Ofgem
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Ofgem secures £1.75m from SSE for failure to meet environmental obligations on time
- SSE delivered 90.9% of its environmental obligation on time
- The supplier continued to take action after the deadline by installing energy efficiency measures to households in low income areas
- SSE to pay £1.75 million to benefit vulnerable customers
Ofgem has recently secured a payment of £1.75 million from SSE as it failed to meet its environmental obligation on time under the government’s Community Energy Saving Programme (CESP).
Under CESP, energy suppliers and generators were obligated to deliver energy saving measures to households in low income areas by the end of December 2012. The scheme was designed to help lower carbon emissions and lower bills for households through the installation of energy efficiency measures. However SSE failed to meet its targets on time, delivering 90.9% of its requirements. This was equivalent to 2,100 households missing out on energy efficiency measures.
Ofgem found that SSE’s management had inadequate plans in place to ensure that SSE would deliver its obligations on time. For example, the supplier 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 installed energy efficiency measures equivalent to the volume of its CESP shortfall by May 2013. Moreover, it 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.
In recognition of its failure, SSE has agreed to pay £1.75 million to benefit vulnerable consumers through the Foundations Independent Living Trust, Energy Action Scotland and to the Citizen’s Advice Bureau for use in Wales.
Sarah Harrison, Ofgem’s senior partner in charge of enforcement said: “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 recently was 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.”
Notes to editors
1. SSE investigation
Ofgem has secured a total of £1.75 million from SSE in relation to the CESP investigation. SSE has agreed to make this payment to benefit consumers through the Foundations Independent Living Trust, Energy Action Scotland and to the Citizen’s Advice Bureau for use in Wales.
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 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: 0207 901 7426
Claudia Cimino: 0203 263 2722
Out of hours media contact number: 07766 511470
