A company that left customers without gas for months and had no records for hundreds of blocks of flats in its network has been hit with a record fine.
Cadent, which runs half of Britain's regional gas networks, is to pay a £24m fine and set up a £20m support fund for vulnerable customers after the energy watchdog discovered “serious” failings.
Ofgem launched an investigation into Cadent in 2018 in the wake of the Grenfell Tower disaster when it emerged that the company didn’t have safety records for its pipes in many high-rise buildings.
The failings meant that up to 775 tower blocks may not have received regular maintenance inspections. The Health and Safety Executive is currently investigating the issue.
Cadent chief executive Steve Hurrell apologised, saying the company had “fallen short of customer expectations and the higher standards we have now set ourselves”.
Some of the company’s record-keeping systems are decades old but are now being updated, Mr Hurrell said.
Ofgem found that Cadent was increasingly leaving residents in blocks of flats without gas for longer than necessary, for example during pipe repairs.
Earlier this year, Cadent told the watchdog that it failed to pay the required compensation over six years to a possible 12,000 residents left without gas for more than 24 hours.
The company will also double the statutory compensation payments, at an estimated cost of £6.7m, for customers who unexpectedly lose their gas supply for for longer than 24 hours over the next two years.
Ofgem chief executive Dermot Nolan 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.
Gas and electricity network companies are largely unknown by consumers, but they perform a vital role in maintaining the infrastructure that transports energy around the country.
The firms have come under fire from consumer groups for making billions in “unjustified” profits for their shareholders and adding hundreds of pounds to household bills.
In 2017, research by Citizens Advice found that gas and electricity network companies were on target to make an average 19 per cent profit margin over eight years, handing an average 10 per cent return back to shareholders, despite the “fundamentally low risk” nature of the business.
Customers have overpaid by £7.5bn – an average of £285 per household – over the last eight years because of errors in judgment made by Ofgem in pricing the network contracts, Citizens Advice found. It said the money should be refunded to customers.