Ofgem triples compensation for storm power cut-hit homes and businesses

Ofgem, the UK’s energy regulator, has announced significant changes to compensation rules for households and businesses affected by power outages caused by severe weather events.

The adjustments come following an in-depth review into the response to Storm Arwen, which left nearly one million homes and businesses without power in November 2021.

Under the new rules, compensation for those who lose power due to severe weather events has nearly tripled, with a maximum cap of £2,000, up from the previous £700. Additionally, the initial payment for affected customers has increased from £70 to £80.

Ofgem’s review into the response by distribution network operators (DNOs) to Storm Arwen revealed areas where improvements were needed to protect consumers’ interests and ensure a more effective response to extreme weather events.

The six DNOs responsible for linking homes and businesses to the electricity network in Great Britain will now be required to adhere to updated statutory regulations, with the possibility of facing multi-million-pound fines for failing to do so.

The key changes introduced by Ofgem include:

1. Increased Compensation Cap: The compensation cap for the loss of power due to severe weather has been raised from £700 to £2,000, providing affected individuals and businesses with greater financial support during outages.
2. Faster Compensation: The waiting time for additional compensation after the initial payment has been reduced from 12 hours to 6 hours for most situations. For Category 1 storms, it is set at 24 hours, and for Category 2 storms, it’s 38 hours.
3. Streamlined Payments: Regulations have been updated to allow all compensation payments to be made by bank transfer, simplifying and expediting the payment process for those affected.
4. Removal of Category 3: Category 3, which previously determined eligibility for compensation, has been removed. This change means more consumers will receive compensation payments for inconvenience.
5. Inflation Adjustment: An inflation adjustment mechanism has been introduced to ensure that compensation payments remain in line with inflation over time.

Storm Arwen left a significant impact on the UK, some homes in Flintshire were left without power for days following damage to power lines.

Akshay Kaul, Director General of Infrastructure for Ofgem, commented on the changes, stating, “It’s unacceptable that thousands of households were left without power in freezing conditions for a prolonged period during Storm Arwen.”

Kaul continued, “Lessons have been learned by the industry following our review into Storm Arwen, but the frequency of extreme weather events is only set to increase, so we need to make sure network services are resilient. Network operators and suppliers should get ready for the coming winter. We will not hesitate to hold them to account if they fall short of the standards customers have a right to expect.”

These new measures are aimed at better preparing network companies for severe weather conditions, ensuring accurate and honest information is provided to customers during power cuts, and expediting fair compensation for those affected.