National Energy System Operator: Blackout Risk

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Wednesday 15 July.

“On 7 July, the shadow Secretary of State, the right honourable Member for East Surrey, Claire Coutinho, wrote to the Government alleging practices of poor information handling in NESO and interference in operational decision-making in the control room. The Government take this issue incredibly seriously. Since the allegations came to light, we have been engaging with NESO and Ofgem to establish the facts. Both my right honourable friend the Secretary of State and I have spoken to the chief executive of NESO.

NESO has now appointed an external legal firm to conduct a full investigation into the claims, and a report is to be delivered to the board’s head of risk and controls and to Ofgem in the coming weeks. The legal firm will interview members of the control room without any other NESO employees present. NESO has already responded publicly that all operational decisions are taken solely by authorised operational control room personnel, and that NESO does not instruct employees to avoid retaining records. We will work closely with Ofgem to monitor both the progress and the outcome of the investigation. However, it would be wrong to pre-empt that outcome, and the investigation must be allowed to run its course.

I want to make it clear that during this period of unprecedented extreme heat, the Great British grid remains stable. No customers were impacted by tight electricity margins, and NESO had a number of tools available to ensure our energy security. Great Britain has one of the most resilient energy systems in the world, and the Government work closely with NESO and the wider sector to ensure that this resilience is constantly maintained. Market notices, such as those issued by NESO during the heatwaves, are standard operational tools that can be used to support energy security, and these were used successfully to maintain grid stability. However, it is important to acknowledge that extreme heat events, such as those experienced this summer, are likely to occur more frequently as our climate continues to change.

My department will continue to work with NESO and Ofgem to identify any lessons from these events, and to work to ensure that our electricity system remains resilient. Ofgem, as the independent regulator, is also working with NESO to initiate a formal review of events during the June heatwave. I welcome this important transparency and look forward to working with NESO and Ofgem on taking forward the lessons learned”.

I declare my interests as chair of Amey, Acteon and Buckthorn Partners. Can the Minister confirm the comments of whistleblowers that on 23 June

“constraints were breached and system security was compromised”—

and, I might add, five safety limits were breached as well? Can he confirm that such events can directly contribute to potential nationwide blackouts? Why was this not reported to Ofgem within 72 hours, as legally required? Does he agree with Octopus Energy, which told Parliament on 8 July that the cost of balancing the grid, net-work constraints and capacity payments under this Government’s high-cost wind and solar-driven energy policy is to go up from £1.5 billion this year to £10 billion a year by 2030, which will further deindustrialise the country and add higher costs to already unacceptably high domestic and industrial energy bills in the United Kingdom?

The Government take the allegations that the whistleblowers have made recently concerning the operation of NESO very seriously. An external legal firm has been appointed to investigate, reporting to a panel independent of senior management; indeed, there is the opportunity for anybody independent of senior management to make representations to that inquiry. It would be wrong to prejudge the outcome at this stage.

As for the wider issue of constraint payments, this is substantially an issue of grid management and grid development, which the noble Lord will know were grievously neglected under the previous Conservative Government. The present Government have very ambitious plans to make sure that the grid is expanded, repaired and updated so that constraints can be managed much more effectively as part of the overall grid process.

My Lords, these allegations, if accurate, would represent a shocking breach of public trust by an organisation now owned directly by the Government. But it also demonstrates a failure of the current whistleblowing framework that, to be heard and to have some measure of protection, the whistleblower has had to go through an Opposition MP, not to Ofgem or any other part of government. Will the Government now act to provide proper protection so that people who speak out can do so without fear of detriment and as soon as they see that there is an issue to be raised, and will they take seriously the proposals of my party for an office of the whistleblower?

As far as whistleblowing is concerned, I can speak only to this particular episode, but I point to the Government’s response—or, rather, the response of NESO and other bodies—in developing very rapidly a forum in which whistleblowers can confidentially and without any concerns about their own future or safety participate in an inquiry into what has taken place. Indeed, the separation of that inquiry from senior management underlines how seriously the Government take this issue but also how they wish to make sure that whistleblowers are given the proper protection and status that their concerns merit.

My Lords, first, in welcoming my noble friend’s response, can he confirm that there was no loss of supply to customers on the occasion of the incidents referred to? Secondly, in response to the question from the noble Lord, Lord Moynihan, in which he attacked the Government’s investment in wind and solar, will the Minster reflect on the national security assessment published earlier this year? That report stated:

“Global ecosystem degradation and collapse threaten UK national security and prosperity”.

Does that not make it so much more important that we continue with the decarbonisation of our energy supply?

Yes, that does make it very important that we continue decarbonising our energy systems to make sure that they are very resilient in a different climate that we will have in the future, and that the consequences of, for example, continuing to provide energy via high-carbon fossil fuels are countered by the systems being thoroughly low-carbon in the future. This has a bearing on the recent episodes as far as energy margin notices are concerned. We have had a period of extreme heat in the UK that is very likely the consequence of climate change, and this has produced some system resilience issues. However, the system was easily resilient enough to cope with that particular issue: there were no blackouts, there was no loss of power for customers or industry, and the stability of the system was maintained at around the 50 hertz mark at all times.

My Lords, does the episode not show that the integrity of the energy supply system is simply not fit for purpose? There is an overdependence on renewables that needs to be addressed as a matter of urgency.

I disagree with the noble Baroness. The recent episode showed that, even in relatively new circumstances of extreme heat—rather than the more normal issue of energy margin certificates being issued because of the effect of cold and winter on the system—the system stood up to it very well and managed to make sure that customers were not deprived of their power. As I said, the system was maintained to run at between 49.5 hertz and 50.5 hertz at all times. That is a sign that the changing nature of the system will be able to deal with these issues very well in the future.

My Lords, can the Minister address the concern that the NESO inquiry is being conducted by a firm of City lawyers rather than electrical engineers? That gives the impression that the allocation of blame and legal liability is seen as more important than the integrity of the system. Is not part of the current problem that the privatised companies save money by running a lower margin of capacity than the old Central Electricity Generating Board? That, along with the changing patterns of demand and supply, make the system less stable and more vulnerable. What is the Minister doing about it?

Many things are being done alongside the changing nature of the system to make sure that it retains its resilience and ability to supply power on a no-failure basis. These include continuing to build out the grid, and bringing forward ancillary services, new forms of artificial inertia, long-duration storage and many other new instruments that the system will have to make sure that it continues on a stable and reliable basis. On the whistleblowers, yes, the investigation team will be led by a law firm, but it will report to a review panel consisting of the chair of the Audit and Risk Assurance Committee, the shareholder non-executive director and the Ofgem director-general. That is entirely in line with making sure that whistleblowers’ interests within the energy delivery system are properly protected.

My Lords, will the Minister please accept that it is very important to ensure that the whistleblowing arrangements work effectively? Otherwise, people will use this opportunity to attack the Government’s excellent policy on moving as rapidly as we can to renewable energy, which is much cheaper and crucial for our security. Will he stand up toughly for the whistleblowers, given that some people, for some reason or other, want to attack the previous Government’s sensible policies, which this Government have continued? Will he make sure that we move to a position in which we are sovereign in our energy?

I could not agree with the noble Lord more. Whistleblowing is and should be an essential part of all these processes. Whistleblowers have to feel safe in what they say so that it can be properly looked at and lessons can be learned if it turns out that they pointed out something that should be done. It is essential that we have an environment in which whistleblowing is protected and where whistleblowers are taken seriously. That is what the Government have done on this occasion, supporting exactly what the noble Lord said about the direction that the system is taking and why it is essential that we do not fall foul of completely unfounded attacks on that system as a result.