Energy firms to pay £10.5m over August power cut

Three energy firms are to pay a total of £10.5m following August's power cut that left over a million people without electricity and caused travel chaos.

Although the power cut lasted for less than an hour, it affected homes, businesses and hospitals, while rail services were disrupted for days.

RWE Generation, Orsted and UK Power Networks will pay into a redress fund run by the UK's energy watchdog, Ofgem.

Ofgem says it will continue to look into the role National Grid played.

The power cut struck just before 17:00 BST on Friday 9 August, and blackouts spread across the Midlands, the South East, South West, North West and North East of England, and Wales.

Following Ofgem's investigation, RWE Generation, which runs Little Barford Power Station, and Orsted, which runs Hornsea offshore wind farm, have both agreed to pay £4.5m. Distributor company UK Power Networks has agreed to pay £1.5m.

The money will be put into a redress fund, which will be overseen by Energy Savings Trust, a charity.

Energy watchdog Ofgem launched its investigation in August.

It found that after a lightning strike, Hornsea offshore wind farm and Little Barford Power Station both went down.

Jonathan Brearley, Ofgem's incoming chief executive, told the BBC's Today programme that the simultaneous outage was an "exceptional event".

He said the equipment within the generators should have "ridden through" the lightning strike and it should not have resulted in a countrywide power failure.

Mr Brearley said the Ofgem report recommended three sets of actions for UK energy companies.

The part of National Grid that gives Britain power needs to be set up "the right way", and he said new forms of generation - such as wind power - needed to be a more secure source of supply.

Finally, Mr Brearley added, "if we do ever have to disconnect people we want to make sure we protect our critical infrastructure and the most vulnerable".

Analysis by Rob Young, BBC business reporter

National Grid bore no responsibility for the August power cut. But the company's bosses can't heave a sigh of relief just yet.

Ofgem says it has identified a number of issues with the Grid's processes and procedures which need to be addressed to reduce the risk of future power cuts.

The regulator has ordered the company to review and change how it operates. But that's only half the story.

Ofgem is widening its own review into National Grid's role as electricity system operator (ESO), partly as a result of its findings from its investigation into August's power cut.

The regulator says the structure and governance of National Grid ESO should be considered and "enforcement action remains an option".

That's a hint that radical surgery could be coming National Grid's way.

The function of system operator is already a legally separate entity within the National Grid company. Ofgem sources are clear that one of the options under consideration will be a break-up of the company, stripping the Grid of its role operating the system.

Some in government are open to that idea. National Grid is far from in the clear.

National Grid says that it has begun its own review and will update an industry standards panel in April.

In a statement, it said it would work with regulators and "colleagues across the industry, to address the issues raised and make sure that lessons are learned, and any changes made are in the best interests of the consumer".

Hornsea One, the wind power station that went down, said in a statement that it took the interruption "very seriously".

"We have co-operated with Ofgem throughout their investigations and conducted a thorough internal review of the events in order to prevent a situation like this from happening again," it said.

Ofgem's report was published alongside another, which was made as a combined effort between the government, regulator and industry members. It found that better communication between the industry and government was needed.

Business and Energy Secretary Andrea Leadsom said: "The disruption caused to people and businesses by the power cut in August was unacceptable.

"However, customers can be confident that we have one of the most robust energy systems in the world and today's report will help us reduce the risks of it happening again and ensure our energy sector is better prepared in the future."

The Office of Rail and Road also released a report which said the rail network "responded well". It also made suggestions for improvements to how train software is updated and monitored.

Although power was out for less than an hour in August, essential services such as hospitals experienced disruption when their safety systems reacted to voltage fluctuations affecting the network.

Some of the power companies began to switch services back on for customers before they were certain that this would not shut down power to other parts of the grid.

Thameslink trains that had only been added to the fleet in 2014 suffered a software glitch from systems sensitive to power fluctuation.

Though some trains could be re-started, many required an engineer to travel out to where the train was stranded for a manual restart.

London's Underground service also saw station power interrupted and signalling was lost.