The money will go to charities and funds that will benefit vulnerable consumers and help to mitigate fuel-poverty.
SSE was fined £1.75m after it delivered 90.9% of its obligation on time and made up the shortfall by May 2013
Scottish Power was fined £2.4m after it delivered 70% of its obligation and made up the shortfall by April 2013
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.
Scottish Power 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.
Scottish Power’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.
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%.
Ofgem also found that SSE management had inadequate plans in place to ensure that it 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.
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 senior partner in charge of enforcement said: “A key consideration for Ofgem during the investigation was the consumer impact. Today’s redress package sends a clear message to the energy industry that late delivery of obligations is unacceptable.
“For example, 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.”
A spokesman for Which? – the consumers’ association – commented: “It’s right that Ofgem holds energy companies to account for not meeting their legal obligations. Energy efficiency schemes are vital for helping consumers save money by saving energy. The fine should be used to assist the most vulnerable households struggling with their bills.
“It’s now time for a new local community-based approach to energy efficiency to make sure all consumers are getting the advice and energy saving measures they need.”
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.