Ofgem hands out £10.5m fine for UK power outage

Energy regulator orders three suppliers to make payouts after more than one million customers lose power in August 2019.

The companies at the centre of the outage, Hornsea One Ltd, RWE and UK Power Networks have all agreed to pay a share of the total sum, after a lightning strike started a chain of events which led to a once-in-a-decade power outage across much of the UK. 

As previously reported by Fundamentals, one million electricity customers were without power for up to 50 minutes on 9th August last year, with some systems affected for close to 24 hours, after the strike led to a loss of generation from two independent generation sites.

 

Under investigation

Once the immediate issues had been resolved, Ofgem called for a full investigation, setting a deadline of less than a month after the outage for a full report to be provided, although National Grid ESO produced an Interim Report within a matter of days.

The report confirmed that generation was lost from two major power stations – Hornsea One Ltd windfarm, co-owned by Orsted, and Little Barford gas-powered station operated by RWE – along with a smaller loss of local generation, caused a frequency drop which triggered automatic disconnection for consumers.  After Ofgem’s investigation, the two companies have voluntarily agreed to pay £4.5m each to Ofgem’s redress fund.

Nation Grid ESO stated: “secondary backup systems were required to disconnect some demand (the Low Frequency Demand Disconnection scheme) and these automatically kicked in to recover the frequency and ensure the safety and integrity of the network.

“This system automatically disconnected customers on the distribution network in a controlled way and in line with parameters pre-set by the Distribution Network Operators. In this instance c. 5% of GB’s electricity demand was turned off (c. 1GW) to protect the other 95%. This has not happened in over a decade and is an extremely rare event. This resulted in approximately 1.1m customers being without power for a period.”

 

Making a connection

While Ofgem agreed that while network operators, and the disconnection and reconnection process, had worked as expected, UK Power Networks had begun reconnecting customers without a formal request to do so. Althoufh UKPN’s actions had no material impact on the outcome of the outage and its resolution, it was deemed a technical breach by the regulator and the company has agreed to pay £1.5m to the redress fund.

At the same time as Ofgem’s findings, the Government - through BEIS and the Energy Emergency Executive Committee (E3C) - released its own report in which it stated it would examine improvements that could be made to avoid future events. These include:

  1. Loss of generation

    1. Disseminate lessons learnt to the wider generation community
    2. Review and improve compliance testing and modelling processes for new and modified generation connections
    3. Review embedded generators’ understanding of, and compliance to, the Distribution Code; and assess whether the current governance, monitoring and enforcement processes are fit for purpose
    4. Review the timescales for the Accelerated Loss of Mains Change Programme, and consider widening its scope
  2. Reserve and Response

    1. Review the requirements for holding reserve, response and system inertia, including a costs and benefits analysis of holding different levels of reserves
  3. Low Frequency Demand Disconnection

    1. Review the performance of the LFDD scheme including its application and administration by the DNOs, and present options for short- and long-term improvements
  4. Impact on Essential Services

    1. Scope and define what an essential service is, and better understand their capacity to deal effectively with power disruptions
    2. Develop and deliver guidance for essential services owners/operators, to support contingency, continuity and resilience planning
  5. Communications Channels

    1. Develop and test a comprehensive communications strategy for use by industry and government
    2. Develop and test revised operational protocols and frameworks