Energy regulatory authority Ofgem has announced significant increases in the maximum compensation available to households and businesses affected by power cuts caused by storms. Under the new regulations, the compensation cap has risen from £700 to £2,000. This move comes as a result of Ofgem’s review of the response to Storm Arwen, during which nearly one million homes and businesses experienced power outages, with some enduring several days without electricity.
According to Ofgem, the enhanced compensation scheme aims to hold energy companies accountable for their preparedness in the face of severe weather conditions. The focus of the review was the performance of distribution network operators, responsible for connecting properties to the electric grid, during the November 2021 storm that struck the UK. Approximately 40,000 consumers suffered power cuts lasting three days, while nearly 4,000 individuals in parts of northern England and northeast Scotland were without power for over a week.
Concerns were raised when affected residents reported delays in receiving compensation, some even months after the incident. As part of the latest changes by Ofgem, customers will receive higher compensation amounts at an expedited pace, aiming to more accurately reflect the impact of extended power outages.
The revised compensation scheme establishes that if a severe weather event is categorized as Level 1, customers will be entitled to £80 in compensation if their power supply is not restored within 24 hours. For storms classified as Level 2, the most severe category, customers will receive £80 in compensation if their supply remains disrupted for 48 hours, recognizing the additional time required by companies to restore power in more challenging conditions.
Furthermore, customers affected by storm-related power cuts will now be eligible for an extra £40 every six hours beyond the initial outage period, a reduction from the previous 12-hour interval. Accordingly, in the event of a Level 1 storm, a customer could receive a maximum compensation of £2,000 if they experience 13 consecutive days without power. For a Level 2 storm, the maximum compensation would apply to a period of 14 days without power.
To expedite the payment process, consumers will also have the option of receiving compensation via bank transfers. Ofgem’s Director General of Infrastructure, Akshay Kaul, emphasized that it is unacceptable for households to endure prolonged power cuts in freezing conditions without sufficient information about restoration timelines during events like Storm Arwen.
