British Gas Fined £1 Million by Ofgem

UK energy regulator Ofgem has imposed a £1 million penalty on British Gas Business after an investigation found that the company had misreported the amount of electricity supplied under the Government’s Renewables Obligation. The error was caused by British Gas’s incorrect interpretation of the reporting requirements and insufficient procedures by the company.

The Renewables Obligation requires energy suppliers to provide evidence of the amount of electricity supplied from renewable sources relative to total electricity supplied. Financial incentives designed to promote the use of renewable energy depend on the accuracy of this information. Ofgem administers this scheme on behalf of the Government.

Over a period of seven years, British Gas underestimated the amount of electricity supplied by an average of 0.62% per year. British Gas brought the error to Ofgem’s attention and co-operated fully throughout the investigation. It is taking action to address the market impact caused by the error by retiring an appropriate number of Renewable Obligation Certificates (ROCs) in the current compliance period.

Ofgem has decided to impose a financial penalty of £1m on British Gas. This has been significantly reduced because of British Gas’ approach and action.

“Ofgem’s decision, and our decision to impose an £8 million penalty on National Grid Gas earlier this year sends a clear message to all energy companies that accurate reporting is essential across the energy sector,” explains David Pimm, group finance director, Ofgem. “Energy suppliers who are presently submitting information to Ofgem for the 2010-11 Renewables Obligation period should also understand that the level of the penalty reflects both the importance of compliance and the significant co-operation of British Gas, including action to address the harm caused. Without this, the penalty would have been much higher.”

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