Power generation companies Drax and InterGen have been hit with fines totalling £39 million by energy market regulator Ofgem for failing to meet energy saving targets for thousands of households.
North Yorkshire-based firm Drax received the largest-ever fine handed out by Ofgem at £28 million. InterGen will have to pay £11 million.
The highest financial penalty dished out by Ofgem to a single company prior to this was £15 million.
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Thousands of households missed out
Both companies failed to meet targets to insulate homes by the end of 2012 under the Government's Community Energy Saving Programme (CESP).
The CESP was implemented to reduce bills for thousands of people living in low income areas by helping them with loft and wall insulation as well as new boilers.
Ofgem said that Drax’s failing was significant, missing its target “by a clear margin”, and delivering only just over a third (37.1%) of its energy-saving obligations. The regulator says this has disadvantaged a huge number of homes in poorer areas.
Drax is now working with charity National Energy Action to develop a package of redress proposals which would see up to £20 million given to the customers who the scheme was targeted at. The rest would be paid as a fine or delivered as further redress measures.
Meanwhile, InterGen met a dismal 6.4% of its energy saving obligation before the end of 2012. However, after additional measures, the firm managed to deliver 61.2% to around 2,200 households by the end of May 2013. Even so, that meant a further 1,500 households missed out. Ofgem also learned that InterGen's failure to act quickly enough meant that it gained financially.
The fines issued reflect the seriousness of the consequences caused by each firm, the regulator said.
More fines ahead?
Ofgem is due to announce the conclusion of investigations into British Gas, SSE, ScottishPower and GDF/Suez's failure to hit their CESP targets in the coming weeks.
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