Investigation into British Gas’ compliance with Article 9(1) and Article 9(1A) of the Electricity and Gas (Carbon Emissions Reduction) Order 2008 (as amended)

Investigation
  • Open
  • Decision proposed
  • Closed

The Authority has decided to impose a financial penalty on British Gas following an investigation into the company’s compliance with its obligations under Article 9(1) and Article 9(1A) of the Electricity and Gas (Carbon Emissions Reduction) Order 2008 (as amended).

The Carbon Emissions Reduction Target (CERT) was a policy, set down in legislation, designed to improve domestic energy efficiency standards across households in Great Britain. The policy was designed to contribute to the UK’s legally binding emissions reduction commitments. The relevant legislation was the Electricity and Gas (Carbon Emissions Reduction) Order 2008, as amended ("CERT Order"). Article 9(1) of the CERT Order required that certain gas and electricity suppliers must achieve their carbon emissions reduction obligations by promoting qualifying actions to domestic energy users in Great Britain. Article 9(1A) of the CERT Order required those suppliers to achieve a defined proportion of that obligation by promoting insulation measures.

The Authority noted that British Gas initially had an obligation to promote carbon savings equivalent to 96,279.607 ktCO2. Under Article 9(1), as a group, British Gas delivered 98.9% of its overall CERT target and had a shortfall of 1,075.111 ktCO2 at 31 December 2012. Under Article 9(1A), as a group, it delivered 95.5% of its Insulation Obligation target of 24,119.192 ktCO2 and had a shortfall of 1,089.622 ktCO2 at 31 December 2012. The shortfall of British Gas’s overall CERT target was incurred entirely against its Insulation Obligation. British Gas accepts that it breached Articles 9(1) and 9(1A) of the CERT Order.

The Authority noted that British Gas undertook mitigation action equivalent to the volume of its shortfall associated with not achieving the carbon reduction target promptly by February 2013 (for both the overall CERT obligation and IO). British Gas also over-delivered during CERT mitigation. The Authority had regard to this in setting the level of penalty.

A payment of £500,000 (less a nominal £1 penalty) has been made by British Gas to the British Gas Energy Trust ("BGET"). The BGET shall distribute the redress monies to organisations which pursue any or all of the following objectives for vulnerable customers:

• the promotion of energy efficiency in domestic homes;

• the alleviation of fuel poverty;

• the reduction of carbon emissions in domestic homes.

A financial penalty of £1 is to be made by British Gas by 17 April 2015.