APPENDIX 8
Memorandum by energywatch
SERVING CONSUMERS
BETTER
Our response to the Trade and Industry Select
Committee draws on the experience of the thousands of consumers
who contacted us during the storm in 2002. Consumers were not
at fault when the power failures occurred as a consequence of
the storm. But once this situation had arisen it is clear from
our experience that they wanted effective communication and a
simple compensation process. Consumers have a fundamental need
for their power supply but they cannot choose which company it
is that distributes it to them so they need to know that companies
are investing efficiently and effectively in their network.
The action plan below sets out what we believe
needs to happen to ensure that consumers do not face the same
problems again as they did in 2002. In light of recent events
in London and the South East on 29 August we will provide the
committee with additional evidence regarding how companies have
performed.
Communication
If recent events in London were the first test
of an improved communication strategy, in our view the test was
failed. Industry and other key players needs to demonstrate to
consumers more clearly that in the event of power failures we
have a strategy that is able to:
— co-ordinate relevant players;
— provide information which is timely,
accurate and concise;
— provide proportionate and reasonable
information so as not to cause undue alarm;
— be rehearsed regularly;
— be scalable ie have the capacity
to respond to the size of the emergency;
— provide clear and unambiguous information
regarding the payment of compensation; and
— provide facilities for reporting
safety or issues of vulnerability.
Compensation
When the threshold for compensation is achieved
(ie 18 hours off supply) regardless of the situation causing the
power outage, all consumers affected should be eligible for compensation.
Ofgem have set out proposals to this effect in their recent consultation
document on the distribution price control. We also believe (though
we recognise the difficulties) that this compensation should be
paid automatically to affected consumers without having to be
claimed. Distributors and Ofgem should continue to work towards
delivering this.
Incentives
Consumers need to know that companies have proper
incentives in place to ensure that they invest efficiently in
their network and take their maintenance seriously because they
cannot choose who their distributor is. energywatch believes that
where this has not taken place, distributors should not be allowed
to recover compensation and other costs as part of their allowed
revenue as this will not provide an incentive to do better.
The onus must clearly be on the company (and
the Regulator) to provide unambiguous evidence that exceptional
circumstances had occurred and were unforeseeable. Without such
evidence additional or existing revenue should not be used It
is vital also that this process be transparent and in the public
domain.
Regulation
The determination mechanism must be a process
of last resort for deciding whether consumers are eligible for
compensation because it is lengthy, cumbersome and not consumer
focussed. It is more suited to establishing for example whether
a company should be allowed additional revenue as a consequence
of extreme weather.
SUMMARY OF
EVIDENCE
Impact of the storms
— energywatch received over 2,100 extra
calls from consumers in the first three days following the October
2002 storms. These calls related, in the main, to a lack of up
to date or relevant information or an inability to make contact
with the relevant distribution company.
Company activity and resulting media attention
— At an early stage the distribution
companies announced that no compensatory payments would be made
to consumers suffering a loss of supply. This angered consumers
whose supply had still not been restored.
— energywatch took the lead in keeping
consumers informed but this was hampered in some areas by a lack
of co-operation from certain distribution companies.
— Media focus on compensation and apportioning
blame often took the focus away from the real issue of supply
restoration.
Post incident review
— energywatch carried out a post incident
review to identify distribution companies who had done better
or worse than should have been expected in the circumstances.
— energywatch was concerned that not
all emergency contacts were exploited (emergency planning organisations,
Social Services, etc) or that Priority Service Register data was
sufficiently robust to deal with the many vulnerable consumers
affected by the storms.
— energywatch has been heavily involved
in many of the post storms activities including the network resilience
group, the emergency planning seminar and several contingency
exercises.
BACKGROUND
1. As part of the normal escalation process
between energywatch and East Midlands Electricity (EME) a call
was made to the energywatch north east Regional Director on Sunday
27 October 2002. During the call energywatch was advised that
storms were in process or were expected in the majority of distribution
areas across the country. In the case of EME these storms were
already in progress and many thousands of consumers were without
supply although exact numbers were not known at that time. This
call enabled the north east Regional Director to begin contingency
arrangements for the following day when the Customer Contact Centre
(CCC) would be open to the public.
2. The CCC opening hours are eight till
eight Monday to Friday and nine till five on Saturdays (the CCC
is closed on Sundays and on all English Bank Holidays). The CCC
is the first point of contact for all consumers contacting energywatch
by telephone. Operatives in the CCC answer enquiries and sometimes
take complaints from consumers. Enquiries can be simple such as
"how do I contact my supplier?" to more complex issues
relating to contracts or new connections. The CCC receives, on
average, 10,000 calls per week. Some calls (eg requests for literature)
are dealt with by an automated voice response system but the vast
majority of callers speak to an operative. The table below shows
the average calls received for Monday to Wednesday and the actual
number of calls received during the first three days after the
storms. We brought in extra staff to the CCC during Monday 28
October.
| Day | Average calls
| Actual calls | Percentage increase
|
| Monday (28 October 2002) | 2,300
| 3,003 | 31 |
| Tuesday (29 October 2002) | 1,725
| 2,210 | 28 |
| Wednesday (30 October 2002) | 1,630
| 2,607 | 60 |
| | |
|
3. The highest percentage of callers wanted information
on how to contact their supplier or what their supplier should
be doing for them whilst they were off supply. A significant proportion
of consumers enquired about compensation payments and for advice
on how to deal with domestic issues (for example dealing with
freezer contents).
