HC Deb 17 April 1996 vol 275 cc817-24

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McLoughlin.]

10.14 pm
Mr. John Home Robertson (East Lothian)

Friday 29 December 1995 was the coldest day in a week of perishing cold weather in Scotland. But when my constituents in Prestonpans, Cockenzie and Port Seton woke up that morning, many of them found that the frost was gripping their bedrooms and kitchens as well as their gardens, because the gas supply to 4,180 households had failed.

It took up to three days to turn the gas on again, so more than 10,000 people in my constituency had a horrible Hogmanay weekend, relying on emergency soup kitchens while the frost burst the water pipes in their homes. There was a similiar failure in the gas supply at Stonehouse in Lanarkshire, and my hon. Friend the Member for Clydesdale (Mr. Hood) may wish to refer to that later in the debate.

This major failure of the gas supply got some attention from the national media, and British Gas's distribution company, TransCo, had to bring in 150 engineers from as far away as Brighton and Cornwall to reinstate our local gas supply in East Lothian. I would like to express my constituents' thanks to those engineers, who did a good job in difficult circumstances when I am sure that they would have preferred to be spending the holiday week with their families at home.

Three months later, the Director General of Gas Supply published the findings of the Ofgas inquiry into this incident. I am sorry to say that the Ofgas report has whitewashed the minor points and missed the main points altogether. The main point surely is that the circumstances were not unpredictable, so the failure of the gas supply should not have been allowed to happen. I am not satisfied that my constituents' experiences have been taken seriously, and I fear that similar failures will occur elsewhere in the future if we do not take steps to impose better standards on this highly profitable privatised industry. That is why I am raising this matter in the House.

I will give a brief summary of the events in Prestonpans, Cockenzie and Port Seton at the end of December. As I have said, the weather was extremely cold. In Edinburgh, the temperature dropped to minus 8 deg C on Wednesday 27th, minus 12 deg C on Thursday, minus 13 deg C on Friday and minus 14 deg C on Saturday 30 December. But it was several degrees colder in other parts of Scotland. Both Glasgow and Aberdeen experienced temperatures of minus 20 deg C during that week.

Evidently the main gas supply into that part of my constituency was not big enough to meet the morning and evening peak demands when people were heating their homes and cooking meals. There is a gasholder at Preston Links that fills up when demand is low, to boost the local supply at times of peak demand. The gasholder is checked regularly, and on 27 December it had 20 per cent. less gas than it should have had, and the pressure in the system was low.

If TransCo had been paying any attention to the weather forecast, it would have realised that things were going to get worse, and it should have taken steps to avoid the crisis that followed. But it did nothing. On the night of the 28th, the gasholder stock ran out, the incoming supply could not keep up with the demand for gas and the pressure in the system fell dangerously low, so all the gas customers in the area—4,180 households, more than 10,000 people—were cut off early in the morning of 29 December.

The gas supply system had collapsed, and it was in a dangerous condition because air could have been drawn into the supply pipes. So it was necessary to isolate street sections, check each householder's gas installation and bleed off the air in the system before restoring the gas supply. That was a major task, involving 150 engineers, including 100 who came up from England. Some households got their gas supplies restored within 24 hours, but the unluckier ones had to wait for up to three days in very cold weather.

East Lothian district council and Lothian regional council, together with the police and emergency services, had to go into action to provide support for elderly and disabled people, and to set up emergency reception centres and catering in the two local community centres. British Gas used its GasCare register to help to identify those most at risk, and information was provided through an emergency telephone service and the local media. TransCo helpfully distributed hundreds of electric heaters, but it was not altogether surprising that the resulting surge in demand for electricity in one street led to a temporary failure in the electricity supply, as if things were not bad enough already.

I kept in close touch with the situation, and I was advised that the official standards of service for the gas industry would require the payment of compensation of £20 a day to affected householders. But of course, at that stage, everyone was rightly concentrating on the main objective of restoring the gas supply, which was eventually completed just in time for Hogmanay. There were still burst waterpipes to repair on 1 January as people began to count their costs, and TransCo started looking for excuses.

TransCo rightly recognised the risk of a public relations disaster if it were to try to sidestep its liability to pay compensation. So it offered the two local community councils the princely sum of £1,000 each. It has not offered to contribute towards the substantial costs incurred by the local authorities—which I understand run into tens of thousands of pounds—but it did make the appropriate £20-a-day payments to affected householders "as a good will gesture". It stipulated that it was an ex gratia payment rather than fulfilment of any obligation, let alone an admission of liability. That bothers me, Mr. Deputy Speaker.

TransCo has claimed that the failure of the supply was due to exceptional circumstances under its contractual standards of service, and that the company was under no obligation to maintain the supply or to pay any compensation. Amazingly, Ofgas has now endorsed that interpretation, and I put it to the Minister that those standards of service must be amended to avoid the risk of similar failures in cold weather in the future.

