Ofgem announced on 1 September 2023 that compensation for households and businesses that lose power as a result of severe weather events has risen to a maximum of £2,000, up from £700, under updated statutory regulations that all six distribution network operators (DNOs) in Great Britain are required to follow1. The regulator said the changes follow its review into the response to Storm Arwen, in which nearly one million homes and businesses lost power in November 2021, with 40,000 consumers cut off for three days and almost 4,000 without power for over a week in parts of north England and north-east Scotland1.
The new arrangements raise the initial payment from £70 to £80 and cut the wait for additional compensation from 12 hours to 6 hours after the initial payment period, which is 24 hours for a category 1 storm and 48 hours for a category 2 storm1. Under the new rules, a category 1 customer is entitled to £80 if supply is not restored after 24 hours, and a category 2 customer to £80 after 48 hours; both then receive a further £40 for every 6 hours without power after that initial period1. The cap now equates to 13 days off supply for a category 1 storm and 14 days for a category 2 storm1. Under the old arrangement, £70 was available after the first 48 hours and £70 for every 12 hours thereafter, capped at £7001.
Ofgem also removed Category 3, which it said will increase the number of compensation payments for inconvenience because it reduces the time consumers must be without power before they are eligible1. All compensation payments can now be made by bank transfer, which Ofgem said will simplify and speed up the process1. An inflation adjustment mechanism links payments to the current inflation rate up to January 2023, based on the CPIH index published by the Office for National Statistics, rounding payments up or down to the nearest £51.
Storm categories are defined in the Electricity (Standards of Performance) Regulations 2015: a category 1 storm causes between eight and twelve times the daily average number of faults in a 24-hour period, and a category 2 storm more than twelve times that average1. Ofgem said companies that fail to comply with its Guaranteed Standards of Performance could face multi-million pound fines, and that payments under the guaranteed standards compensate consumers for inconvenience, not for subsequent financial loss1.
"It's unacceptable that thousands of households were left without power in freezing conditions for a prolonged period during Storm Arwen, often with poor information about when their power would be restored. Many also found it hard to get the compensation they were entitled to afterwards, and that's why we've put tough new rules in place to make sure network companies prepare better for severe weather; customers get accurate and honest information about power cuts in their area; and those who are off power in bad weather are rapidly and fairly compensated."
| Element | Old arrangement | New arrangement |
|---|---|---|
| Maximum cap | £700 | £2,000 |
| Initial payment | £70 after 48 hours | £80 after 24 hours (category 1) or 48 hours (category 2) |
| Further payments | £70 per 12 hours | £40 per 6 hours |
| Payment method | Not stated | Bank transfer permitted |
| Inflation | None stated | Adjustment mechanism to January 2023, rounded to nearest £5 |
Why it matters for households
For a home that depends on the electricity network, a long outage in severe weather removes lighting, heating, refrigeration and, for many, the ability to work or charge devices. The compensation is paid for the inconvenience of the failure, not for financial loss caused by it, so it does not cover spoiled food, lost earnings or damage1. The higher cap and shorter intervals mean a prolonged cut in a named storm produces a larger payment than under the previous rules, and the removal of Category 3 widens who qualifies. The Ofgem guide sets out the regulator's remit over network companies, and the complaints and redress guide covers how disputes over payments are handled. Storm categories are defined in regulations that apply across Great Britain; separate building rules apply in Wales and Northern Ireland.
What happens next
Ofgem said network operators and suppliers should get ready for the coming winter, and that it will not hesitate to hold them to account if they fall short of the standards customers have a right to expect1. Three DNOs, Northern Powergrid, Scottish and Southern Electricity Networks and Electricity North West, agreed to pay a further £10.3 million in voluntary redress payments to affected communities through community funds and donations to vulnerability support charities, in addition to the £30 million paid in direct compensation after Storm Arwen1. No further dates for implementation or enforcement have been reported.