Households and businesses affected by severe weather-related power outages will now receive up to £2,000 in compensation, a significant rise from the previous cap of £700.

This update was revealed today by Ofgem, the energy regulator.

The decision comes after Ofgem’s review of the response to Storm Arwen, during which distribution network operators (DNOs) faced criticism for their handling of power restoration.

These operators, responsible for connecting properties to the electricity network in Britain, will now need to adhere to updated regulations to avoid substantial fines.

The key changes include increasing compensation for supply loss due to severe weather from £700 to £2,000 and raising the initial payment from £70 to £80.

Additionally, the waiting time for additional compensation will be reduced from 12 hours to 6 hours after the initial payment period (24 hours for Category 1 storms and 48 hours for Category 2 storms).

Compensation payments will now be allowed via bank transfer for quicker processing.

To expedite compensation payments for inconvenience, Category 3 will be removed.

An inflation adjustment mechanism will also be introduced to ensure compensation stays aligned with inflation.

Akshay Kaul, Director General of Infrastructure for Ofgem, said: “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.”

Lawrence Slade, Chief Executive of the Energy Networks Association, which represents the UK’s energy network operators, said: “Storm Arwen caused catastrophic damage and disruption to customers, which network operators immediately recognised by voluntarily lifting the cap on compensation following the storm.

“Today’s formal recognition that compensation should be higher reflects the disruption and inconvenience customers experience.”