Energy companies to pay a bit more for compensation for power cuts

Regulator Ofgem proudly announced that it had extracted another 3.3m pounds from energy companies for the power cuts endured by customers in the winter. But surely this is self serving.

by Emma Haslett
Last Updated: 30 Jul 2014

Since this year's storms, energy regulator Ofgem has taken on a new role: distributor of justice. It's already extracted £4.7m from SSE and UK Power Networks for the lengthy power cuts many of their customers were forced to endure during the worst of last winter's weather. Now it wants them to pay out another £3.3m in donations to organisations like the Red Cross, which provided some of the relief to victims of the flooding.

The watchdog also said it wants energy companies to increase their payments to customers from £27 to £70 if they're sans power for at least 24 hours.

You can understand where Ofgem is coming from: a) some customers were left without power for weeks, and b) energy companies are about as popular as Vladimir Putin at the moment, given their preponderance towards hiking prices while continuing to pay out nice, chunky dividends.

The regulator said that by raising the fine, it would provide an 'incentive' to companies to work faster when there's an emergency.

'Ofgem's findings showed that while SSE and UKPN's southern arms were particularly badly hit by the storms, they could have done more to get customers reconnected faster and to keep them better updated on what was happenin,' it said. Fair enough.

But making energy companies pay larger fines, on top of the amount they've already had to pay, and on top of the costs they've already had to pay to fix their networks, seems like cutting off its nose to spite its face. If energy companies need cash, they'll have to go to consumers to get it.

And let's not forget warnings from various factions that unless something dramatic is done, in the not-too-distant future we all face hideous winter of discontent-style blackouts. Energy companies need cash to pay for that: so making energy companies donate money to the Red Cross threatens infrasctructure.

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