4. As the week progressed energywatch increased its media
activity. During the early part of Monday 28 October, activity
in the media concentrated on what was happening and what consumers
should do to protect themselves and their property (for example
maintaining safety). As Monday progressed the media became increasingly
interested in compensation issues. From an early point all companies
announced that no compensation would be paid claiming the situation
was a case of "force majeure". One distribution
company (EME) did qualify this by offering hardship payments to
those who made a claim and could substantiate the claim. 24Seven
later announced a one off payment of £100 to some consumers
who were off supply over a certain period. These announcements
and the media interest had a direct bearing on the type of calls
received by energywatch on Tuesday and Wednesday and beyond. Consumers
sought advice on how much compensation they could claim and how
to go about it. The media interest also centred on apportioning
blame, questioning whether the distribution companies had invested
sufficiently in their networks and questioning who was failing
to communicate effectively with their consumers. This area of
interest often detracted from the real issue of restoration of
supply.
5. One area that was constant throughout, however, was
the inability to contact certain distribution companies (DNOs)
or to get up to date or adequate information. This inability to
make contact or obtain information varied between DNOs. Consumers
in the 24Seven and Aquila areas made the most complaints and consumers
in the WPD area made the least complaints to energywatch. This
was later borne out by the BPI report. Initial complaints about
24Seven were that consumers were unable to get through to the
company. This later changed to the inability to receive up to
date information. At one point the complaint against 24Seven was
that the company's recorded message advised consumers to ring
energywatch if they wanted to know about the storm situation.
Post incident review
6. In an emergency situation energywatch can be of great
benefit by giving advice to consumers and the media and providing
updates. The energywatch website was regularly updated and regular
media activity took place. In order for this to be most effective
there must be regular contact with the various companies and also
with the regulator. Contact with companies is currently handled
through the energywatch "lead office" process. This
process includes regular contact with companies through meetings
and briefings and should be equally as effective whether there
is an emergency or not. This process has different levels of effectiveness
with different companies and anecdotal evidence indicates that
it tends to be the companies that are more consumer focussed that
have had the better results in terms of being proactive or maintaining
contact with energywatch.
Communication survey
7. As part of its post incident review, energywatch conducted
an informal survey of the way in which the various DNOs maintained
contact with energywatch and to what extent they kept us informed.
This review formed part of the energywatch evidence to the BPI
report. The outcome of the review is set out in the table below.
| Company | Comments
|
Western Power
Distribution (WPD) | — Very effective at keeping energywatch informed of progress and at keeping its own consumers up to date.
— Small number of enquiries received from consumers but no complaints.
|
East Midlands
Electricity (EME) | — Was among the best in terms of keeping energywatch informed. Information was accurate, though there were problems with customers accessing the company and gaining advice and information during the early stages of the emergency.
— Medium number of enquiries and only minimal complaints received.
|
| Scottish and Southern | — Generally kept energywatch well informed and provided good quality information to customers.
— Similar numbers of enquiries and complaints as EME.
|
SP Transmission and
Distribution | — Generally kept energywatch well informed and, for most of the part, provided good quality information to customers.
— Similar numbers of enquiries and complaints to EME.
|
Seeboard Power
Networks | — Generally kept energywatch well informed and, for most of the period, provided good quality information to customers.
— The company's later role in handling overspill calls for 24Seven and providing information on the position in that company was less impressive.
|
| United Utilities | — Did not contact energywatch through the normal lead office process despite having consumers without supply but the company did contact the energywatch Wales office from time to time where the bulk of its affected consumers were based.
|
| Aquila | — Did not keep energywatch adequately updated with information on a frequent enough basis.
— The company also experienced very apparent difficulties in dealing with customer requests for information and advice.
|
| 24Seven | — Generally did not keep energywatch updated with accurate information on a frequent enough basis. It was very apparent to energywatch, from the high volume of calls taken by their staff during the days immediately after 27 October that customers experienced major difficulties in accessing 24Seven for information and advice.
— Some of the company's estimates of restoration times proved to be inaccurate, causing further uncertainty and disappointment.
— The practice of "encouraging" customers to call energywatch to discuss their problems (reported by customers to energywatch staff on several occasions) was inappropriate at a time when the focus was on supply restoration.
