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Ofgem issues record penalty over gas supply failures

Gas distribution company Cadent has received Ofgem’s largest-ever fine after it left thousands of residents without gas for 19 days on average.

Cadent will pay a fine of £24m and is committed to implementing an improvement plan to address three serious failings after intervention from Ofgem.

 

The company will also double the statutory compensation payments, at an estimated cost of £6.7m, made to customers who experience an unplanned gas supply interruption for longer than 24 hours over the next two years.

 

It has also committed to setting up a community fund, worth an estimated £20m, to support consumers in vulnerable circumstances.

 

Ofgem found Cadent also had no records of 775 high-rise blocks of flats in its gas network, meaning they were not part of their regular safety inspection programme.

 

In addition to that, over the course of 2018, from analysis of regulatory data provided by Cadent, Ofgem became aware that Cadent was “increasingly leaving residents in blocks of flats without gas for longer than necessary, for example while repairs to gas pipes were carried out”.

 

It was also found that Cadent failed to pay compensation over a six-year period to a possible 12,000 affected residents left without gas for over 24 hours as required.

 

Dermot Nolan, chief executive of Ofgem, said: “Cadent has a duty of care and responsibility to millions of people across half of the country who rely on the gas it pipes to their homes for cooking and heating.

 

“Cadent acknowledges that it failed these customers by leaving many without gas for longer than necessary, failing to properly compensate some of those affected and not having the proper systems in place to keep records of all the high-rise blocks of flats it supplies.”

 

In an unreserved apology, Steve Hurrell, Cadent’s chief executive, said “We aim to put customers’ needs at the heart of everything we do, and we acknowledge that in the past, we have fallen short of customer expectations and the higher standards we have now set ourselves; for this we are sorry.

 

“It is important within the energy sector to have a strong regulator to ensure customer interests are protected and we are working closely with Ofgem to restore confidence in us and build trust in our future plans.

 

"While Cadent is a relatively new business, some of its record keeping processes and practices go back many decades, and a number of the issues we are addressing today are a legacy of that past. We are taking the opportunity to reshape the company to set new standards of customer experience and are investing significantly through our community fund to reach those customers in the most vulnerable situations.”

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