secretary of State for Trade and Industry and
Ofgem. The Secretary of State is responsible for setting the overall
regulatory framework for the supply of electricity. A key part
of that framework is set out in section 3A of the Electricity
Act 1989 as amended by the Utilities Act 2000. Key objectives
of the Secretary of State and Ofgem are:
— to protect the interests of consumers
in relation to electricity conveyed by distribution systems, wherever
appropriate by promoting effective competition;
— to have regard to the need to secure
that all reasonable demands for electricity are met;
— to have regard for the need to secure
that licence holders are able to finance their activities;
— to have regard to those who are disabled,
of pensionable age, on low incomes and who live in rural areas;
— to promote efficiency and economy
in relation to distribution and supply of electricity; and
— to protect the public from dangers
arising from the generation, transmission, distribution or supply
of electricity.
7. Electricity for domestic consumers is
provided through their contracts with electricity supply companies,
which are trading organisations, not responsible for the electricity
infrastructure such as overhead lines. However in many cases an
electricity supply company will have links with a distribution
company (see paragraph 8) for historic reasons. This separation
of roles, which was part of the introduction of competition into
the electricity industry, was brought into effect with the introduction
of the Utilities Act 2000.
8. In each electricity distribution region
the physical supply of electricity to customers is the responsibility
of a monopoly Distribution Network Operator (DNO), regulated through
an Ofgem licensing system. In England and Wales DNOs draw power
from National Grid Transco's (NGT) 400 kilovolt (kV) and 275kV
network. In Scotland the 400kV, 275kV and 132kV lines are operated
by the two companies that are also responsible for the Scottish
DNOs (Scottish Power & Scottish and Southern Energy) in their
respective licence areas. The Secretary of State lays down Standard
Licence Conditions which include, for example, reference to the
Distribution Code. Enforcement of the licence conditions is for
Ofgem.
9. The electricity distribution companies
are subject to Guaranteed Standards of Performance which provide
for compensation to be paid at a rate of:
— £50 for domestic consumers without
power for more than 18 hours; and
— an additional £25 for subsequent
12 hour periods without power.
However companies can be exempted from paying
this compensation if severe weather has prevented the company
from restoring the supply. Initially it is the companies that
decide whether to offer compensation or to claim the severe weather
exemption. Consumers can challenge non-payment of compensation
through the consumer organisation Energywatch and, in the final
instance, Ofgem. Ofgem has statutory powers to determine disputes
on matters relating to payment of compensation under the Standards.
It is also open to the companies to make ex-gratia payments to
affected customers.
10. The Government actively monitors general
gas and electricity energy security over the medium term through
the Joint Energy Security of Supply (JESS) working group, consisting
of DTI, Ofgem, NGT and Foreign Office representatives. It makes
the conclusions of that group publicly available through twice-yearly
reports assessing supply and demand information and periodically
reviewing the dependence of the networks on particular facilities.
Information gathered by JESS is used as a guide to issues in the
market or regulatory system or elsewhere (for example planning)
that may be preventing an adequate market response.
11. Ofgem requires DNOs to submit detailed
information on the performance of their networks on a regular
basis. Ofgem uses this information to monitor DNOs' performance
against target levels agreed at the commencement of the regulatory
period. The companies also submit information on major power interruptions
to the Secretary of State; the Engineering Inspectorate at DTI
collates this information and uses it to investigate incidents
or influence policy as appropriate to the circumstances.
12. Many of the distribution companies have
made substantial improvements in quality of supply performance
since the early 1990s. Analysis by Ofgem has shown that the average
number of power cuts per customer has fallen by 11% and the average
duration has fallen by at least 30%.
13. The Engineering Inspectorate comprises
electrical engineers appointed under section 30 of the Electricity
Act 1989 (as amended by the Utilities Act 2000) to examine the
generation, transmission, distribution or supply of electricity
and to inspect and test electrical plant. In practice Inspectors
liaise closely with DNOs in the performance of their duties, which
include investigating accidents involving the public and complaints
about safety or supply interruptions.
