UK energy regulator Ofgem has told electricity firms to expect revenue cuts of £14 million if they don’t take steps to improve customer service.
The body has informed the country’s electricity distribution network operators (DNOs) that their revenue could be cut following a review of how well they are dealing with new customers that request connections.
Based on provisional information provided to Ofgem, the cut in revenue could be up to £13.9 million across all six DNO groups.
Some background: As part of their 2015-2023 price controls, Ofgem set DNOs an incentive to engage effectively with larger customers requiring new connections, with failure to meet minimum expectations leading to a financial penalty. Following feedback from customers to its consultation in July, Ofgem’s view is that all DNOs may have fallen short of these expectations.
Ofgem says many of the failings involve poor communication. For example, some customers struggled to get progress updates on their connection requests or found that information they were provided by a DNO was not detailed enough. In other cases the DNO failed to explain the cost of reinforcing its network when making quotations for connections work.
Ofgem said that, in general, DNOs seem to be improving their engagement and services, but some specific issues raised by stakeholders remain unaddressed.
The body is consulting on its view, giving stakeholders and the DNOs a further opportunity to provide evidence on performance.
A final decision on each DNO’s performance and whether they will face revenue penalties will be made by the end of November.