Living up to the Standards? Energy networks’ performance against the Guaranteed Standards of Performance in 2015-16
Living up to the Standards? [ 0.92 mb] examines how distribution networks – the companies that transport electricity and gas to our homes and businesses – performed against the Guaranteed Standards of Performance in 2015-16. These standards are regulations that set out minimum levels of service to customers. We find that:
Overall performance in meeting these Guaranteed Standards is excellent.
In the gas sector, there are pockets of poor performance that need improving.
Networks paid out £5.4 million in compensation in 2015-16 because some of their customers did not receive services in line with the standards - but this should have been more. Energy customers missed out on at least £2.2 million in compensation that they were entitled to in 2015-16. This means that customers lost out on 30% of compensation. It’s impossible to know whether customers are missing out on more because the data that Ofgem asks network companies to submit is limited.
Our recommendations to Ofgem and industry are as follows:
Ofgem should introduce automatic compensation for all Guaranteed Standards and thus move towards regulation which always puts the onus on networks to identify failures and compensate their customers. This should involve removing any requirement for energy customers to submit a claim for compensation that still exist in the regulations.
Ofgem should extend the use of penalties against networks that do not pay out due compensation to cover all standards so that networks are further incentivised to identify and compensate customers that were not served in line with the Guaranteed Standards.
While much performance is outstanding, pockets of poor performance remain. Network companies should reflect on how they can improve, make customers aware of the standards and share best practice with each other.
- Ofgem should review its reporting requirements for networks, ensuring that information about the scale of non-payments of compensation is captured and that networks interpret the requirements in the same way.
Accompanying blog on automatic compensation - why it is needed now in the energy networks sector and delivers the best outcomes for consumers.