Ofgem secures £11m from InterGen for failure to meet environmental obligations

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  • Independent generator InterGen delivered 6.4% of its Community Energy Savings Programme (CESP) obligation by the deadline.
  • After additional measures it delivered 61.2%, remaining 38.8% short of its obligation.
  • InterGen did not take appropriate steps to meet target.
  • Around 1,500 homes have missed out on free energy efficiency measures.

Ofgem has today secured £11m payment from the generator, InterGen for failing to meet environmental targets under the government’s Community Energy Savings Programme (CESP).

Under CESP, generators as well as energy suppliers had to deliver energy saving measures to households in low-income areas by the end of December 2012. InterGen delivered 6.4% of its total obligation in the time available. InterGen’s failure to meet its target meant that households missed out on energy efficiency measures that would help keeps homes warm and reduce energy bills.

After additional measures, InterGen delivered 61.2% of its obligated energy saving measures to around 2,200 households by the end of May 2013. It remains 38.8% below its missed target, equivalent to around a further 1,500 households.

Ofgem found that InterGen did not put in place schemes quickly enough to enable on time delivery and installation. Ofgem found that InterGen’s failure to deliver its obligation, either on time or subsequently, meant it gained financially. Today’s agreement to pay £11 million reflects the fact that InterGen still remains below its target, that consumers have lost out significantly from its failure to deliver, and ensures the company does not gain from non-compliance. It also takes into account InterGen’s agreement to settle the investigation, without which the penalty would have been higher.

Sarah Harrison, senior partner in charge of enforcement, said: “Ofgem takes compliance with obligations, both of governmental schemes and regulatory rules, seriously. InterGen missed its target by a clear margin, disadvantaging many low-income households. The £11 million payment reflects the seriousness of these failings and means InterGen has not gained through its non-compliance.”

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Notes to editors

1. CESP Investigation

You can find the penalty notice here.

Ofgem has secured an £11 million payment from InterGen in relation to the CESP investigation. We are working together to identify an appropriate way to direct this payment directly benefit the consumers for whom the scheme was designed to benefit. This will be decided during the consultation period, which runs until 5 January. The decision will be confirmed when the final penalty notice is issued in early January.

In May 2013, Ofgem launched investigations into six energy companies who failed to deliver on time their obligations under the Government’s Community Energy Savings Programme (CESP) scheme. The obligation to meet the CESP target arose under Article 14(1) of the Electricity and Gas (Community Energy Saving Programme) Order 2009 (SI 2009/1905).

2. About CESP

The Community Energy Saving Programme (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 two schemes 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. More information is available on Ofgem’s website.

The overall CESP target was 19.25 million lifetime tonnes of carbon dioxide (Mt CO2). By the end of the programme (31 December 2012) energy companies had achieved 16.31 Mt CO2 (84.7%) against the overall target.  Suppliers met 92.4% and generators met 36.0% of their respective targets. Source: The final report of the Community Energy Saving Programme (CESP) 2009-2012.

You can find more information on CESP here.

Ofgem issued a press release and open letter on the 21 September 2012 that warned energy companies that they risked enforcement action if they failed to meet their CESP targets. We encouraged energy companies to continue to install energy efficient measures after 31 December 2012. These mitigation actions were not a substitute for compliance but ensured the original benefits envisaged under the CESP were realised. Without this approach, thousands of households in low income areas would have lost out. These mitigation actions were taken into account as part of our investigation.

For further press information contact:

Lisa O’Brien:  020 7901 7426

Dafydd Wyn:   020 3263 9943

Claudia Cimino: 020 3263 2722

Out of hours media contact number:  07766 511470