— It was apparent that there were difficulties in communicating with staff in the field.
|
| NEDL/YEDL | — Virtually unaffected by the storms so the company took a lead role in managing the NEWSAC process—the mutual aid programme which enables the import and export of trained staff to worst affected areas.
|
| |
Lead office meetings
8. Another aspect of the post incident review carried
out by energywatch was a meeting with each of the companies and
its respective lead office. This was important not only to review
what had happened but also to put in train measures to prevent
a recurrence. All companies reported their own post incident reviews
and accepted the many failings that had occurred. The main areas
of concern were:
— poor communication with consumers and field staff;
— inappropriate use of "imported" staff;
— poor tree-trimming activity;
— premature announcement of the refusal to pay Guaranteed
Standard of Performance payments;
— failure to comply with established escalation
processes; and
— insufficient evidence of robust contingency plans
in place (including telephony issues, rehearsal of contingency
arrangements, staff training and poor use of other emergency planning
services).
9. Communication was a major issue throughout. Some DNOs
later complained that exported staff to other DNOs were not kept
properly informed of where they were to go or what they were expected
to do. One company even admitted that its own workforce had been
re-routed by a group of villagers anxious to have their supply
restored before their neighbours. Most DNOs accepted that it was
exceptionally difficult at times to obtain accurate information
from field staff and to keep messages constant or give realistic
estimates for restoration of supply.
10. energywatch was concerned that DNOs did not have
up to date priority case information and that, in some cases,
priorities were not recognised. Priority case data is gathered
by both distributors and suppliers and there is a licence condition
requiring both to do so. This data is known as the Priority Services
Register (PSR). DNOs rely heavily on suppliers for information
although they do add cases if the consumer or their representative
offers information. Additionally, priority groups such as hospitals
and care homes are added by virtue of local knowledge. Suppliers
maintain this data through applications to join the PSR and are
obliged to report the PSR data to DNOs. energywatch has always
been concerned that this data is consistently poor and that it
does not accurately reflect the priority cases within any consumer
base. energywatch believes that the industry should be required
to do much more to gather and accurately maintain this information.
Contingency plans
11. A further aspect of the post incident review was
the formation of a contingency group within energywatch. This
group, with participation from industry partners, has reviewed
its own contingency plans and created a plan for dealing with
any emergency faced by consumers. Additionally, energywatch has
participated in the emergency response seminar, the network resilience
group and several of the industry exercises to test contingency
plans within different companies.
12. Resultant meetings with DNOs have provided details
of some of the actions taken so far to improve the effectiveness
of contingency plans. Main activities relate to vegetation management
and call handling.
Guaranteed standards of performance
13. Once supplies were restored energywatch began the
process of investigating complaints against DNOs. Primarily consumers
complained about the DNOs refusal to pay compensation under the
Guaranteed Standards of Performance (GSoP) regulations.
14. DNOs refused to pay GSoP payments as they claimed
the situation was a case of "force majeure" and
that they were therefore exempt from making payments under the
GSoP regulations. In the main they claimed exemption because of
the severe weather and exceptional circumstances exemption clauses
set out in the regulations.
15. energywatch has no statutory power to force a company
to pay compensation. However, the GSoP regulations provide for
energywatch (or consumers) to refer disputes concerning a DNO's
service against the GSoP for a formal determination. energywatch
played a key role in providing and collating information to assist
consumers in requesting a determination from Ofgem. However, this
process was cumbersome and lengthy as information had to be sought
on each individual case. Cases are still being received by energywatch
but so far in excess of 3,200 cases have been submitted to Ofgem
for determination. The DNOs will need to present the case as to
why payments should not be made and then for Ofgem to determine
if they should or should not be paid.
CONCLUSION
16. energywatch has reviewed the types of complaints
and enquiries received from consumers, the practices of DNOs during
and after the storms and determination process and has identified
the issues that mattered most during the emergency period:
— Compensation—this should be automatic and
without exemption. In addition it should be treated separately
to operational issues surrounding the storm itself. Consumers
do not feel that it is appropriate for them to be caught up in
technical or legal arguments about whether compensation should
be paid nor should they be told before an incident is complete
that they are not entitled to any compensation. The determination
process has been very long; due in part to the number of cases
involved, and has been both resource intensive for those involved
and bewildering for consumers.
— Communication—this should be instant. Consumers
need up to date, relevant information and an appropriate route
to notify safety or vulnerability issues (this was highlighted
by the inability to get through to some companies and the lack
of effective information on many occasions where contact was made).
energywatch believes that it is vital that DNOs have robust mechanisms
in place for dealing with consumers, suppliers and their own staff.
Management must ensure that communication between staff members
is effective enough to provide up to date information to consumers
when they need it. Equally, supply companies must ensure that
they deliver good customer service by working with DNOs to obtain
up to date information on supply outages and providing accurate
PSR data.
— Investment—consumers cannot accept that
power will be lost just because there is a storm. Frequently consumers
commented that severe weather is a feature of our day to day lives
and companies should be prepared for this both in terms of forecasting
weather patterns and in building and maintaining robust networks
to deal with them. When building and maintaining networks great
attention must be paid to those factors that can cause outages.
Wind borne debris such as trees and branches will always be a
factor during heavy storms. Prudent trimming and vegetation management
will limit the effect caused by winds.
energywatch
29 August 2003
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