If your business is not in compliance with the Energy Savings Opportunity Scheme (ESOS) Phase 3 regulations, you could be facing some heavy fines. The Environmental Agency (EA) are not shy of handing these out to protect the integrity of the scheme and will impose more than one sanction for multiple breaches. The good news is that there are steps you can take to avoid these fines and penalties. In this blog post, we will provide an overview of ESOS Phase 3 and discuss the potential fines and penalties for non-compliance.

What is ESOS?

Before we begin, let's first define ESOS for those who are new to energy compliance in the UK. The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment and reporting scheme for large UK businesses. The scheme applies to both private sector companies and public sector organisations that meet the qualification criteria.

Under ESOS, these businesses must carry out an energy audit at least once every four years. The audit must be conducted by a qualified assessor and must cover all of the organisation's energy use, including buildings, industrial processes, transport and any other energy use.

After the audit is complete, businesses must submit a report to the Environment Agency detailing their findings and outlining any actions they plan to take to improve their energy efficiency.

What are the fines for non-compliance?

The EA will impose penalties for organisations who are mandated to comply with ESOS but did not participate or failed to meet the required standards. There are different types of non-compliance and for each separate breach of the ESOS regulations there is a different penalty. Let's look at these in more detail below:

Failure to notify

Seen as a negative impact on the scheme's integrity, any organisations that do not declare they have complied with their ESOS obligations will be fined. With an initial penalty of up to £5,000, plus a daily £500 penalty for each working day an organisation remains in violation (for a maximum of 80 days), the fine occurs regardless of whether the organisation has undertaken an energy audit or not and will be imposed onto of the other penalties as well.

Failure to maintain records

It is critical to maintain your records so that you can conduct an energy audit and evidence your ESOS compliance. Failure to do so starts with a £5,000 fine plus a “sum representing the cost to the compliance body of confirming that the responsible undertaking has compliance complied with the scheme,” which must be resolved. The compliance body will put forward steps to remedy this breach and they must be followed.

Failure to undertake an energy audit

The biggest fine comes with not undertaking an energy audit because it's a key requirement of ESOS. At £50,000 plus £500 for each working day an organisation remains in violation (maximum of 80 days) it's worth ensuring you comply if mandated. There is more leniency for new entrants with a reduced penalty of £5,000. Remember that in the next phase of ESOS that organisation is no longer seen as a new entrant. Also, any steps to remedy (i.e. taking an energy audit!) must still be followed.

Failure to comply with an enforcement/penalty notice

This penalty is for any organisation that ignores a compliance, enforcement or penalty notice. With an initial £5,000 fine plus £500 for each working day an organisation remains in violation, again, for a maximum of 80 days.

False or misleading statement

Your ESOS assessment and report must be accurate and factually true. If the EA determine that you have provided a false or misleading statement then an organisation can expect the biggest fine again of £50,000.

Non-compliance being made public

This penalty isn't financial but is worth mentioning as it can negatively impact an organisations public image and brand. With all of the penalties above the EA will name your organisation and the amount you were fined will be published in the public domain on their website.

[source: Policy paper - Annex 2: Climate change schemes - the Environment Agency's approach to applying civil penalties]

Are there penalties for not following the energy saving recommendations of an ESOS assessment?

If you comply to ESOS and partake in the assessment there is no penalty if you fail to implement any of the energy saving recommendations documented within your report. However, it is not very business savvy to fail to implement these energy reducing strategies as they will likely help an organisation recoup the cost of the ESOS assessment with the cost of the energy you may save. Although we do understand that there may be some organisation that have already implemented some quick wins to reduce consumption and the main findings in the report could now be quite complex and costly to implement.

This article was written by Professional Energy Services (PES), an energy consultancy firm that helps businesses comply with UK energy legislation. For more information on how PES can support your organisation with your ESOS assessment please visit our website.