14. The Minister for Energy has recently
made a new statutory instrument—The Electricity Safety,
Quality and Continuity Regulations 2002 (SI 2002 No 2665)—requiring
electricity companies to protect the public from danger, to maintain
standards in power quality (ie maintain voltage within statutory
limits) and to ensure continuity of supply. Regulation 3(1)(b)
requires DNOs to construct, install, protect, use and maintain
their equipment to prevent interruption so far as is reasonably
practicable. The qualifier so far as is reasonably practicable
requires a balance to be struck between the risk of interruption
and the costs of preventing the interruption.
15. In recognition of the importance of
a secure electricity infrastructure for Great Britain, the DTI
Business Plan 2003-06 includes an objective to ensure the
continuity and security of energy supply at affordable prices
through competitive markets, whilst minimising environmental impacts
and delivering social objectives (pages 40 and 41). One of DTI's
aims is to ensure that sound emergency plans and secure and reliable
networks for electricity and gas are in place, and that any disruptions
and emergencies are successfully dealt with.
DTI'S INVOLVEMENT
BEFORE THE
STORM OF
OCTOBER 2002
16. In February 2002 DTI commissioned a
study into the ability of the electricity transmission and distribution
companies to recover from an emergency. The study was not triggered
by an incident or crisis, but Ministers considered it timely to
review good practice across the industry. There had been much
commercial restructuring, it was more than two years since the
last major exercise preparing for the year 2000, there was concern
about more erratic weather patterns, and of course post 11 September
heightened awareness of the possibility of terrorist attack. In
addition there had long been reports, eg from the Trade Unions,
of cost cutting and loss of skills in the sector since privatisation,
although this did not seem to be supported by the companies' performance
records.
17. After a competitive tender process BPI,
power engineers with many years' experience in the sector, were
appointed to carry out the study. They visited all the electricity
transmission and distribution licence holders in mainland Britain
to discuss how their plans had developed in response to changes
such as reorganisations and mergers in the industry and recently
observed erratic weather patterns. The study looked at the quality
of the emergency planning and systems that were in place, but
did not attempt to test them in practice.
18. BPI's report (the first BPI report)
was published in June 2002[2].
It found that the industry was, in most critical areas, better
prepared and equipped to handle emergencies than was the case
a decade ago. This was because technical, managerial and structural
improvements in the companies were likely to mitigate the effects
of staff reductions. However, there was still scope for more sharing
of best practice across the industry in terms of emergency management
structures, processes and planning.
19. BPI presented the findings to the industry
at the Electricity Association's Emergency Response Seminar in
the West Midlands on 4 July 2002. The specific recommendations
of the report included one that companies should clarify their
arrangements for access to contracted-out resources, such as field
staff, equipment and call centre services, in a widespread emergency
where more than one company was affected. In a letter to company
Chief Executives, former Energy Minister Brian Wilson asked the
companies to look closely at the findings (see Annex 1).
DTI'S RESPONSE
TO THE
STORM OF
OCTOBER 2002
20. Before 27 October 2002 DTI was already
considering commissioning follow up work and had been discussing
its scope with BPI. When, following the storm, it had become clear
that the performance of some companies had fallen short of their
contingency planning, this work was brought forward as a matter
of urgency. Brian Wilson announced on 29 October that BPI would
carry out a review of how companies had performed and would make
recommendations. The lessons learned and recommendations would
be reviewed by a team comprising DTI (including the Engineering
Inspectorate) and Ofgem to help ensure that future supplies to
consumers were not affected to the same extent.
21. The BPI Review was published on 19 December
2002. They found that all companies generally had good high level
plans in place. The better performing companies were able to estimate
accurately the amount of resources needed to restore supplies;
they mobilised their resources early and were able to manage them
effectively during the incident. The companies that performed
less well suffered extensive damage to their infrastructure as
a result of falling trees and branches, and their customer communications
and troublecall systems did not meet expectations. BPI made a
number of recommendations for the companies, DTI and Ofgem with
a view to improving storm performance in the future. Importantly,
BPI concluded that there appeared to be no fundamental reason
why those companies that performed less well should not meet the
standards set by the best in how the event was anticipated and
managed.
22. Following the publication of the second
BPI report in December 2002 the then Minister for Energy, Brian
Wilson, wrote to each of the Chief Executives of the DNOs in January
2003 seeking confirmation of their specific plans to improve their
performance in the event of a similar incident in the future (Annex
2). The companies responded offering their own interpretation
of their performance and, in some cases, listing their intended
actions to improve network resilience. These responses were subsequently
published on the DTI's website[3].
