Welsh Government action resolves Baglan Energy Park power cut threat
- Baglan Energy Park customers faced having their electricity cut off when the owners of a private wire network went into compulsory liquidation.
- Welsh Government launched legal action to prevent UK Government’s Official Receiver from switching off power supply & invested over £4m to build new electricity networks.
- Intervention protects businesses that would have been impacted by the loss of power, potentially jeopardising up to 1,200 local jobs, and the local environment due to the risk of floods.
Businesses and other organisations at an energy park in Neath Port Talbot who faced having their electricity supply cut off after a private power network was placed into liquidation are being successfully connected to a newly installed power grid following Welsh Government intervention.
Economy Minister, Vaughan Gething visited Baglan Energy Park to meet businesses who have faced more than a year of uncertainty around their energy supply.
Businesses on Baglan Energy Park previously received their electricity supply via a private wire network from an on-site gas-fired power station. In March 2021, the company that owned the private wire network was placed into compulsory liquidation.
This resulted in the company’s operations, including the private wire network, becoming the responsibility of the UK Government’s Insolvency Service, who were tasked with winding down operations.
The Welsh Government has worked closely with partners and affected organisations over more than a year to prevent and minimise the impact and disruption to the power supply for organisations that rely on the private wire network.
This has included close working with Neath Port Talbot Council, Dŵr Cymru Welsh Water, the UK Government, OFGEM, the Insolvency Service, the Official Receiver, Natural Resources Wales, and Western Power Distribution to seek to find a solution to this challenging issue.
The Welsh Government has invested over £4m to support Western Power Distribution, as the local licensed distribution network operator, to rapidly design and build replacement networks. This investment has allowed Western Power to accelerate the process of building a new network – which would have initially taken between 18 months to two years to build. The investment has also minimised the significant costs affected businesses would have had to meet to connect to the new network.
As well as financial support, the Welsh Government has provided practical support to businesses, including helping them to map and identify their maximum demand requirements, informing the design of the new electrical network.
At the end of 2021, the UK Government’s Official Receiver announced it would be shutting down the private wire network in mid-January 2022 - months ahead of the date when organisations were scheduled to be connected to the new network.
This action would have meant businesses, services and critical infrastructure on the park having to bridge the gap in energy supply with diesel or gas fired generators, which are more expensive, less resilient and have the potential to significantly impact air quality in the local area. There was a real risk of diesel power failing in a storm event with potentially catastrophic consequences.
The Welsh Government led action to prevent this. Together with Neath Port Talbot County Borough Council, Dŵr Cymru and Sofidel we issued legal proceedings to seek to prevent the UK Government’s Official Receiver from discontinuing the private wire network until a new long-term electrical network was constructed.
The new electricity connections - which are directly powered through the National Grid - are now complete, with most customers now connected to the new network.
This means potential disruption to customers of the Baglan Energy Park has been successfully minimised.
This intervention has helped protect businesses that would have been affected by the loss of power, potentially jeopardising up to 1,200 local jobs and has prevented floods by maintaining power to flood water pumping stations.
Economy Minister, Vaughan Gething said:
“I am pleased to have had the opportunity to visit Baglan Energy Park to meet some of the businesses impacted by more than a year of uncertainty around their energy supply. There is no doubt this has been a very stressful and uncertain time for them.
“When the UK Government refused to act, the Welsh Government intervened. If we had not acted then, serious long term harm could have been caused.
“The action we have taken came at significant cost to the Welsh Government. However, I am confident that it was time and money well spent. We have been able to successfully avoid the risk of major job losses, flood incidents and potential environmental pollution.
“This has been an incredibly frustrating time. It is staggering that the UK Government actively opposed our action in the courts to protect jobs, the environment, and the health of tens of thousands of people. In taking this action, the Welsh Government stood up for the people of Wales. This is yet another great example of devolution in action.”
Notes to editors
- Baglan Operations Limited and the Baglan Group of Companies enter compulsory liquidation
- An Official Receiver from the UK Government’s Insolvency Service is appointed as the liquidator to carry out statutory duties to ensure a safe wind-down of the company’s operations.
- This includes ongoing provision of the sole electricity supply to Baglan Energy Park via a private wire network linked to the now-closed Baglan Energy Plant – but for a limited time.
