U.K. energy regulator closes Drax Group investigation amid €25 million agreement

Drax Group will pay U.K. energy regulator Ofgem €25 million (C$ 37 million) after an investigation found the company misreported data on its Canadian sourced biomass.

The regulator announced it’s closing its May 2023-launched investigation into whether Drax Power Ltd. breached reporting requirements — tied to the company qualifying for renewable energy subsidy — after reaching a mutual agreement on alternative action, including a €25 million (C$ 37.3 million) payment to the regulator’s voluntary redress fund.

“This has been a complex and detailed investigation. Energy consumers expect all companies, particularly those receiving millions-of-pounds annually in public subsidies to comply with all their statutory requirements,”  said Ofgem CEO Jonathan Brearley in a press release.

“There are no excuses for Drax’s admission that it did not comply with its mandatory requirement to give Ofgem accurate and robust data on the exact types of Canadian wood it utilizes. The legislation is clear about Drax’s obligations – that’s why we took tough action.”

Ofgem said it didn’t find any evidence to suggest that Drax have been issued the renewable energy subsidy incorrectly.

It concluded Drax didn’t have adequate data governance and controls in place, which meant it misreported profiling data in 2022 and couldn’t support forestry type and sawlogs data for Canadian consignments submitted in the same period.

The regulator said Drax accepted the findings and, in addition to paying into the fund, had updated its policies and procedures around data reporting. Drax also plans to resubmit its 2022 profiling data for Canada and will commission an independent external audit of data from its international supply chain for 2022.

“It is welcome that Ofgem has found no evidence that our biomass failed to meet the sustainability criteria of the Renewables Obligation (RO) scheme, nor that the ROCs we received for the renewable power we produced had been provided incorrectly,” said Drax Group CEO Will Gardiner in a press statement.

“Although Ofgem has noted there is no evidence to suggest Drax deliberately misreported its profiling data, we recognize the importance of maintaining a strong evidence base and are continuing to invest to improve confidence in our future reporting.”

Energy companies and any regulated person can donate to the voluntary redress fund in lieu of, or in addition to a financial penalty for breaches of licence conditions. The money goes to charities and community projects that help vulnerable customers with energy-related support.