23. In order to receive reassurance that
the industry was responding positively to the BPI recommendations,
DTI officials met with the Electricity Association in London on
15 January 2003. Further to this discussion DTI officials attended
the meeting of the Electricity Association Networks Board on 27
February 2003 to encourage the companies towards best practice
in storm performance. The meeting was attended by directors from
the DNOs and a representative from Ofgem. At this meeting it was
agreed that a working party involving DTI, Ofgem and the DNOs
would be established (later to be called the Network Resilience
Working Group—see paragraph 28).
24. DTI officials also met with a number
of the companies to discuss issues around network resilience and
storm performance. Some of these meetings were arranged at DTI's
request, and others were in response to the invitations by the
companies. The meetings were hosted by the companies at their
offices. The dates of the meetings were as follows:
— Western Power Distribution at Bristol
on 11 February 2003;
— Aquila at Worcester on 12 February
2003;
— LE Group in London on 22 May 2003
(DTI officials attended other meetings with LE Group on 8 May
and 20 June 2003);
— NEDL/YEDL at Castleford on 19 June
2003; and
— SP Manweb at Prenton on 6 August
2003.
25. DTI officials have also met with representatives
from the unions to obtain their perspective on the companies'
performances following the storm. Officials attended one meeting
with Prospect (3 February 2003) and two meetings with Amicus (28
January and 25 March 2003). Reports from trades unions members
were mixed. Some felt that management and staff had worked well
together during the incident; others felt that staff were disorganised
due to lack of information, that there were insufficient authorised
persons at hand to instruct staff and that imported staff were
not used effectively. These comments have helped officials to
take a practical and balanced view when dealing with the companies.
26. DTI officials attended and supported
the Emergency Response Seminar on 10 April 2003, which was organised
by the Electricity Association and held at the Institution of
Electrical Engineers in London. This seminar was arranged to highlight
problems associated with network resilience and to discuss ways
forward for the industry.
27. In order to seek confirmation from the
DNOs that their various improvement initiatives are completed
or well advanced, the new Minister for Energy Stephen Timms wrote
to chief executives of NGT and the DNOs on 22 August 2003 (see
Annex 3). It had always been the intention of the Minister to
write to the companies in the autumn, ie in advance of any winter
storms, and this action was brought forward by several weeks to
fit with the timing of the Committee's inquiry. Responses are
sought by 8 September 2003 and these will be published on DTI's
website.
28. Following the meeting with the Electricity
Association Networks Board on 27 February 2003 (see paragraph
23), the first meeting of the Network Resilience Working Group
was held on 15 April 2003. At this meeting the terms of reference
were drafted (see Annex 4), and it was agreed that the Group would
be chaired by a DTI official and DTI would also provide the secretariat.
A key aim of the Group is to provide a joint platform to facilitate
the development and delivery of solutions in line with the BPI
generic recommendations included in their report of December 2002.
The main areas the Group is exploring are: changing weather patterns,
the national availability of engineers and craftsmen, incentives
associated with the existing regulatory regime, vegetation management,
techniques to improve network resilience, customer expectations
and customer communications, and also emerging risks facing the
electricity industry.
29. Representatives from all the DNOs have
participated in the work of the Group as well as representatives
from Ofgem and Energywatch. Since the first meeting the Group
has met regularly at the DTI office, 1 Victoria Street, London.
The Group intends to publish the full text of its report by the
end of October 2003.
RECENT EVENTS
AFFECTING POWER
SUPPLIES IN
NORTH AMERICA
30. The events in north east USA and eastern
Canada on 14 August 2003 leading to collapse of transmission and
distribution systems appear to be different to the areas addressed
in the BPI report of December 2002 and the scope of the inquiry
by the Committee. The incident in August was associated with the
North American extra high voltage (transmission) system linking
several states and straddling the USA/Canada border. It is not
yet certain what triggered these events or why, once triggered,
the problem spread so quickly. DTI eagerly awaits publication
of the findings of the US/Canadian task force which is investigating
this incident. The Department and Ofgem will look closely at the
findings and recommendations and will give careful consideration
to any implications for the UK. A joint DTI/Ofgem working group
has already been established to monitor developments as news of
the North American incident emerges.