Key standard 6 in British Gas's standards of service stipulates criteria for continuity of supply with an exception for interruptions caused by circumstances beyond the Company's control where restoration of the supply within 24 hours is impossible due to exceptional circumstances". Ofgas has defined "exceptional circumstances" as anything with less than a one in 20 chance of occurring, which means that British Gas can avoid responsibility for any supply failure in Scotland if the effective temperature falls below minus 6 deg C. That calculation in this instance was made on a national basis, with bizarre consequences: the lower temperature in Glasgow and Aberdeen, where the supply did not fail, has been used to help to justify the cut-off in East Lothian, where the weather was less severe.

As things stand, it appears that, if the weather gets very cold, and if there is more than a marginal increase in customer demand for gas—just 12 per cent. in the case of East Lothian in December—this massively profitable privatised utility has no contractual obligation to keep the gas flowing. The company will go on paying Cedric Brown's £247,000 pension and Richard Giordano's £450,000 salary plus perks, but the poor old customers can freeze as far as it is concerned.

I suggest a variation to the proverb: if you can't stand the cold, don't use gas in your kitchen. As climatic change seems to be leading to colder winters, Ofgas's one in 20 criterion is probably out of date. Do we seriously believe that it will be 80 years before the weather gets as cold as it was last winter? I do not think so.

The experience of my constituents makes it painfully clear that British Gas must be required to upgrade inadequate parts of the supply network or face penalties if things go wrong. There are other areas with potentially dodgy supplies that depend on gasholders, including parts of Glasgow.

The crisis should have been predictable. TransCo knew the limitations of the local supply system and knew that British Gas had taken on a lot of new domestic customers in new housing developments in the area. A total of 441 new houses have been built in the Prestonpans, Cockenzie and Port Seton area since 1990—almost all of them with gas central heating.

We now know that TransCo had plans to upgrade the supply and to do away with the Preston Links gasholder. I hope that the Minister will be able to assure me that the work will be completed before next winter, but I am afraid that the gasholder is still there—I saw it on Monday. The margin between capacity and possible demand should never have been so finely balanced in the first place.

Paragraph 4.2 of the Ofgas report, under the heading "Action to Prevent a Recurrence", makes a significant tacit acknowledgement that all is not well in the system. It states: TransCo Districts have been asked to undertake further planning and load sensitivity studies to consider whether any additional opportunities might exist to alleviate supply difficulties in periods of extreme temperatures at the limit of the system design criteria. It will take more than studies—we need assurances that the necessary work will be funded and carried out. It is imperative that the national criteria for the supply system be amended to guarantee the requirements of customers at times of greatest need; otherwise, it is quite possible that whole cities could be cut off as my constituents were last December

No doubt British Gas and other commercial gas suppliers will be reluctant to pay their share of the cost of upgrading TransCo's pipeline network. However, Ofgas must surely have an overriding duty to protect customers' interests by stipulating proper criteria for security of supply to avoid this kind of breakdown. Ofgas has seen fit to make excuses and to quote escape clauses for the failure of the supply in East Lothian last December. It is up to the Minister and the House to tell the Director General of Gas Supply to put public interests before the commercial interests of gas suppliers in the future.

The risk of supply failures can and should be minimised—that is the important point that the Minister must address. However, it will never be possible to eliminate the risk altogether. We must have the best possible contingency plans and systems to provide for the needs of elderly, disabled and vulnerable people in the event of a gas cut. The GasCare system seems to have worked reasonably well in this case, although I understand that the register is far from complete.

I am told that up to 1 million eligible customers are not registered under the current set-up. I gather that the threatened diversification of domestic gas suppliers could play havoc with TransCo's GasCare database in the future. I am advised that the register will show only the account number and address of elderly and disabled customers, so it will be a complicated task to find their names and telephone numbers in order to provide support and advice in an emergency, such as the one that occurred in December. The Government are promoting this market madness, so is it too much to ask the Minister to take account of the consequences for vulnerable people?

In conclusion, I inform the Minister that a large number of my constituents are very angry about the failure of their gas supply last December, and they have not been impressed by the dodging and weaving of British Gas, TransCo and Ofgas in the aftermath of that failure. I am grateful to Prestonpans community council, Cockenzie and Port Seton community council, the local members of the East Lothian and Lothian councils and Mr. Euan Robson of the Scottish Gas Consumers Council for making representations on behalf of gas customers. People are entitled to expect appropriate action, especially in East Lothian and other parts of the country where the system may be risky.

The clear conclusion is that this sort of predictable and avoidable gas supply failure must not be allowed to happen again in East Lothian or anywhere else. Effective contractual safeguards must be set and enforced. When I wrote to the Minister for Small Business, Industry and Energy in January, he replied: it is important to know why it happened and what lessons can be learned". and said that these were matters for the Director General of Gas Supply.

