North Yorkshire power generator Drax Group is to pay £25 million into Ofgem’s Energy Industry Voluntary Redress Fund after an investigation by the UK electricity and gas regulator found that Drax reported inaccurate data on the sourcing of some wood it uses to generate power.
The investigation by Ofgem, started in May last year, concluded that there was an absence of adequate data governance and controls in place. It said that led to Drax misreporting data in relation to its annual profiling submission for April 2021 to March 2022, and was unable to support the reliability of its reporting of forestry type and sawlogs for Canadian consignments for that period.
Ofgem said Drax, which runs the UK’s largest renewable power station near Selby in North Yorkshire, engaged constructively during the investigation and has accepted the findings of the investigation, which is now closed.
Drax has agreed to re-report its annual profiling submission for the year in question in respect of forestry type and saw log proportions, and told Ofgem it has updated its policies and procedures for the reporting requirements relating to data profiling. In addition Drax will commission an independent external audit of the profiling data from its international supply chain and its profiling data reporting for the compliance period 1 April 2023 to 31 March 2024.
Annual profiling data is the reporting of ‘additional biomass characteristics’ and is not used for the issuing of Renewables Obligation Certificates. During the investigation, Ofgem did not find any evidence to suggest that Drax have been issued with ROCs incorrectly. The investigation did not find any evidence suggesting that Drax does not meet the government’s threshold that a minimum of 70% of biomass must come from sustainable sources in order to receive scheme funding.
Ofgem Chief Executive Jonathan Brearley said: “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.”
“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 utilises. The legislation is clear about Drax’s obligations – that’s why we took tough action. Drax has accepted that it had weak procedures, controls and governance which resulted in inaccurate reporting of data about the forestry type and sawlog content being used.”
Drax Group CEO, Will Gardiner, said: “It is welcome that Ofgem has found no evidence that our biomass failed to meet the sustainability criteria of the Renewables Obligation scheme, nor that the ROCs we received for the renewable power we produced had been provided incorrectly. Although Ofgem has noted there is no evidence to suggest Drax deliberately misreported its profiling data, we recognise the importance of maintaining a strong evidence base and are continuing to invest to improve confidence in our future reporting.”