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Drax in record £28m penalty from Ofgem Drax and InterGen hit with £39m Ofgem penalties
(35 minutes later)
Power generation company Drax has been hit with a £28m financial penalty after failing to meet targets to provide energy efficiency measures to homes. Two power generation companies are to pay penalties totalling £39m after failing to meet energy saving targets for low-income households.
It is the largest penalty ever handed down by the energy regulator, Ofgem. Ofgem has hit North Yorkshire-based Drax with a £28m penalty, the largest ever handed down by the regulator.
Another generation firm, Intergen, has also facing an £11m payout. Another generation firm, InterGen, also faces an £11m payout.
The companies are among a number of firms which failed to meet targets to insulate homes under two energy efficiency schemes that ran until the end of 2012. The companies failed to meet targets to insulate homes under two energy efficiency schemes that ran until the end of 2012.
The failings meant that households - including vulnerable customers living in low income areas - did not receive the energy saving measures which would have helped to reduce their bills. Similar decisions by the regulator on British Gas, SSE, Scottish Power, and GDF/Suez are still pending and are likely to be announced in the coming weeks.
Similar decisions by the regulator on British Gas, SSE and GDF/Suez are still pending and are likely to be announced in the coming weeks.
The previous record financial penalty handed out by Ofgem was £15m for National Grid in 2010 over a different issue.The previous record financial penalty handed out by Ofgem was £15m for National Grid in 2010 over a different issue.
The penalties were levied for failing to meet targets under the Community Energy Saving Programme (CESP), part of the government's Home Energy Saving Programme.
The CESP was designed to help reduce bills for many thousands of customers living in low income areas.
'Flawed'
Dorothy Thompson, chief Executive of Drax, said: "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.
"We are pleased to be working with National Energy Action to develop a package of measures which would benefit vulnerable energy consumers."
But she added: "We believe the design of the CESP was flawed and significant problems were encountered with scheme delivery, the CESP market and the complex arrangements."
However, Ofgem said Drax's failing was considerable. 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 £28m reflects the seriousness of the consequences of these failings for consumers."
Ofgem said it was still deciding how to distribute the money, although it was likely to be via energy saving schemes and customer redress programmes.