Storm Éowyn compensation payments update
Date published:
Following disruption and damage caused by Storm Éowyn on 24 of January, a working group involving the Department for the Economy, NIE Networks, and the Utility Regulator, was established to consider compensation payments for electricity customers most affected by power outages.
The working group was established at the request of the Executive to consider options where compensation payments would be recovered through customer electricity bills.
It has now updated the Executive of its findings that there is currently no existing route to make payments to customers.
A Department for the Economy spokesperson said: “NIE Networks has applied a severe weather exemption provided for in legislation under which customers can apply for compensation if they have been off electricity supply. The working group concluded that any other options involving recovery of payments from network charges would require legal or regulatory modifications which cannot be applied retrospectively for those customers impacted by Storm Éowyn.
“If NIE Networks was to voluntarily decline to apply the severe weather exemption, customers would pay 50% of the cost of compensation through their electricity bills next year and NIE shareholders would have to agree to bear the rest. No other electricity company shareholders in Britain or Ireland have been asked to bear the cost of compensation for Storm Éowyn which was an unprecedented weather event and NIE was not at fault for the disruption caused by the storm.”
The spokesperson added: “All bodies involved in the response to Storm Éowyn will be considering lessons learned and the need to consider appropriate and affordable measures to strengthen resilience to reduce the impact of future severe weather events.”
Notes to editors:
1. On Friday 24 January, Storm Éowyn, the most severe storm ever recorded in the region, caused widespread damage, mostly resulting from trees striking overhead electricity wires. Nearly 326,000 homes and businesses lost power following damage at approximately 3,000 individual locations. Over 90% of NIE’s primary substations across the north experienced wind gusts in excess of 90mph.
2. The Electricity (Standards of Performance) Regulations (Northern Ireland) 1993 as amended by the Electricity (Standards of Performance) (Amendment No 3) Regulations (Northern Ireland) 1999 provide the current legislative framework under which customers can apply for compensation if they have been off electricity supply. Under this legislation, and in line with the Utility Regulator’s Decision Paper on NIE Licence Modifications: Definition of Severe Weather Event (February 2015) NIE Networks can apply an exemption.
3. In the scenario that NIE was to voluntary decline to apply the serve weather exemption, even if NIE’s shareholders were to agree to such a step, incurring costs outside the regulatory framework would create uncertainty for investors and this would inevitably be priced into NIE’s cost of capital. For example, just a 1% change in cost of capital is estimated to increase customer costs by the order of £1.6 billion over 40 years, adding £40m to annual electricity charges. For this reason it is not in the long-term interests of electricity customers for NIE to not apply the severe weather exemption.
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