British Gas told to pay £11.1m penalty by Ofgem

British Gas will pay an £11.1m penalty for failing to meet energy efficiency targets on time, Ofgem has said.

The regulator said that the firm failed to meet deadlines to insulate homes under two energy efficiency schemes that ran until the end of 2012.

Although British Gas did ultimately reach its targets, the delay meant that thousands missed out on the measures during the winter of 2012-13.

The company said it was sorry for failing to meet the deadline.

Delay 'unacceptable'

Last week Drax, the power generator, was hit with a record £28m penalty for failing to meet targets under the Community Energy Saving Programme (CESP), part of the government's Home Energy Saving Programme. InterGen faces an £11m payout.

Sarah Harrison, an Ofgem senior partner, said: "British Gas's failure to deliver two environmental obligations on time is unacceptable.

"Thousands of households had to wait for energy efficiency measures, like insulation, to be installed during the winter. The payment reflects British Gas's failure to meet its obligations on time but also recognises its commitment to put things right."

The Centrica-owned business said it delivered more measures than required after the December 2012 deadline, benefiting vulnerable customers with an additional £110m saving on energy bills.

Claire Miles, managing director of British Gas New Energy, said: "We're pleased that in the end we managed to help more vulnerable people under this scheme than was required."

The £11.1m will be donated to charity to help vulnerable people with energy costs and energy efficiency improvements.

Other energy companies including SSE, Scottish Power and GDF/Suez are expected to be hit with penalties in the coming weeks.

Dorothy Thompson, chief executive of Drax, said last week that the company was "deeply disappointed" with the penalty levied by Ofgem, adding: "We believe the design of the CESP was flawed and significant problems were encountered with scheme delivery."

Analysis: John Moylan, Energy Correspondent

Two rivals of British Gas have told me today that they are astounded by its £11.1m penalty.

Yes, the firm did meet its targets for insulating homes - eventually. And as the biggest supplier it had the most to do. It ultimately spent £1.1bn carrying out 20 million energy efficiency measures.

But it still means 6,750 households and families were colder than they should have been or faced higher bills during the bitter winter 2 years ago. These were some of the most vulnerable households in Britain.

As the deadline for meeting the energy efficiency targets approached the cost of delivering measures like loft or cavity wall insulation soared. That raises questions over whether British Gas saved more money by missing the target than it is now paying as a penalty, according to a source at one big 6 energy supplier.

He says they were "frankly astounded" by the low level of the fine, particularly given the £28m which the power generator Drax was hit with last week.

And he raised another point - what does this punishment say about the regime that requires the firms to meet their targets and be compliant?