Blog Post

Ofgem widens the Voluntary Redress Scheme to include community energy groups

Richard Simmonds • Jun 21, 2021

The energy regulator Ofgem has revealed that it intends to widen the Energy Industry’s Voluntary Redress Scheme to allow community interest groups, co-operative societies, and community benefit societies to apply for funds from 2022.

What is the Voluntary Redress Scheme?

The Voluntary Redress Scheme was first introduced in 2017 and is operated by the Energy Saving Trust.

Its main purpose is to use redress payments made by energy suppliers who have made failures that potentially breach or do breach their licensing conditions.

Punishment for energy billing errors, consumer complaints and failure to provide Ofgem with information when requested (depending on the severity of the failings) can be reduced if a supplier cooperates fully with the regulator and makes a voluntary payment to the redress fund.

The funds are distributed by the Energy Savings Trust with payments into the scheme and then distributed to support energy consumers (vulnerable consumers take priority) and energy-based projects run by charities.

What are the changes?

Ofgem launched a consultation on the Voluntary Redress Scheme which began in February and ended in April.

The findings of the consultation led Ofgem to widen the eligibility of the schemes Decarbonisation and Innovation Funds to community interest groups, Co-operative Societies and Community Benefit Societies.

The other major changes to the scheme include:

Retain the current funding split between the Main Fund (70%), Innovation Fund (15%) and Decarbonisation Fund (15%).
Retain the vulnerable consumer percentage split (70%) and targeting all energy consumers through the Innovation and Decarbonisation funds (30%)
Continued funding of Fuel vouchers via the Main Fund.
All consumers remain eligible for fuel vouchers.

“On 11 February 2021, we published a consultation seeking views from stakeholders on the processes in place for the Energy Industry Voluntary Redress Scheme. We sought views to ensure that redress payments deliver the maximum benefit for Great Britain’s energy consumers.

‘Having carefully considered the responses to the consultation, we intend to widen eligibility to the scheme’s Decarbonisation and Innovation Funds. We plan to welcome applications to these funds from Community Interest Groups, Co-operative Societies and Community Benefit Societies from 2022.

‘We anticipate this change will come into effect when the contract for the management and allocation of redress funds is renewed in February 2022. The process of procuring a company to manage redress funds will consider the proposal further,” said Ofgem.

Also read: The key compliance and regulatory issues new energy market entrants need to know

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