Ofgem to monitor Cadent’s performance for reliability

Ofgem has published its review of the Gas Distribution Networks (GDNs) for the sixth year of RIIO-GD1, finding GDNs have continued to build on progress made in previous years.

Published in early February, the report found most GDNs had exceeded their annual output targets and are on track to achieve their RIIO-GD1 targets. There are certain outputs where further improvement is needed, with Ofgem pledging to actively monitor performance and take action where appropriate. This includes network reliability which, despite being consistently high over the period with 99.998% reliability for 2018-19, saw some specific performance issues relating to the networks managed by Cadent.

Ofgem outlined how in May 2019, Cadent agreed to pay £24mn for past failures related to reliability with this figure including leaving residents in blocks of flats without gas for longer than necessary. It had committed to double the statutory compensation payments made to customers who experience an unplanned gas supply interruption for longer than 24 hours. Ofgem said it will continue to monitor Cadent’s performance in this area, stating that should it fail to deliver improvements in its network reliability, it may revisit these issues and take appropriate action to protect customers. This would include enforcement action.

Elsewhere, GDNs are forecast to spend a combined £16.7bn over RIIO-GD1, noted as £2.1bn (11.2%) less than their collective total expenditure allowances, with key areas of underspend being savings on iron mains replacement programme expenditure and operational expenditure. The average GB customer, meanwhile, is estimated to pay £118 in real 2018-19 price terms for gas distribution costs in 2019-20.