Drax in 'record fine' for failing low-income households
Drax Power must pay a £28 million penalty after failing to meet targets for energy saving measures in low-income households.
Business & the local economy
Energy regulator Ofgem has today announced the payment from Drax after it emerged the local energy generator had only delivered on 37.1% of its obligations under the Community Energy Saving Programme (CESP).
Drax was amongst five other companies that were investigated by the regulator over non-compliance with the scheme.
Drax will now work with National Energy Action to develop a package of consumer redress proposals which would see up to £20 million benefit the consumers for whom the scheme was designed. The remainder would be paid as a fine or delivered as consumer redress measures.
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. Drax Power delivered 37.1% of its carbon emissions reduction target. This led to several thousand households in some of the most deprived areas in Britain missing out on energy saving measures which would have helped lower bills and keep homes warm.
Ofgem found that senior management at Drax were aware of the serious risk of non-compliance with CESP 18 months before the end of the scheme. While Ofgem has taken into account Drax’s inexperience in delivering energy efficiency measures to consumers and its lack of a customer base, the company could have taken more timely action to reduce the risk of not delivering its obligation. In addition, after the deadline passed, Drax made no attempt to mitigate the carbon saving shortfall. This was a significant factor in Ofgem’s decision.
Today’s payment reflects the fact that consumers have lost out significantly from Drax’s failure to deliver and ensures the generator has gained no benefit from not delivering its obligations in full and on time. It also takes into account Drax’s agreement to settle the investigation, without which the fine would have been higher.
Sarah Harrison, senior partner in charge of enforcement at Ofgem said: “Drax missed its target by a clear margin, disadvantaging several thousand households in some of the most deprived areas in Britain. Not only are these consumers missing out on energy efficiency measures that would help keep their homes warm, they also face higher energy bills as a result. Today’s agreement to pay £28 million reflects the seriousness of the consequences of these failings for consumers.”