Power firms fined £1m for failing to hit connection deadlines

A SCOTTISH power company has been fined £500,000 by the industry watchdog for failing to meet the three-month deadline for customer connections.

Ofgem said Scottish Hydro Electric Power Distribution (SHEPD), which is owned by Scottish and Southern Energy, will pay the fine for taking too long to connect customers and for not having systems in place to monitor their service.

SHEPD serves 721,000 customers in a region covering a quarter of the UK landmass, including Aberdeen, Dundee, Inverness and Perth as well as most of the Inner and Outer Hebrides and Orkney and Shetland.

Two English power companies, Central Networks, which is owned by E.ON and Electricity North West, were each also fined 400,000 and 100,000 respectively.

The firms connect a range of customers to the power grid, such as housing developers and small-scale renewables generators like wind farms.

They hold a monopoly in their areas and customers are therefore reliant on them providing a good connection service, according to Ofgem.

The investigation covered a period from 2004 to 2009, and the watchdog said it was particularly concerned that SHEPD was not able to demonstrate full compliance until the second half of 2009.

Stuart Cook, senior partner of smarter grids and governance at Ofgem, said: "Today's penalty sends a clear message that the companies must meet the standards set by Ofgem for connection services.

"We recognise that all three companies have taken steps to improve their connection services, in some cases prior to the commencement of the investigation, but they should have taken this action sooner."

Ofgem added that the companies have all co-operated with the investigation and have accepted its findings. This is reflected in the level of the penalties, which otherwise would have been higher.

Ofgem - the Office of the Gas and Electricity Markets - is the regulator of Britain's gas and electricity industries. Its investigation covered the period 1 July 2004 to 15 July 2009 and reviewed almost 49,000 connection inquiries.

A spokesman said it established that there were 22 cases where SHEPD did not meet deadlines for providing connection offers to small-scale renewable generators.

There were also 72 instances where it could not confirm whether it was in breach of the deadline because it did not have adequate systems in place.

Ofgem said that, given the need to invest 200 billion in the energy industry in the next ten years - more than 30bn of that in networks - it was vital that customers got prompt connections.

In October, it introduced compensation arrangements when local power network companies do not meet targets for good customer service in connections. Customers now receive compensation payments automatically when certain standards are breached by the companies.SHEPD said it fully accepted Ofgem's ruling and co-operated fully with the investigation, providing detailed information, both on a voluntary basis and in response to formal information requests.