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Utilities make donation to charity

Power firms fined for household energy failures

ScottishPower and SSE have been fined £4 .6 million by the industry regulator for failing to meet government targets on household energy saving measures.

The companies have agreed to give the money to charity.

Ofgem said all energy suppliers were required to deliver fixed targets of energy saving measures to help lower carbon emissions and reduce bills for households in low income areas by 31 December 2012.

ScottishPower was fined £2.4m after managing only 70% of its obligation by the deadline meaning several thousand households missed out on energy efficiency measures during the cold winter. The company made up the 30% shortfall by 30 April 2013.

SSE has agreed to give a donation equal to its fine of £1.75m to the Foundations Independent Living Trust, Energy Action Scotland and to the Citizen’s Advice Bureau for use in Wales.

Ofgem found that ScottishPower’s senior management did not take appropriate action even though they were aware that the company could fail to meet its target at the end of 2011.

The watchdog said the penalty would have been higher if ScottishPower had not continued to install energy efficiency measures following its missed deadline. It accepted that the company compensated for the shortfall by over-delivering by 2%.

ScottishPower agreed to settle the investigation with Ofgem enabling a quicker resolution to the matter. Without these measures and co-operation the level of penalty would have been higher.

The company has agreed to make a £2.4m to the ScottishPower Energy People Trust which will benefit consumers similar to those for whom the Community Energy Saving Programme (CESP) was developed.

Ofgem found that SSE’s management had inadequate plans in place to meet the deadline. It was slow to increase its budget when it was alerted to the discrepancy between their forecast and actual cost of delivery. SSE did not put measures in place to meet its full obligations by the deadline. Instead it made a decision to deliver the remaining CESP measures after the deadline.

SSE also put measures in place in response to the findings and over-delivered which saw around 346 more homes receiving energy efficiency measures than required. SSE’s co-operation enabled a quicker resolution to the investigation and without this the level of penalty would have been higher.

CESP was designed to lower carbon emissions through the delivery of energy saving measures, such as loft and cavity wall insulation free of charge, to households in low income areas. The government required generators as well as energy suppliers to deliver against individually set targets by the end of December 2012.

The CESP overall targets were set by the Department of Energy and Climate Change (DECC). Ofgem administered the scheme while DECC was responsible for the policy. Ofgem’s role included calculating the individual targets of qualifying energy companies, reporting to the Secretary of State and initiating enforcement action where appropriate.

Sarah Harrison, Ofgem’s senior enforcement partner said: “ScottishPower clearly missed its target by the required deadline disadvantaging many households.

A key consideration for Ofgem during the investigation was the consumer impact. SSE’s failure to deliver energy efficiency measures on time meant that over 2,000 households missed out on measures like insulation during the early months of 2013, where consumers experienced a particularly cold winter.

“Our action today is a clear signal that failure to deliver environmental obligations on time is not acceptable. By agreeing to make the payment to charities, Ofgem and SSE are ensuring that this money is targeted to energy customers who need it most.”

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