31. The storm of 27 October 2002 affected
high voltage and low voltage overhead lines operated by the DNOs.
NGT's transmission lines were not affected by this storm and therefore
NGT were not subject to the investigation by BPI. The scope of
BPI's second investigation was strictly the networks operated
by the DNOs, ie 132kV down to 230V.
32. The factors that may be attributed to
these two incidents appear to be different. The British outages
were caused by multiple incidents due to storm damage affecting
a number of adjacent distribution networks (15,490 faults in total).
It appears that the American experience was initiated by a single
incident (or a few incidents) affecting transmission networks
linking distribution networks in adjacent states. For these reasons
the Department's view is that it is not appropriate to link the
two events, at least until the conclusions of the US/Canadian
task force are published. It could be, of course, that common
factors may emerge from the North American investigation, for
example vegetation management.
POWER FAILURE
AFFECTING LONDON
ON 28 AUGUST
2003
33. The Department is very concerned about
the power failure affecting London and parts of the south east
on the evening of 28 August 2003. At 18:20 supplies were lost
to about 410,000 customers. All supplies were restored within
41 minutes, but problems continued with the transport system apparently
due to an early decision to evacuate passengers from trains. Early
reports point to coincident faults on NGT's 275kV network, one
associated with a transformer and another with a circuit or switchgear
for this circuit.
34. The Minister has written to NGT for
their advice as to the circumstances of this incident and what
measures may be taken to avoid a similar power failure in future
(see Annex 5). NGT will report their findings to the Minister.
DTI will work closely with Ofgem in reviewing the circumstances
of this serious incident with a view to taking forward any necessary
recommendations. At this moment in time it is too early to speculate
on the outcome of NGT's investigation.
DISCUSSION
35. It is the DTI view that it is appropriate
to be involved in these issues, alongside Ofgem as the industry
regulator, both because of the Department's joint responsibility
with Ofgem for security of energy supply, and because the industry
is so crucially important to the economy and national life.
36. The Department continues to believe
that electricity services are best delivered by private firms
under a regulated system. It would be inappropriate for Government
to specify exactly what measures companies should adopt to deal
with emergencies. These judgements are best made by the companies
who have detailed local expertise and knowledge and who are directly
subject to the performance standards in the regulatory system.
37. However DTI believes that it is appropriate
to monitor the workings of the system closely to see whether the
regulatory system is delivering today's needs, for example modern
expectations of customer information. It is also appropriate to
gather information about good and less good practice from major
incidents such as the October 2002 storms, and to make this available
to companies and the public. In this way lessons can be learnt
and the impact on consumers from similar incidents in the future
can be minimised.
38. It is DTI's assessment that all the
DNOs have responded positively to the BPI recommendations and
to the Minister's enquiries, and that arrangements have been put
in place by the DNOs to bring about an improved performance in
restoration of supply following a storm. The better performing
companies have been reassured that their facilities and arrangements
are suitable to respond to major storms, and they have identified
opportunities for improvement where processes could have worked
better. The companies that performed less well have benefited
from a wake up call; they have identified numerous initiatives
to improve their performance including improvements to their customer
communications and troublecall systems, reorganisation of emergency
plans and resources, and review of vegetation management contracts.
39. DTI is confident that these practical
initiatives would result in more rapid restoration of supply following
another storm comparable to that of 27 October 2002. However,
the extent of improvement in storm performance is to some extent
limited by several factors, at least for the short term due to
the volume of work, difficulty and costs associated with addressing
outstanding issues. These factors include tree cutting near overhead
lines, selective refurbishment of overhead lines and reorganisation
of networks; such works may be necessary over large areas requiring
some time (possibly years) to bring to fruition. In the meantime
it is conceivable that prolonged interruptions may follow another
major storm in some parts of the country.
40. DTI is also pleased to note the positive
contribution made by each of the DNOs to the Network Resilience
Working Group. This forum has proved to be a useful opportunity
for representatives from DTI, Ofgem, Energywatch and the DNOs
to air their respective concerns and to propose ways forward.
41. The BPI investigation and DTI's involvement
in follow up actions point to important areas which Government
may wish to consider further. The key issues which appear to be
emerging from DTI's perspective are adequacy of tree cutting programmes
and the existing regulatory framework.
