Regulator Ofgem has ordered energy companies SSE and UK Power Networks (UKPN) to pay an additional £3.3 million after a probe into how they handled last winter’s storms.
The firms have already paid out £4.7m and committed to improvements following the severe weather last Christmas in the south of England. It brings the total to £8m.
Ofgem said it was more than doubling the minimum payments of those affected by severe weather incidents in the future and has warned the industry that it must learn the lessons of last winter.
It said it found that while SSE and UKPN’s southern arms were badly hit by the storms “they could have done more to get customers reconnected faster and to keep them better updated on what was happening”.
Last week Perth-based SSE reported that it lost 110,000 customers over the last three months despite freezing prices.
But chief executive Alistair Phillips-Davies told investors that the UK’s second-largest energy supplier continued to target a slight increase in earnings per share this year in the face of a tough business environment.
Ofgem’s announcement comes as the Competition and Markets Authority (CMA) sets out details of a major investigation it is opening into Britain’s energy market. It marks the first phase of a probe which could see Britain’s “big six” energy suppliers face being broken up.
Ofgem referred the industry to the CMA after saying soaring household bills and intensifying public distrust highlighted the need for an investigation.
It is due to report by the end of next year but some think the deadline is likely to be extended by a further six months.
The CMA said yesterday that it had identified four key theories about what could harm competition in the sector.
These include problems with the way wholesale electricity markets operate, which it is thought could create “barriers to entry” for independent suppliers, and the possibility that large power generation companies could at times be able to influence wholesale prices.