Ofgem secures £11.1m from British Gas for failing to meet environmental obligations

British Gas is to pay £11.1 million to benefit vulnerable customers after Ofgem’s investigation found the company failed to meet its environmental obligations under the Community Energy Saving Programme (CESP) and Carbon Emissions Reduction Target (CERT) by the 2012 deadline.

ofgem (orange)Under CESP, energy suppliers and generators were required to deliver energy saving measures to households by the end of December 2012. British Gas failed to meet its targets on time, delivering 62.4% of its obligations. This led to around 6,750 households in low income areas experiencing delays in receiving energy saving measures which would have helped keep homes warm and lower bills during the winter of 2012/13.

The CERT scheme required certain gas and electricity suppliers to achieve targets for reducing carbon emissions within domestic properties. British Gas failed to meet its target on time, achieving 99% of its obligation. Until the shortfall was made up seven weeks later, households were unable to benefit from energy efficient measures which they ought to have received.

Ofgem found that British Gas’ senior management did not take appropriate action to ensure it delivered energy efficiency measures on time. In particular, under CESP, British Gas did not do enough to respond to changes in market conditions or effectively manage its delivery when problems arose in 2012.

Following the missed deadlines, British Gas installed energy efficiency measures equivalent to the volume of its CERT and CESP shortfalls, which it completed in February and August 2013 respectively. Eventually it over-delivered by 2.3% for CERT and 1.5% for CESP, which saw around an additional 20,000 homes benefiting. The particularly late installation of CESP measures was one of the factors that was taken into account when setting the level of penalty.

The amount also reflects British Gas’s settlement of the investigations, without which the payment would have been higher. It also ensures British Gas did not gain financially for not meeting its targets on time.

Sarah Harrison, Ofgem’s Senior Partner with responsibility for enforcement said:

“British Gas’ failure to deliver two environmental obligations on time is unacceptable. Thousands of households had to wait for energy efficiency measures, like insulation, to be installed during the winter.

“The payment reflects British Gas’ failure to meet its obligations on time but also recognises its commitment to put things right.”

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