42. The BPI investigation revealed that
the majority of faults were caused by tree damage to overhead
lines, and they recommended that Government and companies should
ensure more focus on this important area. BPI identified two key
aspects—housekeeping maintenance (ie trimming branches to
keep them a safe distance from conductors, say two metres) and
tree clearance (ie cutting all trees back to falling distance
from lines, say 10 or 20 metres). It is DTI's view that the performance
of the DNOs in housekeeping maintenance is variable; the better
performers operate strict and regular tree trimming programmes,
aware that this work is important for public safety as well as
network performance. However not many DNO's operate tree clearance
programmes, largely because of the difficulty of agreeing works
with landowners and because of the cost effectiveness of the works.
The companies have statutory powers to enable them to lop trees
interfering with lines (Schedule 4 of the Electricity Act 1989
as amended), however they appear to be reluctant to use these
powers in order to avoid confrontations with landowners over their
equipment. DTI considers that the problem of trees interfering
with, or potentially interfering with, overhead lines needs to
be addressed by all companies in order to present a step forward
in network resilience for the UK. The Department also recognises
that extensive tree cutting is an emotive issue and therefore
any change to Government policy would have to be carefully considered.
It is recognised that solutions need not involve tree trimming
or felling, for example diverting, insulating or undergrounding
lines. However alternatives to tree cutting are invariably expensive
and may be difficult to justify as measured by numbers of customers
benefiting from the works.
43. The varying performances of the DNOs
following the storm of 27 October 2002 raise questions about why
the impacts and responses were very different for similar storm
conditions. Naturally the DNOs may point to different specifications
of overhead lines, different types of trees, the density of tree
populations and reluctance on behalf of landowners to permit tree
trimming particularly in the home counties; their bespoke systems
(eg troublecall and customer communications systems) as well as
management arrangements are other differentiating factors. Whatever
the different reasons attributing to DNOs' performances, it is
important to ensure that the regulatory regime, ie statutory instruments,
published guidance, licence conditions and financial incentives/penalties,
presents DNOs with the necessary motivation to work towards better
network resilience. The Department and Ofgem will continue to
liaise closely in this respect.
44. It is important to acknowledge that
other storm conditions would impact differently on distribution
networks, eg lightning or blizzards. DTI is aware that the impact
of various severe weather events is currently being reviewed by
Ofgem.
CONCLUSION
45. DTI intends to maintain network resilience
as a high profile issue and will continue to work with Ofgem and
the industry to improve network resilience and storm performance.
The Department eagerly awaits the views of the Committee resulting
from this inquiry; full consideration will be given to all comments
and proposals.
Department of Trade and Industry
Amended 2 September 2003
Annex 1
Text of letters in June 2002 from Brian
Wilson to NGT and DNOs concerning first BPI report
I am writing to thank you for your cooperation
with the recent study carried out for DTI by British Power International
(BPI) into the resilience of the electricity transmission and
distribution systems. I very much appreciate your willingness
to share information and make people available for meetings, often
at very short notice, during the course of the study.
I understand that BPI is sending a copy of the
main report and the findings specific to your own organisation
to the people they dealt with directly during the study. I shall
be announcing the findings of the study on Tuesday 18 June, and
the main, non-confidential, part of the report will be available
on the DTI website at www.dti.gov.uk/energy/bpifinalreportelec.pdf.
I was very reassured that the study found that the electricity
transmission and distribution companies are generally better prepared
to handle emergencies than they were 10 years ago.
There must nevertheless be scope for best practice
to be shared more widely across the industry; although the companies
studied are performing well in most respects, none was outstanding
in all respects. I attach BPI's description of what a company
that had adopted "best practice" in all areas might
be like. I would be very interested to know your reaction to the
report and any action you may be taking as a result; it would
be most helpful to have this by the end of July.
For my part, I will be considering what Government
can do to help achieve the best possible systems to avoid or minimise
the failure of power supplies, bearing in mind the report findings.
As a first step in spreading best practice, BPI will be presenting
their findings at the Electricity Association's Emergency Response
Seminar in the West Midlands on 4 July.
