Electricity (Maintenance of Supplies) (Hansard, 4 February 1998)

I beg to move,

That leave be given to bring in a Bill to require electricity supply companies to compensate customers whose supply is interrupted and not restored within specified time periods. The House will already be well aware of the considerable problems experienced in northern and central Wales and elsewhere with regard to the breakdown of electricity supply during the Christmas period. I was fortunate to secure an Adjournment debate on the issue on 21 January, during which other hon. Members from Wales and elsewhere added their experiences of similar problems. I do not intend to repeat the detail of that debate, but it may be helpful to highlight some of the main themes.

First, I remind the House that thousands of households in Wales lost their electricity supply over Christmas, hundreds were off for more than three days, dozens were off for as long as five days, and, in some instances, the loss was for as long as eight days. Although we criticise the performance of the supplier company, MANWEB, we recognise the strenuous efforts of its workers, who laboured in difficult weather to restore power. Likewise, although we criticise the company for having an inadequate facility to respond to telephone inquiries from those who lost their power supplies, we pay tribute to the staff who sacrificed their Christmas holidays to try to help out in the offices.

The supply failures occurred on 24 December following a "severe weather watch" issued by the Meterological Office on 20 December warning of the dangers, particularly on Christmas eve. In areas where cables had been put underground or investment made in upgrading the supply lines, supplies were maintained, but thousands of homes lost supplies. Half the losses were because of trees or branches falling on to supply lines. Trees in our area are trimmed only once every five years.

When the electricity supply was lost, my constituents, and many others, had immense difficulty making telephone contact with the supplier company. It took days to get the electricity restored. Constituents are convinced that that was partly because of inadequate investment and partly because of cuts in staff, particularly engineers.

The loss of supply hit farmers hard, who are dependent on electricity to keep milk cool or to run milking machines to milk the cows. Many vulnerable people, some in nursing homes, were put at risk because no electricity supply was available for their life support machines. Hundreds of people lost the entire contents of their deep freezes. All are looking for compensation.

MANWEB, the supplier company in our area, does not recognise the need to pay compensation. A loophole in the Electricity Act 1989 lets supply companies off the hook in what is termed "severe weather". MANWEB is, however, making good-will payments, although, by doing so rather than paying compensation, it avoids bumping up its annual figure for breaches of guaranteed standards. In other words, because of a loophole, its performance is not properly recorded.

Incidentally, another failure in the present compensation rules was drawn to my attention by a correspondent from Somerset: if people live in a private 1063 park, for example, with caravans or chalets, and the electricity is lost, the compensation goes to the park owner, not the people who have suffered the loss of supply.

The objective of the Bill is to maximise the maintenance of electricity supplies. It has been made abundantly clear to us that the supplier companies now work in a commercial environment. They exist to make money, not just to provide an electricity supply service. That is clearly seen from the way in which such companies diversify into other sectors, such as water. Indeed, the Minister for Science, Energy and Industry, who replied to my Adjournment debate, acknowledged that when he said:

we are concerned that utility companies are putting profits and shareholders before service to their customers."—[Official Report, 21 January 1998; Vol. 304, c. 1120.] It is therefore my contention that the supply companies will maximise the attention they give to maintaining supplies to their customers when, and only when, they suffer punitive financial penalties for not doing so—in other words, when the cost of paying compensation is greater than the cost of taking the necessary steps to safeguard supplies.

We want the companies to do three things: first, to invest substantially more to upgrade the distribution network to reduce and, I hope, eliminate power cuts; secondly, to maintain their supply lines more effectively, having more rigorous planned maintenance and tree-trimming programmes; and, thirdly, to respond more quickly to breakdowns in supply.

The first objective requires a greater capital investment programme by the supplier companies, and the second and third need more engineering staff, locally—I emphasise locally—based so that they can respond to the needs in their areas. All three of those objectives require money to be spent by the companies on looking after their customers rather than their shareholders. That means not reducing charges to some customers at the cost of failing to maintain supplies to others, usually in rural areas.

The mechanism envisaged in the Bill would stiffen the compensation regime so that it starts to provide significant compensation to customers, including commercial customers, and to ensure that those who suffer the most get the full benefit of the compensation. It will close the loopholes whereby the supply companies avoid paying compensation, although they may make more limited good-will payments, as MANWEB has.

I raised the matter with the Office of Electricity Regulation. In his reply, Professor Littlechild relies on the present guaranteed standards payments, but acknowledges that they are inoperable in circumstances outside the company's control, such as exceptionally severe weather. 1064 That is not the wording in the statutory instrument, which refers merely to "severe weather conditions". The companies appear to be working to the wording in the regulations, not that in Professor Littlechild's letter.

There is, moreover, no definition of "severe weather" in the regulations. There is no obligation in the primary legislation to have such a regime; it is merely permissive. To be fair, Professor Littlechild tells me that he is considering whether there is a case

for further tightening or extending these standards". We accept that a reasonable period must be allowed for engineers to reconnect supplies after storms. We believe that 24 hours—the threshold in current regulations that triggers the present flawed compensatory payments—is reasonable. We propose to keep that threshold and the £40 initial payment—which may shortly go up to £50—for when the electricity supply is off for 24 hours, but to make it virtually mandatory. After the first 24 hours, we want a mandatory compensation payment of £10 for each hour after the first 24 without supply. The Bill would achieve that by amending sections 37 to 42 of the Electricity Act 1989.

If such a regime had been in place, my constituents who were without electricity for three days would have received £525 compensation, not a £50 good-will payment. Compensation at that rate would force supply companies to get their act together and minimise periods of lost supply. Through the Bill, we are helping to facilitate such a change, using the proposed augmented compensation as a lever to encourage companies to ensure that supplies are maintained. Other provisions in the Bill will help ensure greater emphasis on maintaining supplies.

At Christmas, many people in Wales and elsewhere suffered misery and financial loss because of the failure of the electricity supply companies to avoid breaks of supply and to re-establish it in a reasonably quick time frame. I hope that the Bill will help show the direction in which the regulator and the Government will have to go to avoid in similar occurrences.

Question put and agreed to.

Bill ordered to be brought in by Mr. Dafydd Wigley, Mr. Elfyn Llwyd, Mrs. Margaret Ewing, Mr. Lindsay Hoyle, Mr. Cynog Dafis, Mr. Ieuan Wyn Jones, Mr. Alasdair Morgan, Mr. Chris Ruane, Mr. Gareth Thomas, Mrs. Betty Williams and Mr. Alex Salmond.