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Drax and InterGen fined 39m

Article By: ,  Financial Analyst
November 28, 2014 12:26 PM

Energy firms Drax and InterGem have been hit with a combined fine of £39 million by Ofgem.

The regulating body has issued penalties to the two companies for failing to meet energy saving targets for low-income homes. North Yorkshire-based Drax has been handed a £28 million fine, the largest ever issued by Ofgem, while InterGem faces an £11 million bill. The decision follows similar fines given to British Gas, SSE, Scottish Power and GDF/Suez.

Ofgem has taken action against Drax and InterGem after the two were unable to meet standards laid out in the Community Energy Saving Programme (CESP), part of the government's Home Energy Saving Programme. The fine levied against Drax dwarfed the previous high of £15 million which was issued by Ofgem to the National Grid in 2010 for a different issue.

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."

The company has now vowed it will be working alongside National Energy Action to create a range of measures designed to provide support for vulnerable energy consumers. Ofgem also noted that InterGem had missed its target by a considerable margin putting a burden on low-income households.

Sarah Harrison, senior partner in charge of enforcement at Ofgem, explained that the fine reflected the "seriousness of these failings" and also means the company has not gained through its non-compliance.

Drax and InterGem's fines come after Scottish Power was given a three-month deadline earlier in November to improve its customer service. Ofgem warned the company that it will be banned from sales to new customers should it fail to meet the new standards laid out by the regulator.

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