National Grid slapped with £4.3m fine

The energy provider's gas arm didn't respond fast enough to gas leaks last year, says Ofgem. Although to be fair, it was a very cold winter.

by Emma Haslett
Last Updated: 22 Dec 2011
National Grid Gas and its northern counterpart Northern Gas Networks have been slapped by fines of £4.3m and £900,000 respectively by energy regulator Ofgem, after they were both found to have been lacking when it came to responding to gas leaks on time. According to Ofgem, they’re required to attend 97% of uncontrolled gas leaks within an hour and 97% of controlled gas leaks (ones its customers had been able to temporarily fix after advice from National Grid) within two hours, but failed to make the grade last year. Both have pointed out that last year’s unusually harsh winter weather made it more difficult than usual to get to customers – but Ofgem reckons they should have been better prepared.

Ofgem’s figures show that National Grid only managed to reach 92.1% of uncontrolled leaks in the North West on time during 2010/11, while its rates in the West Midland, East of England and London also weren’t up to scratch, at between 95.2% and 96.1%. NGN was no better: in its patch (north Cumbria, the North East and parts of Yorshire), it only reached 91.6% of uncontrolled gas leaks and 94.3% of controlled leaks on time.

This puts National Grid in the dubious position of having been the recipient of the three largest fines Ofgem has ever handed out: on top of today’s £4.3m, it was fined £8m earlier this year for ‘failing to provide accurate information’ to the regulator about maintenance work it had (or hadn’t, in this case) carried out, while in 2010 it was fined an eye-watering £15.8m for abusing its market position.

This is the first time companies have flouted Ofgem’s response time rules – and to be fair to National Grid and NGN, their excuse that the weather was so bad, they found it difficult to reach some properties is perfectly valid. But Rachel Fletcher, Ofgem’s senior partner for distribution, was emphatic that ‘both companies need to plan better for bad weather and ensure that adequate resources and contingency plans are in place to meet the annual targets’. So plenty of brownie points to National Grid, which said today that it has ‘learned lessons’ and that this year, it’s got an extra 200 engineers on standby, with more 4x4 vehicles and snow tyres a-plenty. Not that it’ll need any of that, given the balmy temperatures we’re experiencing at the moment.

Elsewhere in the energy industry, things are going better: the solar power industry is, presumably, feeling less despondent this morning after a High Court judge ruled plans by climate change secretary Chris Huhne to slash the subsidies given to households that generate solar energy ‘unlawful’. The industry had been up in arms after Huhne announced plans in October to reduce the amount the Government pays property owners who sell excess electricity back to the grid. And Mr Justice Mitting seems to agree, calling the sudden change ‘flawed’.

Now obviously, this is a good thing for the UK’s burgeoning renewables industry, which, is only in its infancy and thus benefits from any incentives it can provide prospective customers. On the other hand, you’ve got to ask what the point is of supporting an industry that can’t function without such extremely generous Government subsidies.

Still: as Energy and Climate Change Select Committee chairman Tim Yeo pointed out, the reduction could have been done in a more orderly fashion. ‘Ministers should have spotted the solar gold rush much earlier, and subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry,’ he said. You can’t really argue with that.

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