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First Civil Penalties for CRC Non-compliance – Quite Steep

Civil penalties totalling £99,000 for non compliance with the CRC Energy Efficiency Scheme (the “CRC”) have been announced.  The penalties were levied on 4 companies which are participants in the CRC. These companies failed to provide prescribed reports on time. The highest penalty was £41,000 and the lowest was £10,000.

Background

The CRC Energy Efficiency Scheme Order 2010 (the “Order”) provides the administrators of the CRC (the Environment Agency, SEPA and NIEA respectively) the ability to apply penalties for non compliance with the scheme. Under the first year (2010 to 2011) of phase one of the CRC participants were obliged to provide a footprint report and an annual report no later  than the end of July after the end of the reporting year. For the second year (2011 to 2012) an annual report only is required.

Potential Penalties

There are separate penalties for failure to provide either report:

1. A fixed payment of £5,000 and publication of the failure;
   
   
2. Where the report is provided less than 40 days after the due date,  a penalty of £500 can be levied for each working day the report is late. After 40 days a financial penalty of £40,000 may be applied;
   
   
3. In respect of annual reports only, where the report is provided more than 40 days after the due date (or not at all), further penalties may be levied including doubling of CRC emissions (thereby increasing allowances required to be purchased).

These first Penalties

The highest penalty was £41,000 and comprised a penalty of £20,500 for the two late reports. The lowest penalty was £10,000, being £5,000 for each late report.

The Order provides the administrators with discretion to waive or modify a civil penalty. This includes when the offender took all reasonable steps to comply, or to rectify the failure as soon as it came to its notice. In 2 of the 4 reported cases discretion was exercised resulting in a reduction of the penalty imposed.

Details of the civil penalties are available here  

The penalties applied indicate that non compliance with the CRC will be taken seriously particularly where there is little attempt by the offender to rectify the non compliance. It is also a stark reminder of the requirement to submit annual reports by 31 July 2012 for the reporting year 2011/12 and to surrender adequate allowances this year. The regulatory enforcement position is that participants shall be treated as compliant with their 2011/12 surrender obligation providing the Environment Agency receives a valid order for sufficient allowances including payment of cleared funds by 31 July 2012 and sufficient allowances are surrendered by 28 September 2012.

The Order is available here

For further information, please contact: