Electricity network owners have collectively taken £3.5bn in dividends since 2016, new figures reveal, as the Government’s infrastructure tsar warns Storm Arwen shows a more “proactive” stance over network resilience is needed.
The UK’s distribution network operators (DNOs), which own and run the power lines connecting homes and businesses to the electricity grid, have invested about £12bn in resilience measures over the same period, the figures show.
The five DNOs include Northern Powergrid, part of Warren Buffett’s Berkshire Hathaway; UK Power Networks, owned by Hong Kong billionaire Li Ka-shing; and Electricity North West, whose owners include Japan’s Kansai Electric Power.
The companies are being scrutinised by the Commons business select committee following Storm Arwen. It destroyed or damaged infrastructure in the north of England and Scotland in December, leaving tens of thousands of people without power for as long as 10 days.
Sir John Armitt, chair of the National Infrastructure Commission, told the committee in a letter published on Friday that the rate of power cuts had improved since 2002, but suggested more could be done to strengthen the system.
“We are once again looking at resilience after the system has experienced a shock,” he wrote. “We need to be more proactive in thinking about resilience – anticipating the system requirements so that we plan and operate systems to resist, absorb and recover from shocks and stress.”
Sir John said DNOs were planning to increase spending in making networks more resilient over the next five years, but had spent less in recent years than allowed under the regulator’s price controls.
There may be sensible explanations for this such as increased efficiency, he said, but added: “We need to ensure resilience investment remains a priority.”
The Energy Networks Association, which represents DNOs, told the committee that storms are becoming more frequent due to climate change. “It has been clear for some time that continued investment and innovation in network resilience… is crucial.”
The association said DNOs’ spending on resilience in the next five years would be a fifth higher than in the most recent five years, adding: “The requirements placed upon network operators, including requirements to invest in resilience, are developed and consulted on as part of the price control process led by Ofgem [the regulator].”