Cadent to pay £24m after compensation and record-keeping failures
Cadent Gas has agreed to pay £24m and committed to implementing an improvement plan to address three serious failings after intervention from the energy sector regulator Ofgem, it was revealed on Wednesday.
Additionally, the company had committed to setting up a community fund worth an estimated £20m, to support consumers in vulnerable circumstances.
Cadent would 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.
The company was spun out from National Grid in 2017, and operates and maintains gas networks in the West Midlands, North West England, the East of England, and North London.
Ofgem said on Wednesday that during 2018, from analysis of regulatory data provided by Cadent, it 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.
Cadent confirmed to Ofgem earlier in 2019 that it had failed to pay compensation over a six-year period to a possible 12,000 affected residents left without gas for more than 24 hours as required.
Additionally, last year Cadent told the regulator that, after reviewing its database of assets, it had no records of gas pipes in many high rise blocks of flats in its London network.
Network companies were required to keep records of assets, such as the pipes in their network.
Cadent, however, had no records of the 775 high rise blocks of flats, which meant they were not part of its regular inspection or maintenance programme.
Ofgem opened an investigation into Cadent’s record-keeping in 2018.
Cadent admitted all three failings to Ofgem, and had acted to rectify the issues, implemented new processes to address them, and submitted improvement plans for interruptions and record keeping.
Ofgem said it had now closed its investigation into the record keeping failures, and would not take further action over gas supply interruptions and delayed compensation payments to affected residents.
“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,” said Ofgem chief executive Dermot Nolan.
“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.
“Ofgem has worked with the company, which is under new ownership and has given commitment to improve its operations to put customers at the heart of the business, to help it address its failings and prevent further harm to customers’ interests.”
Nolan said Cadent had also agreed to make a “significant” financial contribution to customers as redress in recognition of its past failings - a move the regulator welcomed.
“Ofgem now expects Cadent to deliver on its improvement plan and put the needs of customers, particularly those in vulnerable circumstances, at the heart of its business.”