Member Article

Selby-based Drax fined £28 million by Ofgem

Selby-based Drax, owners of the North Yorkshire coal-fired power station of the same name, have agreed to pay a £28 million fine to energy regulator, Ofgem after failing to meet environmental obligations.

Drax Power only delivered 37.1% of its Community Energy Saving Programme (CESP) obligations, meaning that several thousand homes have missed out on free energy efficiency measures.

Drax blamed their non-compliance on outsourcing the delivery of the scheme to a third party blaming their “lack of experience in the delivery of energy efficiency schemes.”

Ofgem said that Drax had failed to take action and that senior management were aware of the issues 18 months before the end of the scheme, and that customers lost out significantly because of their inaction.

Drax has agreed to a total of £28 million in settlement, which would see up to £20 million benefit vulnerable energy consumers through a programme of work to be developed with the charity, National Energy Action, and the remaining £8 million to be paid as a fine or delivered as further consumer redress measures.

Ten energy companies had CESP obligations and six, three of which are independent generators, did not deliver their CESP obligation in full. These six companies have been subject to investigation by Ofgem. Drax has co-operated at all times with the investigation.

Dorothy Thompson, chief executive of Drax said: “We take our statutory obligations very seriously and in the case of the CESP we always sought to maintain a compliant position.

“We believe the design of the CESP was flawed and significant problems were encountered with scheme delivery, the CESP market and the complex arrangements.

“We are deeply disappointed with the magnitude of the fine. However, we believe it is in our shareholders’ interests to settle this matter and, as the nation’s single largest power provider, focus on delivering a reliable supply of electricity this winter.

Sarah Harrison, senior partner in charge of enforcement at Ofgem said: “Drax missed its target by a clear margin, disadvantaging several thousand households in some of the most deprived areas in Britain.

“Not only are these consumers missing out on energy efficiency measures that would help keep their homes warm, they also face higher energy bills as a result.

“Today’s agreement to pay £28 million reflects the seriousness of the consequences of these failings for consumers.”

This was posted in Bdaily's Members' News section by Clare Burnett .