Brian Wilson
STUDY OF THE RESILIENCE OF ELECTRICITY TRANSMISSION
AND DISTRIBUTION SYSTEMS CHARACTERISTICS OF "GOOD PRACTICE"
COMPANIES
The report of the study includes a number of
key recommendations but woven throughout are examples of systems
and processes which can be identified as "good practice"
in terms of planning, confidence in plan execution, risk mitigation
and governance and management. Much good practice is common to
all companies. However, summarised below is a simple list of areas
where some demonstrate more sophistication than others—and
it is therefore these areas that may offer the most scope for
learning and sharing good practice.
— Existence of a fully documented,
comprehensive and audited governance process which incorporates
emergency planning, the management of risk and customer recovery
plans.
— Evidence that planning and response
arrangements are built on processes—rather than a reliance
on a small number of key individuals. (The optimum is, of course,
good processes and good people to implement them.)
— Presence of a "dedicated"
emergency planner.
— Regular, well documented and audited
simulated emergencies, covering a range of credible scenarios,
with follow up action incorporated into the risk management process.
— Use of electronic document management
system which facilitates the control, ease of access and regular
updating of emergency plans (and related documents/process charts/resourcing
schedules).
— Integrated network management centres
incorporating customer reporting, resource dispatch and management
and system control.
— Implementation of asset condition
monitoring which is incorporated into investment strategy.
— Robust contracts for out-sourced
services which may be critical during emergency conditions, with
evidence of providers/suppliers having robust business continuity
plans and a commitment to supply during times of stress.
— Environmentally sensitive tree cutting
contracts where reward and penalty payments are related to network
performance indicators.
— Innovative approaches to system management
and supply restoration strategies during emergencies.
BPI
May 2002
Annex 2
Text of letters in January 2003 from Brian
Wilson to DNOS concerning Second BPI Report
I enclose a copy of the final main report from
BPI on the performance of distribution network operators in the
South, West and Midlands of England and in Wales during the storms
of late October 2002 together with a copy on the performance of
your particular company. I understand that my officials sent electronic
copies of these, and of the report on other operators to you before
publication. The reports demonstrate clearly that while a number
of network operators performed well—indeed in the best traditions
of the industry—others fell short of that standard. Equally
BPI concludes that even the best performers still have room for
improvement. I have no doubt that you and your managers will have
studied all of the reports with interest.
I am writing now to ask you to provide to me
and to Callum McCarthy a note setting out the actions which you
are now putting in place to address the issues raised in the annex
relating to your company. In keeping with the openness of the
whole process, I would wish the note to be in a form which can
be put into the public domain. Consequently, any commercially
confidential information should be clearly flagged as such. It
would be very helpful to have such a note by the end of this month.
A number of recommendations relate to the industry
as a whole, and indeed some to government. My officials will therefore
be in touch with the Distribution Board of the Electricity Association
very shortly to discuss how these might be taken forward.
Finally, I would like to take this opportunity
to than you and your staff for the open and frank way in which
you responded to the requests from BPI in what must have been
very difficult circumstances. It is precisely that openness which
has helped us—and I suspect you also—to focus quickly
on the issues which need to be addressed, and that the exercise
proves beneficial to the companies, those who work in it, and
of course your customers.
I am copying this letter to Callum McCarthy.
Brian Wilson
Annex 3
Text of letters in August 2003 from Stephen
Timms to NGT and DNOS concerning follow up to second BPI report
LETTER TO
DNOS
I write to enquire about your company's state
of readiness to respond to major storms that may affect electricity
supplies this coming autumn and winter.
I have noted the positive response from your
company to the BPI recommendations following the storm of 27 October
2002 in your previous reply to Brian Wilson the then Minister
for Energy. I am also aware of your company's contribution to
the Network Resilience Working Group. DTI welcomes the forthcoming
inquiry by the Trade and Industry Select Committee, which along
with recent events in North America has helped to raise the profile
of this important matter.
In view of the possibility of further storms
this winter, I would be grateful if you would advise me concerning
the following:
(a) In their responses to Brian Wilson earlier
this year the companies outlined a number of particular initiatives
that they intended to implement in response to the BPI recommendations.
I would be grateful if you would let me know how your initiatives
are progressing for your company;
(b) In view of the high numbers of faults
caused by trees on 27 October 2002, could you also let me know
how far advanced are your tree cutting programmes across your
network?
(c) Please confirm your company's state of
readiness to respond to a severe weather event affecting your
network; and
(d) Could you also confirm your level of
confidence that your customer communications systems will continue
to operate during a major incident?
