Ofgem has proposed an incentive mechanism for transmission companies to keep loss of supply incidents on the transmission network to a minimum. Under Ofgem’s RIIO model which will go live in April 2013; Ofgem will set a target for energy not supplied. Above this level they will levy a penalty on Transmission Companies based on the formula: Penalty = price x MWh not supplied. The penalty will deducted from the Transmission Company’s income by Ofgem. It would not be levied if the loss of supply was due to exceptional weather events, third party damage or damage caused by adjacent network. Ofgem’s proposal also delivers a reward to Transmission Company if the actual energy supplied was less than the target level. Scottish Hydro Electric Transmission Ltd (SHETL) are consulting on an alternative proposal to keep loss of supply incidents on the transmission network to a minimum.
The majority of consumers in the north of Scotland are supplied by Scottish Hydro Electric Power Distribution Network at a lower voltage than the 132 volts going through the SHETL network. However, the Distribution Network in England and Wales operates at 132 volts. SHETL would like to set up a mechanism which recompenses the customers on the transmission network directly (so that it is a manner similar approach to that in place under the Distribution Network Guaranteed Standards) whereby, following supply interruption, customers get money based on the following:
- £54 to domestic customers who are without power for 6+ hours (with additional £27 to customers off supply for 12+ hours)
- £108 to commercial customers who are without power for 6+ hours (with an additional £54 to customers off supply for 12+hours)
However these payments will not be made if the customers are off supply because an exceptional weather event has occurred; or extended emergency return to service arrangement has been made with the National Grid. The payments are designed to compensate for the inconvenience caused by loss of supply. They are not designed to compensate customers for subsequent financial loss