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Get Your Energy House in Order to Avoid Heavy Fines.

Tuesday 25 April 2017

Organisations are being urged to begin critical energy audits to avoid heavy fines for non-compliance with a Government scheme.

The mandatory Energy Savings Opportunity Scheme (ESOS) is moving into its second phase – but the Environment Agency has revealed that hundreds of organisations are facing financial penalties for failing to comply with Phase 1.

The next deadline is not until December 2019 but organisations are being encouraged to start the process now to avoid any last minute rush to complete the administration and a fine of up to £50,000 for a potential breach.

Organisations that qualify for ESOS must carry out ESOS assessments every four years. These assessments are audits of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures.

ESOS applies to large UK undertakings and their corporate groups. It mainly affects businesses but can also apply to not-for-profit bodies and any other non public sector undertakings that are large enough to meet the qualification criteria.

A large undertaking is:

  • any UK company that either:
    • employs 250 or more people, or
    • has an annual turnover in excess of 50 million euro (£38,937,777), and an annual balance sheet total in excess of 43 million euro (£33,486,489)
  • an overseas company with a UK registered establishment which has 250 or more UK employees (paying income tax in the UK)

The Government’s website says: ‘You must take part in ESOS if your undertaking is part of a corporate group which includes another UK undertaking or UK establishment which meets these criteria.

‘Where a corporate group participates in ESOS, unless otherwise agreed, the highest UK parent will act as a ‘responsible undertaking’ and be responsible for ensuring the group as a whole complies.

‘UK registered establishments of an overseas company will also need to take part in ESOS (regardless of their size) if any other part of their global corporate group activities in the UK meet the ESOS qualifying criteria.’

The assessment requires an organisation to calculate its total energy consumption, identify areas of significant energy consumption (at least 90% of the total) and then find out whether ISO 50001, DECs or GDAs cover any of your areas of significant energy consumption and identify whether ESOS compliant energy audits have been, or need to be, carried out for the areas of significant energy consumption not covered by ISO 50001, DECs or GDAs – which guarantee ESOS compliance.

A lead assessor needs to be appointed to conduct the audits and ESOS assessment – either an employee or external contractor – but they must be members of an approved professional body register.

The ESOS notification of compliance must be sent to the Environment Agency and records kept of how the organisation maintains its compliance.

Energy consumption profiling – breaking down the different ways in which energy is used by a participant’s activities and assets and analysing energy use to identify inefficiencies – is key to the process and one of Syntegra’s core business activities.

The ESOS assessment must identify energy saving opportunities which are cost-effective to implement, although there is no enforcement on implementation.

A recent newsletter from the Environment Agency said that more than 300 enforcement notices have been served on organisations which qualify for the ESOS scheme but have yet to comply with its protocols – and more are set to follow.

Other penalties will be issued to organisations which have been found to have misled the Agency about their qualification status at the time of the original deadline for signing up in April last year.

The future of ESOS appeared uncertain under Brexit but the Environment Agency’s announcement of Phase 1 fines and reiteration of the December 5, 2019 deadline for Phase 2, indicates it remains in force.

The newsletter states: ‘If you know that you will qualify for Phase 2, there is no reason why you shouldn’t start doing your energy assessments now. You will not be able to carry out the assessment of your ‘total energy consumption’, as this has to include the qualification date of 31 December 2018. However, where you know that an energy supply will be included in your “significant energy consumption”, you can do the audit work on this supply.’

All organisations that undertook an energy audit in the initial round of ESOS registration will have to repeat the exercise before the end of 2019. The ESOS audit needs to be based on at least one year’s energy measurement – which can be taken from any year-long period between 6 December 2014 and 5 December 2019 – but this cannot be the same data that was used in Phase 1.

The ESOS audit process has identified huge areas of savings for organisations in their energy bills with cost-effective measures cutting expenditure by as much as 20% and early identification of savings opportunities is beneficial to company balance sheets and the environment.

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