As touched upon earlier, I am mindful that,
the events which have taken place in North America have raised
the profile of electricity resilience and security even further.
It would therefore be safe to assume that the Inquiry will wish
to examine the US disruption from a UK perspective. Whilst I appreciate
that at this early stage no firm conclusions can be drawn it would
also be very helpful if you could comment on your network's resilience
to other external shocks, and whether in your view there is more
the industry needs to do—or industry and Government—to
ensure that the UK does not experience a US style blackout.
The information that you and your fellow network
operators provide in response to this letter will be extremely
important not just in providing evidence to the Inquiry, but also
in providing assurances to customers that lessons have been learnt.
For my part, I can assure you that DTI will continue to engage
with the industry to encourage and facilitate best practice.
In view of the timing of the inquiry I would
therefore be grateful if you could reply by 8 September. It is
also my intention to publish individual company responses on the
DTI website.
Finally, may I once again offer my gratitude
to you and your company for your continued efforts in these matters.
Stephen Timms
LETTER TO
NGT
In view of the forthcoming inquiry by the Trade
and Industry Committee into distribution network resilience following
the storm of 27 October 2002, I write to enquire about NGT's level
of confidence in the robustness of the 400kV and 275kV systems
in the UK.
For your information I have written to all the
DNOs to seek assurances that they have implemented the recommendations
identified in BPI's report and the various other improvement initiatives
identified by the DNOs. I appreciate that NGT's network remained
secure during the storm of last October and therefore NGT was
not included in BPI's follow up investigation. However for completeness
I would be grateful if you could advise me concerning any improvement
initiatives you have undertaken arising from your experience of
this incident.
It is my expectation that the Committee may
also enquire about any implications for the UK following the incident
on 14 August 2003 in the USA and Canada. I am aware and am grateful
that NGT has agreed to share its own findings with Government
and to consider any implications for the UK and of course much
will depend on the findings of the US/Canadian task force that
has been established to review the causal factors attributing
to the blackouts. Given that this information is likely to only
become clear by mid to late September I would be grateful if you
would share any early views on whether more needs to be done to
avoid such a large scale blackout.
In view of the timing of the inquiry, it would
be helpful if you could reply by 8 September. It is my intention
to publish the responses from the DNOs and NGT on the DTI website.
I look forward to hearing from you.
Stephen Timms
Annex 4
Draft terms of reference for Network Resilience
Working Group
1. INTRODUCTION
The main purpose of the Network Resilience Working
Group is to consider the generic recommendations arising from
the BPI report (dated 16 December 2002) into the performance of
the electricity companies following the storm of 27 October 2002.[4]
A specific objective is to provide a joint platform
(ie the Industry, Government and Regulator) to facilitate the
development and delivery of solutions in line with the BPI generic
recommendations. The Working Group will also seek confirmation
that the specific recommendations by all the named parties are
implemented or are in hand.
The Working Group will seek to promote strategic
positioning for network performance standards into the future
to match changing customers' expectations. The Working Group will
propose best practice and innovative solutions, supported by appropriate
funding regimes, to further improve network resilience.
2. SCOPE
The workplan for the Working Group will cover
the following issues:
(a) Review of weather patterns—Have
the weather patterns in the UK changed since the Baldock Report
(September 1982)? What weather patterns can reasonably be expected
in the future? What are the implications for overhead line design
and construction standards?
(b) Resources—How to ensure that the
national and local resources (numbers of staff and their skill
range) in the future will meet customers' expectations under storm
conditions.
(c) Operational communications—Review
the arrangements distributors have in place to provide operational
communications with field staff. How robust are these systems
in storm conditions?
(d) Incentives for long term network investment—What
is the effect of Ofgem's incentive schemes on distributors' long
term network investment plans for fault prevention/mitigation?
How might incentive schemes be adjusted in favour of long term
investment? What is the impact of the current incentive schemes
on sharing best practice between companies?
(e) Toolbox for network improvements—What
particular strategies and actions may be utilised by distributors
to improve network resilience? Ideas from network operators in
other countries will be sought. The menu of suggested responses
should take into account the environment and network constraints.
Three particular scenarios should be considered:
(i) network performance under storm conditions;
(ii) network performance during normal
weather patterns; and
(iii) strategies for improving networks
supplying worst served customers in rural areas.
