British Gas fined £1m over error

British Gas was fined £1m today after it miscalculated how much of the electricity it supplied to business customers had come from renewable sources.

Energy regulator Ofgem said British Gas Business would have received a “much higher” penalty but it reported the error itself and co-operated with the investigation.

British Gas Business apologised for the error, which occurred over a seven-year period.

It will have to effectively repay £2.8m into a fund set up to incentivise power companies to source more green electricity.

Under the terms of the the Renewables Obligation scheme, suppliers pay money into a fund depending on how much electricity they supply. They are also given certificates depending on how much green energy they source, which is deducted from an amount they pay. The money is redistributed to suppliers that hit the targets.

British Gas Business correctly reported the amount of green energy it supplied but miscalculated the total amount of energy it sold by an average of 0.6% a year. As a result, it will have to retire 87,000 certificates, worth £2.8m, to make up the shortfall.

Audrey Gallacher, director of energy at Consumer Focus, welcomed the fine and said consumers need to be able to have faith that what energy firms report is accurate.

She added: “However, this wasn’t picked up for seven years and shows how important it is that what energy firms report is put firmly under the microscope.

“It is essential that Ofgem’s moves on greater transparency and scrutiny of energy suppliers are successful if the tide of consumer distrust of energy firms is to turn.”

Earlier this year, National Grid was fined £8m after it provided inaccurate information about a gas replacement programme, which is used by the regulator to set price controls.

David Pimm, Ofgem’s group finance director, said: “Ofgem’s decision today, and our decision to impose an £8m 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.”

Kanat Emiroglu, managing director of British Gas Business, said: “We take any failure to meet Ofgem reporting obligations very seriously, and we are sorry this error has occurred.”