Cadent pays £24 million for past failures and establishes a £20 million community fund

Press release
Publication date
Company
Cadent Gas Limited
Industry sector
Supply and Retail Market
Distribution Network
  • Thousands of residents of blocks of flats served by Cadent were left without gas for longer than they could have been, while others did not receive the required compensation
  • Cadent had no records of 775 high rise blocks of flats in its gas network
  • Cadent responded to these issues and is implementing a plan to improve the way it interacts with customers

Cadent, a gas distribution network company, acknowledges its responsibility to its customers, agrees to pay a total £24 million and is committed to implementing an improvement plan to address three serious failings after intervention from Ofgem. 

Additionally, Cadent has committed to setting up a community fund, worth an estimated £20 million, to support consumers in vulnerable circumstances.

Cadent will also double the statutory compensation payments, at an estimated cost of £6.7 million, made to customers who experience an unplanned gas supply interruption for longer than 24 hours over the next two years (see breakdown of payment for full details). 

Cadent has acknowledged the following failings:

  1. During 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.
  2. Cadent reported to Ofgem earlier this year that it 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, and finally,
  3. Last year, Cadent reported to Ofgem after reviewing its database of assets that it had no records of gas pipes (sometimes referred to as risers) in many high rise blocks of flats in its London network.

Network companies are required to keep records of assets, such as the pipes in their network. Cadent 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 has admitted all three failings to Ofgem, acted to rectify the issues, implemented new processes to address them, and submitted improvement plans for interruptions and record keeping.

Ofgem has now closed its investigation into the record keeping failures and will not take further action over gas supply interruptions and delayed compensation payments to affected residents.

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.

“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.

“Cadent has also agreed to make a significant financial contribution to customers as redress in recognition of its past failings. This is a move we welcome.”

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.

Breakdown of the £24 million payment and improvement plan:

(in addition to the estimated £20 million community fund)

1. Lengthy gas disconnections

  • Cadent committed to reduce the number of blocks of flats off gas as a result of supply emergency from 40 in August 2018 to 15 by March 2019, which it met.
  • Cadent has committed to implement, monitor and report to Ofgem on its multiple occupancy buildings improvement plan, which includes reducing the length of a typical disconnection for each block of flats from 19 to 10 days.
  • Cadent will pay £3.6 million to Ofgem’s consumer redress fund administered by the Energy Savings Trust.
  • For two years starting 1 April 2019, across all its networks, Cadent will double the compensation payments to customers who experience an unplanned interruption longer than 24 hours. Cadent estimates this will cost £6.7 million.
  • Cadent will incur an estimated £4.8 million in costs to establish and run a dedicated team to help improve performance in blocks of flats.

2. Delays in compensation

  • Cadent will pay £2.3 million to Ofgem’s consumer redress fund administered by the Energy Savings Trust.
  • Cadent will pay £300,000 directly to residents who faced delayed compensation payments in 2018-2019, representing double what Cadent initially owed them.

3.  Ofgem’s record keeping investigation

  • Cadent has created a new database to record all its assets.
  • Cadent has committed to a set of improvements and recommendations to keep its records fully updated and accurate and will report back to Ofgem on progress.
  • Cadent will pay £3 million to Ofgem’s consumer redress fund administered by the Energy Savings Trust.
  • Consumers will pay none of the full costs (£3.6 million) associated with Cadent investigating and putting right the issues associated with the investigation.

Notes to editors

  • To signal a new approach by the company, Cadent’s board has committed 1.25% of its after tax profits on an annual basis, and has announced the Cadent Community Fund, to support consumers in vulnerable circumstances across its network. For details, journalists can contact Sara Wilcox in Cadent media relations on 07899 983792.
  • Ongoing monitoring: If Cadent’s improvement plans are not fully implemented, or the proposed payments are not made, Ofgem reserves the right to revisit these issues and take appropriate action.
  • Cadent Gas Limited holds a Gas Transporter licence.  Cadent owns four of the eight regional distribution networks in the West Midlands, North West, East of England and North London.
  • Ofgem has published its decision to close this investigation into Cadent’s record keeping.
  • More information about Ofgem’s voluntary redress fund.

For media, contact

Michelle Amos: 020 7901 1881

Media out of hours mobile: 07766 511470 (media calls only)

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