Sadly, Ofgas has whitewashed the incident and fudged the lessons, so I put it to the Minister that he has a duty to intervene to set proper standards for the gas supply industry.

10.29 pm
The Minister for Small Business, Industry and Energy (Mr. Richard Page)

I am grateful to the hon. Member for East Lothian (Mr. Home Robertson) for raising this important subject. Although the hour is late and springtime is arriving, it is right that we should have an opportunity to discuss this subject. I pay tribute to the great interest that he has taken in representing his constituents, and express my appreciation to my hon. Friend the Minister of State, Scottish Office, for joining me tonight.

Mr. Home Robertson

He is a constituent of mine.

Mr. Page

I am delighted that he is, and I sincerely hope that my hon. Friend did not have his gas cut off just after Christmas.

It might help the hon. Gentleman if I explained for the record how gas supply security has been approached by British Gas, and the standard licence conditions set by the President of the Board of Trade under the Gas Act 1995.

There are two principal aspects to security of gas supplies. The first is to secure that each winter there is sufficient gas to meet demand. That is achieved by means of the network code, which provides the economic incentives for gas shippers and suppliers to obtain sufficient gas and the price signals that can trigger demand by larger users. Further flexibility arises where gas is conveyed on interruptible terms to large industrial consumers, allowing the suspension of supply where needed. Those arrangements are together designed to secure that sufficient gas is available to domestic customers to meet the demand that would arise in one winter in 50.

The second aspect of supply security is ensuring that there is sufficient pipeline capacity to get the gas to where it is needed. That is a more complicated task, because it involves the operation of each part of the gas pipeline network in Great Britain, which runs to a staggering 0.25 million km of pipes. The criterion is that the system must be designed to meet the demand occurring on the peak day likely to occur in one winter in 20. The hon. Gentleman referred to his concern about that limit.

Those security criteria have been used for the planning and development of the gas network, and were reviewed by British Gas in the context of the 1993 Monopolies and Mergers Commission report. They have now been enshrined as specific regulatory obligations in the new licences.

On the specific incident, let me again say, as I have already said at Question Time, how sorry I was to hear about the supply failure that affected part of the hon. Gentleman's constituency during what he admitted was exceptionally severe weather last December. Whether we are, as he suggested, entering another ice age is a matter for debate. I stress the word "exceptionally". I understand that the nearest monitoring station, the Royal Botanic Garden in Edinburgh, recorded the coldest temperatures since records began there. The hon. Gentleman emphasised that it was exceptional.

It is an example of Murphy's law, and an undesirable fact of life, that many of the services upon which we depend are prone to break down just when we need them the most, because that is when they are placed under the greatest stress. In fact, the gas distribution system is highly resilient, and hardly ever breaks down through excess demand. That it did on this occasion was a consequence of prolonged very bad weather combined with higher than usual residential demand due to the Christmas and new year holiday.

At this stage—I think that the hon. Gentleman has endorsed this—I should like to acknowledge the great efforts made by those working in the gas industry and the local authority to minimise the disruption and inconvenience caused. I pay tribute to the way in which the people affected in both East Lothian and Lanarkshire coped with the incidents.

As the hon. Gentleman is aware, high demand caused the supply disruption during the extremely cold weather. I thought that he might be interested to note that demand was 121 per cent. more than the demand for an average winter day, which is more than double. The local supply system, despite being built to the required standard, was sadly unable to cope with that unprecedented demand due to that operational constraint, which is already being removed. As the hon. Gentleman said, there was a risk of air getting in and a danger to the system, which had to be shut down for safety reasons. I understand that emergency plans and procedures, including those involving the local agencies, were duly implemented.

Just over 4,000 homes were cut off in East Lothian on Friday 29 December, and 500 had their supplies restored the same day. As the hon. Gentleman said, engineers were called from the length and breadth of the United Kingdom, and worked ceaselessly and tirelessly to try to restore supplies. That process of restoring supplies required a visit to every house by a gas engineer. I believe that some of the delays were caused by the difficulty of getting access to some of the houses, which is why it took three days to reconnect some. As it happened, by Saturday 30 December most of the supplies were restored because those 100-plus engineers worked around the clock.

Both TransCo and Scottish Gas made strenuous efforts to help those customers who suffered disruption to their supplies. They paid particular attention to those with special needs, such as the elderly. As the hon. Gentleman no doubt knows, an incident room was set up in a local primary school to co-ordinate welfare provision and the restoration of supplies.

In particular, British Gas liaised with the regional council to arrange food and warmth in community centres, town halls and schools. It provided several hundred electric heaters and cookers for those in greatest need, and supplied pre-paid power cards for distribution to pensioners and people on income support. Scottish Gas provided a 24-hour help line, and also made contact with those on the GasCare register—the record of customers who have notified British Gas of their age or special needs—to check that they had adequate heating and cooking.

