Legislation could cost noncompliant British businesses billions in 2016

The Environment Agency (EA), which administers ESOS on behalf of the Government, has estimated that circa 10,000 enterprises falling under the legislation, affecting up to 200,000 buildings, may fail to file their notification of compliance by the 5th December.

Whilst the number of businesses affected is widely quoted as being around 14,000, ESOS experts have suggested that many more businesses may also qualify because of a startling lack of awareness.

The EAbegan raising awareness of ESOS and the necessary compliance procedure two years ago and, in recent weeks, the agency has sent letters to organisations on their immediate radar, reminding Company Secretaries of the upcoming deadline and the implications, sanctions and penalties of failure to comply. Despitethis, reports have revealed that only 850 surveys have been submitted to the EA*.

David Llewellyn, CEO of Energy at Servest said;

“Our research has indicated that there are still a significant number of companies who are not aware, or who do not think, the legislation applies to them.

“Organisations that turnover significantly less than the benchmark of £39million may believe they do not qualify for ESOS compliancy. This is not the case as employee numbers must also be taken into consideration, regardless of turnover.

“This means that companies which employ over 250 staff will need to submit their compliance report or intention to comply notification to the EA by the 5th December. For example, hotels turning over millions less than the threshold will still qualify if they employ over 250 part-time bar staff and zero-hour contractors for events.”

As per the legislation, qualifying companies must carry out ESOS assessments every four years, starting from the initial compliance date of 5th December 2015. Although ‘Intent to Comply’ notifications need to be filed by the 5th December, the process itself can take up to three months and the first step is to allocate a Lead Assessor. Servest believe that there are still a significant number of businesses that have not yet appointed a LeadAssessor in order to start collecting site-based information required for reporting.

“With only approximately 850 Lead Assessors registered, of which we understand about half are in-house, there is limited spare capacity to support those who have not yet started the process,” commented Llewellyn.

For businesses that run out of time to submit prior to 5th December, the Environment Agency has indicated it has some discretion under the regulations and, providing companies can confirm a Lead Assessor has been or will soon be appointed, enforcement action may be deferred until the end of January, andlater for those that choose the ISO50001 route for compliance. Beyondthat, an enforcement notice approach will be used backed up by civil penalties.

Withall the immediate focus on achieving compliance, it is easy to forget that this scheme is about driving energy savings. The Energy Savings Opportunity Scheme is essentially an opportunity for British businesses to save money. The Government has identified that the Net Present Value of the benefits will be in the region of £1.6 billion, so the gains reaped from becoming ESOS compliant far outweigh the initial cost of the assessment.

In line with the rapidly approaching deadline, Servest is urging qualifying companies who have yet to appoint a Lead Assessor to do so with immediate effect.