- While the supply of power to businesses is a commercial matter between the energy supplier and its customers, the Welsh Government recognises the significant impact any disruption to power would have on customers of the Energy Park, local amenities, and the local economy.
- The Welsh Government establishes a Taskforce with Neath Port Talbot Council, UK Government and Natural Resources Wales to mitigate the effects of the company’s decision on the businesses and organisations reliant on the private wire network and to help ensure an ongoing and secure energy supply to customers of the Baglan Energy Park.
- The Welsh Government advises companies on the Energy Park that a long-term energy solution is needed and encourages them to contact Western Power Distribution urgently to request a connection to the grid.
- Western Power Distribution informs the Welsh Government and customers that connection to the grid could take up to 24 months and will incur significant cost.
- The Welsh Government works with BEIS, the Insolvency Service and the Official Receiver to seek to extend the life of the Private Wire Network to minimise any gap in energy supply.
- The Welsh Government works with Western Power Distribution to explore if there is any way of accelerating the process of connecting customers of Baglan Energy Park to the grid.
- The Welsh Government announces it is investing approximately £3m to contract Western Power Distribution, as the local licensed distribution network operator, to design and build a replacement network for the benefit of Baglan Energy Park. This is later increased to £4m to further accelerate delivery.
- This Welsh Government investment will provide new infrastructure to the energy park, and allow customers impacted by the liquidation to connect to a new OFGEM-regulated distribution network with greatly reduced cost implications.
- The Welsh Government works with affected businesses to help them finalise their gird requirements which are then submitted to Western Power Distribution.
- Following Welsh Government intervention and investment Western Power Distribution accelerates its estimated timeline for connecting businesses to the grid.
- The Official Receiver advises customers that power through the private wire network will be terminated on 14th January 2022, alongside the close-down of his liquidation work.
- This would be some months ahead of the provision of the new power network arrangements, and would mean businesses, services and critical infrastructure on the park having to bridge the gap in energy supply with diesel generators which are more expensive, less resilient and less sustainable form of energy than the Private Wire Network.
- The Welsh Government continues to have extensive discussions with all relevant parties, including BEIS Ministers and the Secretary of State for Wales, to try and secure a sensible solution and avoid the premature termination of the private wire energy supply and the associated risks of economic harm, and increased flood and pollution. The UK Government maintains it has no power to prevent the Private Wire Network from being switched off.
- Having pursued all other options, the Welsh Government, Dŵr Cymru, Neath Port Talbot Council and Sofidel, issue legal proceedings to seek to prevent the Official Receiver from discontinuing the private wire network, pending the longer-term solution being implemented.
- The rationale for legal proceedings is to secure the supply of power to critical infrastructure in the form of flood water pumping stations and local street lighting and to protect businesses that would have been impacted by the loss of power, jeopardising potentially 1200 jobs in the local area.
- The issue of legal proceedings results in the power remaining on, with the Official Receiver undertaking to refrain from taking any further steps to disconnect energy supply until after final resolution of the legal actions.
- The Welsh Government continues to support Western Power Distribution to deploy new infrastructure to all customers of the Power Station as quickly as possible by providing practical and financial support.
- After working at pace, WPD say they expect to complete the grid work significantly ahead of schedule, with the majority of customers expected to have their new connection in place by the end of May 2022. (This later slips to July).
- The judgment in court proceedings is handed down. Whilst the judge dismisses the applications, he directs that the power supply to the private wire network should be maintained until 18thApril 2022 for Dwr Cymru and Neath and Port Talbot Council.
- The Court Order directs that the power supply to Sofidel and other customers at the park (apart from DCC and NPTC) should be maintained until at least the 4th April 2022.
- Leave to appeal against the judgment is granted on 28th In addition, the Judge grants further interim relief, to require that the power be maintained to all customers until at least 14 days after the disposal of proceedings in the Court of Appeal. (This order has subsequently been amended permitting customers to leave the private wire network should they request to do so)
- Ministers proceed with the appeals process. The appeal is yet to be listed by the courts.
- The Welsh Government also serves proceedings for Judicial Review on the Secretary of State for BEIS as it believes BEIS do have the powers to intervene to ensure continuity of supply for the benefit of the citizens and businesses in the Baglan Bay area.
- Most businesses and services that were reliant on the private wire network are now successfully connected to the grid. The remaining businesses will be switching over in the next few weeks