Scottish Affairs Committee - A Robust Grid for 21st Century ScotlandWritten evidence submitted by Scottish Hydro Electric Power Distribution

1. This evidence has been prepared by Scottish Hydro Electric Power Distribution (SHEPD), the electricity distribution provider in the north of Scotland. SHEPD is a subsidiary of SSE Power Distribution, and are part of the SSE group.

About SSE

2. SSE is an energy company with interests in electricity distribution, transmission, generation and supply and is a UK-owned FTSE 100 company with over 20,000 employees. SSE is responsible for over 127,000km of overhead lines and underground cables, distributing electricity to 3.5 million homes, offices and businesses in the north of Scotland and central, southern England. SSE is also the largest renewable generator of electricity in the UK with over 2.5GW of capacity, and the second largest generator overall. It also supplies over 9.5 million customers through our Southern Electric, Scottish Hydro, SWALEC and Atlantic supply brands.

About SHEPD

3. SHEPD’s network is over 46,000 km long and serves over 740,000 customers over a 55,000 km² area in the north of Scotland, including the majority of the Scottish islands. The disparate communities served across the network is demonstrated by the fact that SHEPD’s operating area covers 25% of the UK land mass but has only 2% of all UK customers, reflecting the large number of small remote communities served (see Appendix).

Network Resilience

4. Over the decade 2005–15, SHEPD will have invested £385 million on its electricity distribution network, and the level of investment per customer is already much higher than in our southern network (SEPD). This is illustrated in the two graphs below:

5. SHEPD has improved network performance with our high voltage average fault rate over five years at 5.7 per 100km compared to the national average of 9.1 per 100km, according to figures from the Energy Networks Association.1 SHEPD’s refurbishment policy for overhead lines has been in place since 1995. In that time the performance of the lines has improved consistently. Excluding exceptional events, we have seen a continued reduction in the number of customer interruptions (CIs) and duration of events (measured in customer minutes lost (CMLs).

6. Refurbishment is based on a cycle whereby we visit our circuits every 12 years. Every four years we carry-out a safety patrol and test the wooden poles for structural integrity. We carry-out light refurbishment in some years and, in other years, heavy refurbishment depending on the condition of our circuits. The assessment is based on a detailed specification that includes all known defects on our network.

7. For the period 2005–10, SHEPD spent £180 million capex on our network overall, £71 million on overhead lines and £16 million on tree cutting. For the period 2010–15, SHEPD forecast an investment of £204 million overall, £87 million on overhead lines and £28 million on tree cutting. In Argyll and West, we will invest approximately 20% of these values.

How the Network is Funded

8. Electricity distribution networks are regulated businesses, with costs and revenues controlled by Ofgem through its distribution price control review. The current price review period runs from 1 April 2010 through to 31 March 2015, and controls the funding that Distribution Network Operators (DNOs) receive for maintaining, operating and investing in their distribution networks. DNOs are not allowed to charge customers more than is determined by Ofgem.

9. Protecting consumers is Ofgem’s primary duty. They do this by promoting competition, wherever appropriate, and regulating the monopoly companies who operate the electricity networks. The interests of electricity consumers are taken as a whole, including their interests in the reduction of greenhouse gases and in the security of the supply of electricity.2

10. The costs of distribution networks are split equally across consumers in the UK through use of system charges, which make-up around 19% of the average energy bill.3 This equates to just over £110 of the average electricity bill, to ensure that the UK’s electricity distribution networks deliver the power consumers need.

11. Stakeholder engagement is a key component of Ofgem’s price control review to ensure that customers get the level of service they require for the price they are prepared to pay. The proactive engagement that SHEPD has undertaken with non-governmental organisations (NGOs), emergency services, local Government and the Scottish Government before, during and after the recent storm events feed into Ofgem’s work. This ensures that the network gets the required support and balances the needs of all UK consumers.

How SHEPD Prepares for Exceptional Weather Events

12. SHEPD has a well practised and rehearsed twenty four hour operation for exceptional weather events, making the most of daylight hours and using the overnight periods to prepare properly for the following morning. SHEPD has a very good relationship with a number of communities, local authorities, NGOs, emergency services and the Scottish Government, amongst other stakeholders, so that when exceptional weather does occur, all parties are prepared.

13. We have a procedure that defines categories of emergency and the contingencies we take in the lead up to an exceptional weather event:

Weather Warning—Advance warning of bad weather.

Yellow Alert—Customers could be off supply up to 24 hours and is an exceptional event.

Red Alert—Customers may be off up to 48 hours

Deep Red—Customers may be off over 48 hours.

14. During an emergency we send email alerts and updates at least twice a day to the Scottish Government, DECC, Ofgem, Consumer Focus and within SSE.

Severe Weather so far During Winter 2011–12

15. Rainfall in December was exceptional and in the west of Scotland it was the fourth wettest December with the greatest number of rain days since 1910. This saturated tree roots and made tree falls far more likely. December had also been very stormy with the winds on 8 and 9 December very close to those in January. This had created many potential issues with trees that the January storms made worse.

16. Low level wind speeds on 3 January were exceptional with Port Ellen experiencing 97mph (highest gust on record), Campbeltown 92 mph, Macrahanish 92 mph (highest since 1998), and Dunoon 90 mph. Meteogroup data indicates that December had the strongest westerly winds since 1974 in south west Scotland. Very high winds followed this on the night of 4 January causing us more problems and suspending work for a number of hours. Port Ellen again experienced wind speeds of 82 mph.

17. We normally experience between two and three exceptional events in any given year.4 However, in four weeks during December/January we experienced five exceptional events alone. This was an exceptional period of weather.

