Ofgem secures £2.4m from ScottishPower for failing to meet environmental obligations on time
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- ScottishPower delivered 70% of its Community Energy Savings Programme (CESP) obligations by required deadline
- After failing to comply on time, ScottishPower fully mitigated its shortfall
- ScottishPower completed delivery of obligation in April 2013
Ofgem has today secured a £2.4 million consumer redress package from ScottishPower as it failed to meet environmental targets under the government’s CESP scheme by the required deadline.
Under the CESP scheme, 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 failed to meet its targets on time, delivering 70% of its obligation by the deadline. This meant that several thousand households missed out on energy efficiency measures during the cold winter of 2012/13. The company made up the 30% shortfall by 30th April 2013.
Ofgem found that ScottishPower’s senior management did not take appropriate action to ensure it delivered energy efficiency measures on time. Although management were aware that the company could fail to meet its target at the end of 2011, budget increases for CESP schemes were made slowly. After failing to meet the deadline, ScottishPower continued to deliver energy efficiency measures to consumers.
The penalty would have been higher if ScottishPower had not continued to install energy efficiency measures following its missed deadline. The supplier fully mitigated the volume of its shortfall arising from non-compliance by April 2013 and over-delivered 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 will provide consumer redress measures by allocating £2.4m to the ScottishPower Energy People Trust which will benefit consumers similar to those for whom the CESP scheme was developed.
Sarah Harrison, Ofgem’s senior partner with responsibility for enforcement said: “ScottishPower clearly missed its target by the required deadline disadvantaging many households. Today’s redress package sends a clear message to the energy industry that late delivery of obligations is unacceptable.”
Notes to editors
1. ScottishPower investigation
Ofgem has secured a total of £2.4 million from ScottishPower in relation to the CESP investigation. This will go to benefit vulnerable consumers through the ScottishPower Energy People Trust.
In May 2013, Ofgem launched investigations into six energy companies who failed to deliver on time their obligations under CESP.
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 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.
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.
More information on CESP
3. Background
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 and CERT 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 and CERT 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.
4. ScottishPower Energy People Trust
The ScottishPower Energy People Trust is an independent charity that supports other registered charities who offer help to people whose lives are affected by fuel poverty.
To date The ScottishPower Energy People Trust has awarded over £12.1 million to 259 projects, helping over 1.6 million people in 1.3 million households through community projects designed to reduce fuel poverty.
For further press information contact:
Lisa O'Brien: 020 7901 7426
Claudia Cimino 020 3263 2722
Out of hours media contact number: 07766 511470