ENERGY MANAGEMENT ESOS:
THOUSANDS HAVE FAILED TO COMPLY
Almost twelve months since the deadline, Rob Legge, CEO and
Bob Foley, Strategy Director of Energy & Compliance at Servest Group, explain the implications of ESOS and how to discover whether or not you should be compliant.
Under EU legislation, qualifying organisations should have completed and submitted a compliant Energy Savings Opportunity Scheme (ESOS) assessment back in December last year. The HM Treasury’s Impact Assessment estimated that around 9,400 enterprises are affected by ESOS, covering 170,000–200,000 buildings that consume around a third of UK energy demand. In contrast, Experian had identified 14,490 companies with over 250 employees back in 2012, which is one element of the qualifying criteria. The Environment Agency (EA) stated that it had written to 14,000 companies that were potentially impacted by the legislation.
However, just short of a year later, it appears that there are still qualifying businesses that have yet to file notifications of compliance. As such, the EA, which administers ESOS on behalf of the government, is now taking action to ensure businesses comply with the mandatory scheme. Although financial penalties are a last resort, qualifying organisations that have not yet taken action to ensure they are ESOS compliant risk receiving penalties in excess of £100,000.
The message from the Environment Agency is clear: as per the online ESOS information hub, they “will be making sure all businesses are fully compliant with ESOS: it’s simply a case of when, not if.”
The EA began raising awareness of ESOS and the necessary compliance
26 | TOMORROW’S FM
procedure two years ago. However, from the high level of calls we’ve been experiencing, it appears the agency has begun to take action with organisations on their immediate radar, reminding companies of the implications, sanctions and penalties of failure to comply.
“ORGANISATIONS THAT HAVE NOT
YET TAKEN ACTION TO ENSURE THEY
ARE ESOS COMPLIANT RISK RECEIVING
PENALTIES IN EXCESS OF £100,000.”
As of the end of June 2016, 6,542 businesses had provided submissions under the scheme. Of these, 2,571 were submitted after the 5th December 2015 compliance deadline. As of August 2016, a further 124 had notified their intention to comply but at that time still had not complied.
Over the course of the summer, the scheme regulators have investigated 1,700 organisations they believe may be required to participate but had not made a submission. Although there does not seem to be a definitive list of the companies who fall within the criteria, by inference, it appears that somewhere in excess of 3,000 companies have not complied.
Servest’s energy and compliance division has recently heard from a number of companies who were not aware, or who did not think the legislation applied to them. For instance, we have heard from companies who have been contacted by local trading standards or by the Environment Agency; however, in about half of these cases we were able to help them understand that they did not, in fact, meet the compliance threshold tests.
That being said, there are organisations out there that, unbeknownst to them, did qualify. Organisations that turnover significantly less than the benchmark of £39million (50 million Euros) may believe they do not qualify for ESOS compliancy. This is not always the case, as employee numbers must also be taken into consideration. This means that companies that employ over 250 staff, regardless of turnover, may have also fallen into the EA’s “naughty list”. For example, hotels turning over millions less than the threshold will still qualify if they employ over 250 part-time bar staff and zero-hour contractors for event support and so forth.
As per the legislation, qualifying companies must carry out ESOS assessments every four years, the first of which should have been completed last year. The process itself can take up to three months and the first step is to allocate a lead assessor. Based on the numbers and our correspondence with companies
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