British Gas hit with £11.1m fine - Gas and electricity - News - Moneyfacts

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British Gas hit with £11.1m fine

British Gas hit with £11.1m fine

Category: Gas and electricity

Updated: 03/02/2015
First Published: 04/12/2014

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British Gas has been fined a total of £11.1 million for failing to meet its environmental obligations, after an investigation conducted by industry regulator Ofgem found that the supplier fell far short of its 2012 deadline.

The failures were in relation to the requirements of the Community Energy Savings Programme (CESP) and the Carbon Emissions Reduction Target (CERT). British Gas only delivered 62.4% of its CESP obligations by the deadline, and also just missed its CERT obligations, delivering 99% of its overall requirement. Close, but not enough.

Under CESP, energy suppliers and generators were required to deliver energy saving measures to households by the end of 2012, but British Gas failed to meet that target. This meant that around 6,750 households in low income areas saw delays in receiving those energy saving measures, said Ofgem, which would have helped keep their homes warm and bills lower during that winter.

The CERT scheme, meanwhile, required some suppliers to achieve targets for reducing carbon emissions within domestic properties. British Gas again failed to meet that target by the necessary deadline, and until the shortfall was rectified seven weeks later, households were unable to benefit from the energy efficient measures they should have received.

Failures were also identified in relation to its management practices. Ofgem found that British Gas' senior management didn't take appropriate action to ensure it delivered the required energy efficiency measures on time, and nor did it do enough to respond to changes in market conditions or properly manage its installations when problems arose in 2012.

Despite the fact that British Gas eventually over-delivered on its targets – by 2.3% for CERT and 1.5% for CESP, resulting in some 20,000 additional homes benefiting – the fact that it took so long posed particular problems for the regulator. The supplier completed its CERT shortfalls by February 2013 and its CERT obligations by August of the same year, far later than planned, which resulted in thousands of homes failing to benefit when they should have done.

"The particularly late installation of CESP measures was one of the factors that was taken into account when setting the level of penalty," it said in a statement. "It also ensures British Gas did not gain financially for not meeting its targets on time." However, the amount also takes into account the speed in which British Gas settled the investigations, without which the payment would have been higher.

Sarah Harrison, Ofgem's senior partner with responsibility for enforcement, commented: "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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