OFGEM Possible fines relating to CERT and CESP schemes

  OFGEM - Possible fines relating to CERT and CESP schemes

RNS Number : 8490M
21 September 2012

Press Release


· Energy companies face possible fines if they fail to meet their targets
by December 2012

· Companies to be incentivised to continue to deliver energy savings as
soon as possible beyond December deadline so consumers don't miss out

· Ofgem acting to ensure consumers get the benefits that companies have
signed up to deliver as quickly as possible.

Ofgem today warns energy suppliers and generators that they face the risk of
enforcement action and fines if they fail to deliver Government-set targets to
install energy efficiency measures for consumers.

The Community Energy Saving Programme (CESP) and the Carbon Emissions
Reduction Target (CERT) were set up by the Department of Energy and Climate
Change (DECC) to deliver energy saving measures to domestic customers. DECC
gave Ofgem the powers to ensure these schemes are delivered by the industry,
but Ofgem does not set policy for these schemes.

In an open letter published today, Ofgem sets out its priority: to protect
consumers' interests and ensure that companies are incentivised to deliver
benefits to consumers. Ofgem will consider investigating and taking possible
enforcement action against companies who do not meet their targets. Companies
should not be able to benefit from non-compliance.

Ofgem will take into account additional energy saving measures installed after
the 31^st of December as mitigation against future enforcement action, such as
possible fines. This incentivises companies who fail to meet their
obligations to continue to deliver for vulnerable consumers, while still
holding them to account for their obligations. Otherwise suppliers may stop at
the end of the December and just face enforcement action. 

Stuart Cook, Managing Director of Ofgem E-Serve, said: "Today's message to
companies and generators is clear, if you fail to comply with your CERT and
CESP obligations by the December deadline you risk investigation and a
possible fine."

"But, focusing on financial penalties alone will not deliver benefits for
consumers. That is why we will take account of late delivery of scheme
measures. By doing this we are giving companies likely to fail their targets
every incentive to do the right thing by the public and the environment and to
keep delivering energy efficiency help for consumers."


Notes to editors:

1. Today's lettercan be found on the Ofgem website.

2. The Carbon Emissions Reduction Target (CERT) and the Community Energy
Saving Programme (CESP) targets are set by the Department of Energy and
Climate Change (DECC). Ofgem administrates the two schemes while DECC remains
responsible for their policy. Ofgem's role includes calculating the individual
obligations of qualifying energy companies, reporting to the Secretary of
State and initiating enforcement action where appropriate. More information on
the two programmes is available on Ofgem's website.

3. Ofgem will report to the Secretary of State by the 31 April 2013 on
obligated parties' (qualifying energy companies) achievement of the
obligations. Obligated parties progress to April 2012 and December 2011
respectively are available on our website in the CERT Annual Report and CESP
Annual Report. Overall progress is also included in the CESP biannual update
and CERT quarterly update which show the average figure for all obligated
parties, this will be published on 25 Sept 2012.

4. The legislation is clear that obligated parties must achieve their
obligations under the CESP and CERT Orders by 31 December 2012. If an
obligated party fails to meet its target then Ofgem would consider enforcement
action after that date. Ofgem has powers which include imposing significant
financial penalties of up to 10% of an obligated party's annual turnover,
following an investigation. Under current rules consumers would not directly
benefit from any fine imposed on suppliers, however DECC is consulting on
giving Ofgem redress powers.

5. Ofgem takes decisions about its approach to potential enforcement in
accordance to its Enforcement Guidelines. These include ensuring that action
is proportionate and targeted. The assessment includes the steps taken by a
company to try and comply and to mitigate the impact of non compliance.
Ofgem's enforcement approach can be found on our website - Enforcement
Guidelines on Complaints and Investigations 2012.

6. Ofgem is the Office of the Gas and Electricity Markets, which supports the
Gas and Electricity Markets Authority, the regulator of the gas and
electricity industries in Great Britain. The Authority's powers and duties are
largely provided for in statute, principally the Gas Act 1986, the Electricity
Act 1989, the Utilities Act 2000, the Competition Act 1998, the Enterprise Act
2002, the Energy Act 2004 as well as arising from directly effective European
Community legislation.

For further press information contact Ofgem:

Felicity Beverley 020 7901 3858

Rory Edwards 0207 7901 7246

Mark Wiltsher 020 7901 7006

                     This information is provided by RNS
           The company news service from the London Stock Exchange


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