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Ofgem secures £4.6m for environmental failures

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Energy regulator Ofgem has secured a total of £4.6m in fines from SSE, Scottish Power and generator GDF SUEZ/IPM for failing to meet environmental targets.

The firms were obligated to deliver energy saving measures to households in low income areas by the end of December 2012 under the Government’s Community Energy Savings Programme. Their failure to do so resulted in a £1.75m fine for SSE, a £2.4m fine for Scottish Power and a £450,000 fine for GDF SUEZ/IPM.

SSE came closest to meeting its targets, delivering 90.9 per cent of its requirements by the deadline. According to Ofgem, however, management’s plans for the roll-out were inadequate and the company was slow to increase its budget even when it became clear that delivery costs would be higher than anticipated.

Scottish Power delivered 70 per cent of its obligation, making up for the 30 per cent shortfall after the deadline had passed, while SUEZ/IPM delivered just 38.6 per cent of its already reduced target by the deadline. SUEZ/IPM’s failure to meet targets left about 1,000 households without energy efficient measures that could have reduced their bills. Scottish Power’s failure left around 2,000 households without such measures.

Neil Clitheroe, CEO of retail and generation at Scottish Power, said: “The design of the CESP programme was challenging, making it very difficult to find suitable partnerships and properties to target under the scheme. Finding solutions to these challenges meant that the eventual cost to Scottish Power of delivering the CESP was £64m, versus the original impact assessment of £30m.

“Although we are disappointed with Ofgem’s enforcement decision, we fully co-operated with the investigation and agreed to settle the matter as quickly as possible.”

Gillian Guy, chief executive of Citizens Advice, added: “Ofgem is right to penalise firms for failing to meet energy saving obligations. Thousands of households have been denied measures that would have reduced bills in low income areas. Loft and cavity wall insulation could have helped vulnerable consumers prevent cold homes.”

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