Authority guidance on the allocation of redress funds
Ofgem has appointed the Energy Saving Trust (EST) as the independent Service Provider to manage and allocate voluntary redress funds over a 2 year period, with the option to extend for a further 2 years in February 2024. This is a reappointment for the EST who have been managing the fund since 2018.
Energy companies may volunteer to pay a sum of money to appropriate charities, trusts or organisations in lieu of, or in addition to a financial penalty for breaches of licence conditions. Companies may also volunteer these payments to remedy any harm to consumers, in addition to compensation to those directly affected, where Ofgem has not conducted a formal investigation.
Our decision to engage an expert third party, and the associated Guidance below, is to ensure the voluntary redress funding is well targeted, and is allocated in the best way to maximise the long-term positive impact of voluntary redress payments for energy consumers across Great Britain, and in particular those in vulnerable circumstances.
The EST will follow the Authority Guidance document below which may be updated from time to time at our discretion.
The Redress Fund is comprised of 3 separate funds; the Main fund accounts for 70% of voluntary redress funds and the Innovation and Decarbonisation funds each account for 15% of funds.
The Guidance has been updated since the EST’s last appointment to manage the redress fund, to reflect the responses we received from our consultation to review the fund. We now welcome applications from Community Interest Groups, Co-operative Societies and Community Benefit Societies, for the scheme’s Decarbonisation and Innovation funds.
Further information on eligibility for the redress scheme, and how to apply, can be found on the EST webpage.
Supplementary Guidance to the Authority Guidance on the Allocation of Redress Funds dated 7 April 2022 (the “Authority Guidance”):
Notwithstanding the allocation of overall funds set out in paragraphs 2, 3 and 4 of the Authority Guidance, the Authority expects the Service Provider to prioritise funds to the allocation of funds to support energy consumers in vulnerable situations during the cost of living crisis for the period October 2022 - March 2023.
The Service Provider may do this by prioritising charitable projects that provide fuel vouchers for prepayment meter customers. As noted, this prioritisation of funds has been allocated to cover the period October 2022 – March 2023. All other parts of the Authority Guidance remain applicable. Please read this Supplementary Guidance in addition to the Authority Guidance.