Theory:

Part - III
I folded the letter again and slipped it carefully back into its envelope. I kept awake all night. By morning I knew what I had to do. I drove into Bridport, just a few miles away. I asked a boy walking his dog where Copper Beeches was. House number 12 turned out to be nothing but a burned-out shell, the roof gaping, the windows boarded-up. I knocked at the house next door and asked if anyone knew the whereabouts of a Mrs Macpherson. Oh yes, said the old man in his slippers, he knew her well. A lovely old lady, he told me, a bit muddle-headed, but at her age she was entitled to be, wasn’t she? A hundred and one years old. She had been in the house when it caught fire. No one really knew how the fire has started, but it could well have been candles. She used candles rather than electricity, because she always thought electricity was too expensive. The fireman had got her out just in time. She was in a nursing home now, he told me, Burlington House, on the Dorchester road, on the other side of town.
Explanation: (Part - II ended with the letter)
  
Part - III
  
Now the author held the letter in his hand and put it back carefully into the envelope. He did not sleep the entire night. The next morning he decided to drive to Bridport, which was only a few miles away from his house. He had seen the address as "Mrs Jim Macpherson, 12 Copper Beeches, Bridport, Dorset." When he reached Copper Beeches, he asked a boy where number 12 was. It turned out to be a burned-out house, with a roof wide-open, windows damaged and shut with boards. He went to neighbour's house and asked where Mrs. Macpherson could be. The older man in his slippers said that he knew her very well and that she was a lovely lady. He also said that Mrs. Macpherson had become a bit mentally disorganized due to age she was a hundred and one years old. Her house had caught fire when she was inside. The older man said the actual reason for the fire accident had not been found, but it could have been because of the candles; she was a lady who used candles as she felt electricity was too expensive. The firemen had saved her in the crucial last moment. He also said that she was in a nursing home  in Burlington House on Dorchester road.
 
 
Meaning of difficult words:
 
Words
Meanings
Burned-out Destroyed by fire
GapingWide open
Boarded-upCovered with wooden boards
Muddle-headedMentally disorganized
 
Reference:
National Council of Educational Research and Training (2008). Honeydew. The best Christmas present in the world - Michael Morpurgo (pp. 9-16). Published at the Publication Division by the Secretary, National Council of Educational Research and Training, Sri Aurobindo Marg, New Delhi.