TT229: ESOS Compliance – Large companies – ACT NOW!

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You should be aware that by 5 December 2015, large companies in the UK must report on energy use and recommendations for energy savings under the UK Government Energy Savings Opportunity Scheme (ESOS) legislation. ESOS has been set up to follow the EU Energy Efficiency Directive (2012/27/EU). It is a mandatory energy assessment scheme for large organisations in the UK.

Thresholds

Large companies for this purpose are:

  • any UK company that either:
  • employs 250 or more people, or
  • has an annual turnover in excess of 50 million euro (£38,937,777), and an annual balance sheet total in excess of 43 million euro (£33,486,489)
  • an overseas company with a UK registered establishment which has 250 or more UK employees (paying income tax in the UK).

Further considerations would need to be given if you are part of a large corporate group.

These thresholds are based on the qualification date of 31 December 2014. Companies should assess themselves against the thresholds using accounts for the financial year ending either on the qualification date or in the 12 months immediately preceding the qualification date.

Reporting

If you qualify and are fully covered by ISO 50001, you need to inform the Environment Agency that you are compliant by 5 December 2015 by completing an online form. If you qualify but are not fully covered by ISO 50001, you need to carry out an ESOS assessment.

If you cannot submit the notification of compliance by 5 December 2015, you still need to notify the Environment Agency explaining why you’ve missed compliance and when you expect to be able to submit the notification.

The process

There is a significant body of evidence and analysis to be provided before compliance can be notified, that can include obtaining the services of an external assessor. The assessment would involve:

  • calculating your energy efficiency,
  • identifying areas of significant energy consumption, and
  • appointing an in-house employee (has to be a member of one of the specified professional bodies) or external contractor. The lead assessor would hold Energy Audits and prepare detailed reports on energy consumption and recommendations which are to be signed off by one or two directors depending on the assessor used.

You then need to inform the Environment Agency that you are compliant by 5 December 2015 and keep an evidence pack.

This process must be followed every year, and compliance notified for each subsequent compliance period every 4 years, by 5 December following the qualification date of the preceding 31 December. For instance, the next reporting for a qualifying large company will have to be done by 5 December 2019 following the qualification date of 31 December 2018 covering the compliance period from 6 December 2015 to 5 December 2019.

The ramifications

Provided you submit the notification of compliance by 29 January 2016, no enforcement action will be taken. For organisations committing to achieving compliance through ISO 50001 Certification, enforcement action will not be taken until 30 June 2016.

The penalties are at the discretion of the regulator and can be anywhere from a fixed penalty of £5,000 for a failure to notify, to a fixed penalty of £50,000 for failure to undertake an Energy audit. In addition, there are daily penalties of £500 subject to a maximum of 80 days. There is also a Publication penalty, whereby the Environment Agency will publish the company details on their webpages.

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