Ofgem announce significant boost in storm compensation cap in wake of Arwen damage in Northumberland

The compensation cap paid to households and businesses that lose power as a result of severe weather events has risen from just £700 to £2,000 under new rules brought in by Ofgem.

The announcement comes ahead of the winter storm season and almost two years after Storm Arwen left thousands of homes across the region without power for up to ten days.

It follows the findings of a review into the response to the storm by the companies responsible for linking up properties to the national grid. Ofgem say the changes will mean more customers will be entitled to higher levels of compensation to better reflect the impact of being cut off power for extended periods.

Akshay Kaul, Director General of Infrastructure for Ofgem, said: “It’s unacceptable that thousands of households were left without power in freezing conditions for a prolonged period during Storm Arwen, often with poor information about when their power would be restored.

“Many also found it hard to get the compensation they were entitled to afterwards, and that’s why we’ve put tough new rules in place to make sure network companies prepare better for severe weather; customers get accurate and honest information about power cuts in their area; and those who are off power in bad weather are rapidly and fairly compensated.

“Lessons have been learnt 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.”

Other changes include:

• Increasing the compensation cap for loss of supply due to severe weather from £700 to £2,000, and increasing the initial payment from £70 to £80.
• Reducing the length of the time consumers have to wait for additional compensation from 12 hours to six hours after the initial payment period (24 hours for category 1 storms, and 38 hours for category 2 storms).
• Updating regulations to allow all compensation payments to be made by bank transfer to simplify and speed up the payments process.
• Removing Category 3, which will increase the number of compensation payments for inconvenience, as it reduces the time consumers would need to be without power before they are eligible for payments.
• The introduction of an inflation adjustment mechanism, so compensation payments remain in line with inflation.

One of the worst-affected parts of Northumberland was the rural Rothbury ward.

Coun Steven Bridgett, who represents the area, welcomed the increases but criticised a lack of investment in infrastructure by energy companies.

He said: “Given that there was not a household or business in the area that I represent that was not affected by Storm Arwen, I very much welcome this news.

“It is good news for residents and businesses. Although, it should not take an event like Storm Arwen for Ofgem to review the compensation structure that they have in place and come to the conclusion, which everyone else knew, that it was woefully inadequate.

“We are now nearly two years on from Storm Arwen and what residents tell me that they want to see from Ofgem is them making sure that the electricity companies have learnt lessons and are improving their infrastructure investment and upgrades. At the moment, I’m not sure that we wouldn’t find ourselves in the same position as we did during Storm Arwen, should another storm occur tomorrow.”