Mr. Tam Dalyell (Linlithgow)

The Minister emphasised that the Lothian region performed extremely well, and so it did, but Lothian region is no more, thanks to the crazy local government reorganisation. It is far from clear that in West Lothian, East Lothian or Midlothian one, would get the same service if the situation were ever to arise again.

Mr. Page

This is not quite the opportunity to debate the reorganisation of Scottish local authority activities.

Mr. Dalyell

The hon. Gentleman mentioned it.

Mr. Page

Although I said that Lothian coped well, I am confident that its successors will have equally adequate support systems in place if such a disaster ever occurs again. TransCo's efforts to keep consumers informed about the situation—including about 80 media updates and door-to-door calls—have been criticised. TransCo is considering how improvements in those procedures can be made. I will ensure that the comments of the hon. Member for East Lothian about having a register and the security of the register for the most vulnerable are drawn to the attention of British Gas, so that it can take those concerns into account.

Unlike the hon. Member for East Lothian, I am grateful to the Director-General of Gas Supply for the thorough investigation that her office has undertaken into the incident in East Lothian. I do not so casually dismiss the work that she has done on the investigation. It has provided a basis of factual material that has certainly helped me to prepare for this debate.

I understand that some of the hon Member's constituents believed that the interruption to their supplies was due to the diversion of supplies to Edinburgh. The Ofgas investigation paid particular attention to that concern, but concluded that the interruption arose from the demands placed on the local supply system, and not as a result of deliberate demand management by TransCo.

Mr. Home Robertson

I realise that the Minister has been well briefed for the debate, but I did not raise that issue, precisely because I am satisfied with the explanation given by Ofgas. What I said was that the criterion to which the Minister has referred—the one-in-20 criterion—is plainly insufficient. If that criterion is taken as an acceptable baseline, it means that all of us will experience two or perhaps three complete shutdowns of the gas supply in our houses in our lifetime. That is not tolerable. It is up to the Minister and Ofgas to impose realistic criteria to ensure genuine safety of supply in cold winters.

Mr. Page

Time is not on my side. I do not have enough to argue the point back and forth, but, if I recall correctly—I shall read the report of our proceedings—the hon. Gentleman used words such as "whitewash" in relation to the report. That is slightly dismissive. He says that the one-in-20 criterion is not adequate, but, apart from a small shutdown in Lanarkshire, the details of which I am not completely au fait with, the incident in East Lothian was the only one that I am aware has occurred in the past 10 years.

Mr. Home Robertson

So that is all right, then?

Mr. Page

I did not say that it was all right. As the hon. Gentleman is saying that there will be two or three such incidents in the next year or so, I have to point out that, in the past 10 years at least, there has been only the one incident. It must not be blown out of all proportion. If the hon. Gentleman can contain his enthusiasm, I hope that I shall be able to bring him some comfort for the future.

The hon. Gentleman also raised the question, which was mentioned in the Ofgas report, of the monitoring of the gasholder at Prestonpans. It will, of course, become an academic question for this site when TransCo completes the current re-enforcement, which will connect the area directly to the higher capacity intermediate pressure system. However, the director general suggested improved inspection, and I understand that TransCo has now decided that, where a gasholder is critical to security of supply, it will be visited more frequently when conditions approach that one-in-20 situation.

I must emphasis that, although the failure was in freak conditions that well surpassed the design criteria, I would not wish it to be thought that TransCo is simply shrugging off the whole issue. Steps are being taken to ensure that such incidents remain exceedingly rare.

In the specific location, the operational constraint that caused the problem—the medium pressure link to the local area—is being replaced with an intermediate pressure link with a much higher capacity. That will effectively rule out a repetition of the incident, and is due to be installed in time for next winter. A stretch of pipeline 1.25 km long has already been installed. I shall ensure that TransCo is aware of the concerns that the hon. Gentleman has expressed, and of the need to ensure that the work is completed before next winter.

More generally, TransCo is considering its response to the recommendations of the Ofgas investigation. However, it is already undertaking further planning and load sensitivity studies to ascertain whether additional opportunities may exist to alleviate supply difficulties in periods of extreme temperature at the limits of the system design criteria. Also, I understand that the Edinburgh district is compiling a report detailing the procedures used throughout the incident, highlighting the learning points from its experience. The report will be distributed to other districts, and any learning points will be incorporated in emergency plans as appropriate. I hope that that reassures the hon. Gentleman.

As I said at the outset, I appreciate the concerns raised by the hon. Gentleman on behalf of his constituents, but I hope that what I have said this evening will provide some reassurance for the future.

Question put and agreed to.

Adjourned accordingly at seventeen minutes to Eleven o'clock.