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E.ON fined after selling energy-saving lightbulbs it should have given away E.ON fined after energy-saving lightbulbs it should have given away found for sale
(about 5 hours later)
Energy firm E.ON has been ordered to pay a £3m financial settlement – including a fine of £500,000 – for failing accurately to report how many free energy-saving lightbulbs it had distributed under a flagship government energy scheme. Rebecca Smithers
The regulator Ofgem said the package reflected the "serious" nature of the offence, which was a breach of the company's reporting obligations under the government's carbon emissions reduction target (Cert) programme. Consumer affairs correspondent
The two-tier financial penalty was designed to achieve "balance", Ofgem said, allowing hard-pressed consumers to benefit rather than the full £3m penalty disappearing into Treasury coffers. Energy firm E.ON has been ordered to pay a £3m financial settlement, including a payment of £2.5m to households hit by fuel poverty, after energy efficient lightbulbs that were supposed to have been given away free in the UK under a government initiative were found for sale in Ireland. .
Industry regulator Ofgem said the punishment, which includes a fine of £500,000, allowed hard-pressed consumers to benefit rather than see the full £3m penalty disappearing into Treasury coffers.
Industry regulator Ofgem said the package reflected the "serious" nature of the offence, which was a breach of the company's reporting obligations under the government's carbon emissions reduction target (Cert) programme.
Under Cert legislation the big six energy companies had to introduce measures to reduce carbon emissions in British homes. As part of this, suppliers were able to distribute free energy saving light bulbs to British households.
But an Ofgem investigation found that German-owned E.ON had not properly distributed 3.4m of the 25m light bulbs that it had handed out over a five year period.
The figure included some light bulbs that went on sale in stores in the Republic of Ireland rather than being distributed for free in Britain, as well as others for which E.ON could not provide appropriate evidence that they had been distributed. The total amount reported inaccurately was equivalent to 1% of E.ON's CERT obligations.
E.ON must pay £2.5m to 18,500 customers in – or at risk of – fuel poverty to help with their 2013/14 winter bills, equivalent to £135 a household.E.ON must pay £2.5m to 18,500 customers in – or at risk of – fuel poverty to help with their 2013/14 winter bills, equivalent to £135 a household.
The remaining £500,000 will be paid as a fine – which would have been much higher had the company not co-operated fully, Ofgem said.The remaining £500,000 will be paid as a fine – which would have been much higher had the company not co-operated fully, Ofgem said.
Under Cert legislation, which was in place between 2008 and the end of 2012, the big six energy companies had to introduce measures to help reduce UK carbon emissions in domestic properties. As part of this, suppliers were able to distribute free energy saving light bulbs to British households.
But an Ofgem investigation found that E.ON's claim to have distributed around 3.4m million light bulbs (of a total of 25 million handed out over the five year period) was inaccurate.
This reported figure included some light bulbs that went on sale in stores in the Republic of Ireland rather than being distributed for free in Britain, as well as others for which E.ON could not provide appropriate evidence that they had been distributed. The total amount reported inaccurately was equivalent to 1% of E.ON's CERT obligations.
In May Ofgem announced an investigation into six energy firms that missed their targets after failing to deliver enough energy efficiency measures to UK households.In May Ofgem announced an investigation into six energy firms that missed their targets after failing to deliver enough energy efficiency measures to UK households.
Energy companies achieved 99% of government energy efficiency targets by the December 2012 deadline, with EDF energy, Eggborough power, E.ON and RWE npower achieving all of their energy efficiency targets. Despite achieving its overall target, E.ON faced the sanction for its reporting failure.Energy companies achieved 99% of government energy efficiency targets by the December 2012 deadline, with EDF energy, Eggborough power, E.ON and RWE npower achieving all of their energy efficiency targets. Despite achieving its overall target, E.ON faced the sanction for its reporting failure.
Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: "This case leaves companies in no doubt that Ofgem takes reporting failures seriously. Accurate company reporting is essential to Ofgem's effective administration of the government's environmental schemes."Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: "This case leaves companies in no doubt that Ofgem takes reporting failures seriously. Accurate company reporting is essential to Ofgem's effective administration of the government's environmental schemes."
E.ON's error was due to its failure to have in place adequate management systems to ensure accurate reporting of the distributed light bulbs. It took action to ensure it met its overall CERT obligations by installing extra energy-saving measures to make up for the carbon savings shortfall associated with the light bulbs it wrongly claimed to have distributed.E.ON's error was due to its failure to have in place adequate management systems to ensure accurate reporting of the distributed light bulbs. It took action to ensure it met its overall CERT obligations by installing extra energy-saving measures to make up for the carbon savings shortfall associated with the light bulbs it wrongly claimed to have distributed.
Tony Cocker, chief executive of E.ON UK said: "We're sorry that these mistakes were made in 2010 and Ofgem has received a board-level assurance that the necessary changes have been made.Tony Cocker, chief executive of E.ON UK said: "We're sorry that these mistakes were made in 2010 and Ofgem has received a board-level assurance that the necessary changes have been made.
"Our controls should have been stronger and our processes more robust. It was important to us that, as part of putting this right, customers in fuel poverty or groups at risk of fuel poverty should receive a portion of the penalty in the form of the additional payments we are making.""Our controls should have been stronger and our processes more robust. It was important to us that, as part of putting this right, customers in fuel poverty or groups at risk of fuel poverty should receive a portion of the penalty in the form of the additional payments we are making."
He added: "No consumers were misled because of this mistake but this does not take away from the fact it was an error that should not have been made."He added: "No consumers were misled because of this mistake but this does not take away from the fact it was an error that should not have been made."