More than 99% of our distribution customers are homes and small businesses, but the remaining 0.4% are large businesses which consume around 45% of the electricity we distribute. The amount of electricity we need to send across our network depends on a number of general factors, like customer numbers and the weather, but it’s also affected by more specific influences like changes in the way customers use energy, more localised generation and the effects of price increases.

Over the last few years, the volumes of electricity we’ve sent through the network have been reducing, sometimes due to milder winters but mostly as a result of sharp rises in retail electricity prices and also more recently because of the economic downturn. Over the last few years we have noticed a marked reduction in demand in both the domestic and the larger business markets. Many large industrial customers have introduced long-term energy efficiency measures while domestic customers have reduced the amount of energy they waste, for example by not leaving equipment on standby, or by switching lights off when leaving a room. Inevitably, when electricity is transported around the network, some is lost. A study into the technical losses on our network concluded that the West has the lower level, estimated at 4.2%, which we believe is one of the lowest loss factors across the industry. Technical losses for the East are estimated to be around 4.7%. Our overall network losses – including non-technical losses such as theft and measurement error – stand at around 5.1% of units distributed and are amongst the lowest in the UK.

Distribution Customer Minutes Lost and Customer Interruptions

The main way of measuring performance is to count the number and length of interruptions to supply. These are defined as the number of supply interruptions (power cuts) per 100 customers per year, and the average number of minutes without power per customer per year. Only incidents that last three minutes or more are included.

Our performance compared with target for Customer Minutes Lost was an improvement on our 2007 performance by reducing Customer Minutes Lost from 74.3 to 58.0 for CN East and 101.7 to 85.1 for CN West. Also our performance compared with target for Customer Interruptions was an improvement on our 2007 performance by reducing Customer Interruptions from 78.9 to 69.0 CN East and 110.7 to 101.0 CN West.

Network investment

We have in place long-term investment plans to manage the entire lifecycle of our distribution network assets, looking decades into the future to ensure that the long-term needs of customers will be met. We develop proposals to address the risks we might face and the potential for long-term improvements and upgrades. All this is done on a rolling basis and reviewed against current performance levels.

Our medium-term investment is funded in five-year 'price control review periods' agreed with the industry regulator Ofgem. The current five-year period began in April 2005, and includes a substantial increase in investment to ensure that the quality of the network is maintained. Our current investment allowance of £1.2 billion is helping us maintain and improve the service we provide our customers and is an increase of some 55% over the previous five years.

Ofgem has also introduced a separate funding mechanism that will allow companies to use some of their expenditure to put overhead cables underground in Areas of Outstanding Natural Beauty and National Parks. We’re in discussions with local environmental groups about how and where to do this.

Flood damage prevention

Instances of flooding across the UK have highlighted the need for us to increase the resilience of our network to reduce the likelihood of supply interruption caused by flood damage. We’re undertaking a detailed risk assessment using data from the Environment Agency to determine the critical assets most at risk. The investment required will continue into the next review period, up to 2015.