Clock Ticking for UK Companies as Energy Use Compliance Deadline Approaches

01 May 2015
by begbiestraynor -- last modified 01 May 2015

Time is running out for companies around the UK to comply with the government’s Energy Savings Opportunity Scheme (ESOS) and to avoid facing fines of up to £50,000.

ESOS obliges large enterprises throughout the country to demonstrate an awareness of energy use across their organisation and to conduct audits to that end in the remaining months of 2015.

The end goal of the scheme is to encourage all large companies in Britain to reduce the scale of carbon emissions for which they are responsible and therefore to help reduce the UK’s overall carbon footprint.

Obligations on big businesses and organisations include the appointment of a Lead Assessor to take up the task of overseeing and reviewing an assessment of total energy consumption.

All areas of significant energy consumption within the context of a particular enterprise’s overall operations then need to be identified through the auditing process, with the idea being that organisations will then pursue certificates approving their energy management efforts.

Time though is ticking away with government legislation stipulating that all large enterprises operating in Britain need to have declared ESOS compliance by December 5^th 2015.

Any organisation subject to ESOS rules that fails to carry out necessary assessments and declare its compliance could find itself being hit with fines on a very considerable scale.

Low-level fines are to be issued to non-compliant companies at £500 but the numbers involved in these penalties can rise quickly and potentially reach an upper limit of £50,000.

An audit from a reputable and relevant service provider is estimated to cost around £5,000, so the hope is that all enterprises subject to ESOS will take steps to ensure their full compliance over the course of 2015.

Importantly, it is also likely that large enterprises in any industry will be able to identify potentially very significant saving opportunities as a result of auditing their energy use. In fact, audits of energy use across large organisations tend to highlight areas where major savings can be made and, in many cases, identified cost reduction opportunities can be worth hundreds of thousands of pounds on an annual basis.

Energy management has been rising up the political agenda in recent years and ESOS is a key consequence of that for British businesses and other organisations. But energy management certifications are nothing new, with many companies already having demonstrated an awareness of their own energy consumption.

Indeed, prior to the creation and implementation of ESOS legislation, UK enterprises could demonstrate their commitment to energy management efficiencies through ISO 500001 certificates.

Organisations with ISO 500001 certificates still need to be aware of and comply with the stipulations of ESOS but they can approach the compliance process differently. Essentially, possession of an ISO 500001 certificate leaves an organisation able simply to notify the Environment Agency of their compliance with ESOS. Again though, that compliance has to be declared before December 5^th 2015 or even the most energy efficient of operations could be subject to fines.

Regardless of the nature of your organisation, if you’re involved at an executive level with a large-scale enterprise in the UK, it is important to understand the obligations you may be subject to when it comes to ESOS compliance.

Begbies Traynor is the UK's leading business rescue, recovery and restructuring specialist, providing a partner-led service to stakeholders in troubled businesses.

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