The toolbox should also include best practice
in tree cutting—strategies for vegetation management, management
of contractors and management of dissatisfied landowners eg wayleave
terminations, compensation claims, etc. What are the constraints
on tree cutting (both real and perceived)? How might they be addressed?
(f) Customers' expectations for future storm
performance—What maximum restoration times should distributors
aim to achieve in future severe storm conditions? When and how
will distributors be able to reach this level of performance and
demonstrate this? What other types of severe weather events need
to be addressed? What different actions, if any, are needed? How
do customers' expectations in the UK compare with those abroad
for similar networks/environments?
(g) The changing risks arising from external
stakeholders—What up and coming risks may impact on a distributor's
performance (eg legislation)? How can all parties influence these
issues in order to manage risks/expectations?
(h) Particular BPI recommendations on each
company—In addition, and further to the individual reports
from the companies to the Minister, the Working Group will seek
confirmation from each distributor that his particular actions
arising from the BPI report have been completed.
(i) NEWSAC review—The group will enquire
about progress with the NEWSAC review and seek verification that
improvements / recommendations have been implemented.
(j) BT platform—Is the BT platform
now sufficiently robust to handle customer calls in the event
of a major storm?
3. ASSESSMENT
OF BENEFITS
The Working Group will make an assessment (including
related costs) of initiatives against the following performance
criteria:
— network resilience and quality of
supply;
— public and employee safety; and
4. OUTCOME
The Working Group expects to deliver a report
covering each of the areas listed in the workplan, which will
be presented to the Minister, the Regulator and directors of distribution
companies.
The Working Group will aim for completion of
the report by 30 September 2003 in order to feed into the forthcoming
distribution price review. At this time the Working Group will
consider how any further work should be taken forward.
5. MEMBERSHIP
OF WORKING
GROUP
The Working Group will comprise representatives
from:
— DTI (Engineering Inspectorate and
Energy Markets Unit); and
— Distributors (including Electricity
Association).
Energywatch will be invited to provide a customer's
view on these important issues.
Giles Scott of the Engineering Inspectorate
(DTI) will chair the group. Steve Jacobs (DTI) will act as secretary.
Members agreed to consider sharing as much information
as possible regarding how they manage their networks, on the basis
that they (and the whole industry) may benefit from the outcome.
However, it is understood that there may be a few issues that
provide commercial competitive advantage, which should be respected.
The HSE is welcome to all meetings in the capacity
of observer and all correspondence will be copied to HSE for information.
Annex 5
Text of letter to NGT following incident
on 28 August 2003
Chief Executive,
National Grid Transco
29 August 2003
As you will be aware, I wrote to you on 21 August
seeking your assurances of the level of confidence you had in
the robustness of the 400kV and 275kV system in the UK. This was
as a consequence of the Trade and Industry Committee Inquiry into
distribution network resilience.
I am now writing to register my deep concern
about the major power disruption, which affected London and the
South East on the evening of 28 August, and its knock on effects
for the transport system in London. With this in mind, I should
be grateful if, as a matter of urgency you would supply me with:
— A full report explaining the reasons
which led to the power failure;
— What actions were taken to get supply
power on track;
— The risks of a similar incident occurring
in the future;
— Given the risk of a potential repeat
occurrence what measures you will be implementing to ensure that
a similar problem does not arise in the future, including details
of planned investment in London.
It is essential that assurances can be made
that the reasons for the disruption are clearly understood and
that lessons will be learnt.
Stephen Timms
1 Department of Trade and Industry October 2002
power system emergency post event investigation-overview report
and individual annexes on each company investigated are available
at: http://www.dti.gov.uk/energy/domestic_markets/security_of_supply/bpireport/index.shtml Back
2
Department of Trade and Industry Resilience of the Electricity
Transmission and Distribution Systems dated 10 May 2002-available
at: http://www.dti.gov.uk/energy/domestic_markets/security_of_supply/bpifinalreportelec.pdf Back
3
Letters from CEOs may be viewed at: http://www.dti.gov.uk/energy/domestic_markets/security_of_supply/stormdresp.shtml Back
4
Recommendations directed at individual companies are being taken
forward by these companies and have been the subject of reports
to the Minister for Energy. Back
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