Environment Agency to fine hundreds of firms for ESOS non-compliance

As many as 500 firms are set to be hit with fines of up to £50,000 from the Environment Agency (EA) after failing to comply with Phase 1 of the Energy Savings Opportunity Scheme (ESOS).

The EA has already issued 300 enforcement notices to companies, with 200 more expected to be handed out this year, after a number of businesses incorrectly claimed that they did not qualify for the scheme.

The future of ESOS had been questioned following the Government’s 2015 energy efficiency tax landscape review, while Brexit also put the scheme into a state of confusion, as ESOS had been introduced in response to the European Commission’s 2012 Energy Efficiency Directive, which may not apply to the UK when it leaves the EU.

A spokesperson for the EA told EiBI: “We received notifications from around 1,000 organisations via our online portal stating that they do not qualify for the scheme. As part of our investigation work we have assessed over 80 per cent of these organisations to ensure that they have correctly assessed their status.

“As a result, we have identified a number of organisations that have incorrectly assessed themselves as non-qualifying. We will be serving enforcement notices on these organisations during this financial year.”

Sebastian Grey, director of consultancy 2EA, is encouraging all participants who qualify for Phase 2 to start gathering relevant data now and choose a route to compliance.

“The end of phase 2 is 2019. The reason we have recommended data collection and compliance routes now is because, unlike phase 1, phase 2 has a couple more years for participants to get organized, and there is no excuse not to be. Otherwise, we will have a repeat of phase 1, where everyone is cramming the process of ESOS into one year, which is not good business practice,” he said.

The ESOS requires businesses with more than 250 employees, £40m in annual turnover or a balance sheet of more than £34m to complete an officially approved energy efficiency audit every four years, with around 10,000 companies falling under the regulations and having to comply last year.

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