Gas network Cadent to pay £44 million in penalties

Gas network company Cadent’s failings over keeping records of the buildings where it delivers gas were so poor as to threaten its fundamental duty, under Section 9 of the 1986 Gas Act, to “maintain an efficient and economical pipe-line system for the conveyance of gas”, Ofgem said. But the regulator decided on customer redress totalling £44 million, instead of pursuing enforcement action that could lead to a fine.

Cadent spent £3.6 million identifying the missing connections (a cost it has now promised will not fall on customers). They included 774 high rise blocks, containing 4,671 gas risers in total. Ofgem also notes that without the records – which the company missed opportunities to gather and check – Cadet could not report on the condition of those risers, as required by the regulator, as they were not part of its regular inspection or maintenance programme. Nor could it properly plan maintenance and repair activities. Cadent has created a new database to record all its assets and has to report back to Ofgem on progress in making improvements to keep its records up to date and accurate.

 

Cadent also acknowledged failings in customer service. It reported to Ofgem earlier this year that it failed to pay compensation over a six-year period to a possible 12,000 affected residents left without gas for over 24 hours as required. During 2018, from analysis of regulatory data provided by Cadent, it was increasingly leaving residents in blocks of flats without gas for longer than necessary, while repairs to gas pipes were carried out.

The package of redress measures includes setting up a £20 million fund to support consumers in vulnerable circumstances. Cadet will also make two payments to Ofgem’s consumer redress fund administered by the Energy Savings Trust:  £2.3 million for delays in paying compensation and £3 million for its data failings.

In addition the company will:

  • Double the compensation payments to customers who experience an unplanned interruption longer than 24 hours, for two years from April 2019. Cadent estimates this will cost £6.7 million.
  • Pay £300,000 directly to residents who faced delayed compensation payments in 2018-2019, representing double what Cadent initially owed them.
  • Incur an estimated £4.8 million in costs to establish and run a dedicated team to help improve performance in blocks of flats.
  • Implement, monitor and report to Ofgem on its multiple occupancy buildings improvement plan, and reduce the length of a typical disconnection for each block of flats from 19 to 10 days.

Cadent, which operates four gas networks, was formerly owned by National Grid Gas.

Cadent’s independent Customer Engagement Group (note: New Power editor Janet Wood is a member of the group) welcomed the plans for compensation. Zoe McLeod, Chair of the independent Group said: ”Cadent has lagged behind the other gas networks in terms of customer service performance and it knows things have to change.

“Under its new ownership and leadership, Cadent has started to make improvements across the board. We will continue to challenge the company to be more re​sponsive to customers, and to improve its processes and performance significantly, as it develops its next five-year business plan.”

 

Further reading

National Grid to sell remaining gas distribution stake

Cadent acquisition drops gas network credit quality

OPINION: Energy networks are making too much profit

National Grid agrees sale of its share in Cadent gas network

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