18. However, this is not a west coast issue. Geographic distribution of exceptional events over the last 10 years shows north, east and west Scotland with very similar numbers, and the Islands with generally half that number (approx. 20 versus 10). The graph below shows the number of exceptional events, over the ten period 2001–2011, affecting SHEPD’s geographical areas.

SHEPD’s Performance During January 2012 Storms

19. On 3 January 2012 storm force winds of over 90 mph affected Argyll and Bute and parts of Tayside. This resulted in a significant amount of damage to the network and the loss of power to approximately 40,000 properties across the SHEPD area. On 3 January SHEPD experienced 600 separate faults, over 1,000 points of damage and undertook the equivalent of three months of fault repair work in four days.

20. Preparation for this storm started on Sunday 1 January. During the storms over 700 people, working for SSE from across the UK and Ireland, were involved in restoring electricity supplies, and in some cases parts of the electricity network had to be rebuilt as it was so badly damaged. In total for Tayside and Argyll we had:

External contractors	281
SEPD staff	65
SHEPD staff	419
Total	765

21. When wind conditions eased, and where safe to do so, helicopters were used to speed up the process of identifying the extent of damage to power lines. Three helicopters flew every day, where conditions allowed, from 4 January onwards. Additional mobile generators were brought into some of the worst affected areas where access permitted, ensuring customers had their power supplies restored as soon as was possible.

22. For more information please see SSE’s intial evidence submitted to the Committee on 23 January 2012.

Customer Welfare, Vulnerable Customers and Community Engagement

23. During the storm conditions, the volume of calls received by SHEPD’s emergency service centre increased dramatically, as shown in the table below. On 3 January SHEPD received 24,886 calls which equates to seventy-five times the winter daily average. The monthly totals of calls received is shown in the table below:

	November 2011	December 2011	January 2012
Daily Max	1,597	19,518	24,886
Daily Average	330	2,258	19,222
Monthly Total	9,912	67,754	57,655

24. From 3 January, a team of 10 outbound callers was set up to proactively contact customers who:

were registered on our Priority Services Register,

would be off supply overnight, and

requested updates on their supplies.

25. Inbound calls were handled by the both our dedicated emergency service centres based in Perth (for SHEPD) and Portsmouth (for SEPD). In addition, SHEPD was able to utilise customer service staff from both customer service centres based in Perth and Portsmouth to provide necessary emergency cover. The split of staff dealing with calls was, as follows:

SHEPD dedicated staff in Perth	30
SEPD dedicated staff in Portsmouth	65
Customer Service Staff Perth & Portsmouth	70
Total	165

26. Additional support for our customers and communities was made available as follows:

The offer to reimburse the costs for hot food and accommodation for customers whose supply was off for a second night.

Organised six hot food catering vans to provide hot food and drinks, free of charge, for those without power and were located in the following areas:

Three vans in various locations in Rothesay.

Dalmally.

Lochgilphead.

Dunoon.

Opened Scottish Hydro’s shop in Rothesay to provide food and refreshment facilities as well as information on power supplies.

Transporting less mobile members of the community to and from the food vans as well as delivering hot food and drinks to some of the more vulnerable members of the community.

Fifty-two generators deployed to provide heat and light for more vulnerable customers.

Worked closely with Argyll and Bute Council’s emergency planners and social care workers to provide assistance for vulnerable customers including privately run care homes in Jura and Tighnabruaich who were provided with gas heaters and a generator.

SHEPD tree cutters used the equivalent of 600 man days during the January storm to clear roads allowing access for our repair teams and the general public.

Customer Compensation: Exceeding Regulatory Requirements

27. The performance of DNOs is subject to guaranteed standards set by Acts of Parliament. These include standards around supply restoration under normal and severe weather conditions. If DNO’s fail to meet these standards, consumers are entitled to receive a payment. If electricity supply fails because of a problem on a distribution system due to severe weather, a DNO must restore supply within a defined period and depending upon the scale of the event.

28. Sometimes the guaranteed standards may not apply, including under exceptional circumstances and events beyond a DNO’s control (such as industrial action, not being able to gain access to premises and, in some cases, severe weather).

29. Due to the additional challenges and costs of serving remote communities, customers in the Highlands and Islands area do not have any statutory right to compensation.5 However, given the severity of the storms, and the exceptional circumstances faced by these customers, SHEPD is offering £75 to customers in the Highlands and Islands who were without power for forty eight hours or more. On the Island of Islay, where weather related events have been exceptional over the past eighteen months, SHEPD will pay £150 to domestic customers and £250 to businesses.

30. SHEPD is paying an ex-gratia payment of £75 as compensation to every domestic customer and £250 to every business that was off supply for 48 hours or more and who have applied via our advertised email or postal address:

feedback@sse.com

Customer Relations
Scottish Hydro Electric Power Distribution
Inveralmond House
200 Dunkeld Road
Perth
PH1 3AQ

31. To publicise the compensation that is available to customers, SHEPD has used a number of communication channels including its website, email, social media channels, working with elected representatives and publishing letters in the local press.

32. To date SHEPD has paid over £100,000 in compensation to approximately 1,300 customers. We anticipate this figure to rise significantly. SHEPD will honour our obligations to customers who legitimately claim for compensation and were without power for over forty eight hours. As a DNO, SHEPD are not liable for other indirect claims and would encourage customers to contact their insurance provider in those areas in which SHEPD cannot assist.

Planning for the Future

33. SHEPD recognise there are still a number of winter months to go, and is looking to engage proactively with all relevant stakeholders to ensure that future performance is continually improved by learning from the experiences of every exceptional weather event.

34. In particular, SHEPD are engaging with local community councils and local authority emergency planning groups to build relationships, share learning and make improvements to the service we provide our customers and the community alike.

2 February 2012