Ofgem Closes Investigation into Drax Power – What It Means for Business Energy Customers

Ofgem Closes Investigation into Drax Power Limited

On 29 August 2024, Ofgem announced the closure of its investigation into Drax Power Limited (“Drax”) concerning its compliance with reporting requirements under the Renewables Obligation (“RO”) scheme. This follows an in-depth review into Drax’s data governance and controls relating to its annual profiling submissions.

Background of the Investigation

The investigation, launched on 31 May 2023, focused on whether Drax had breached its obligations under the Renewables Obligation Order 2015 (“ROO”). Specifically, Ofgem examined the company’s governance and internal controls for reporting profiling data.

The inquiry identified several key issues, including:

• Misreporting profiling data in Drax’s submission for the compliance period 1 April 2021 – 31 March 2022 (“CP20”).
• Insufficient Evidence to demonstrate how its CP20 profiling submission was calculated and to support the accuracy of forestry type and sawlog reporting for Canadian consignments.

Findings and Remedial Actions

Drax has engaged constructively with Ofgem throughout the investigation and has taken several corrective measures, including:

• Accepting the investigation’s findings.

• Making a £25 million payment to Ofgem’s Energy Industry Voluntary Redress Fund.

• Agreeing to re-report its CP20 profiling submission regarding forestry type and sawlog proportions.

• Updating its internal policies and procedures on data profiling under the RO scheme.



• Commissioning an independent audit of its profiling data from its international supply chain for the compliance period 1 April 2023 – 31 March 2024 (CP22). This audit will cover 98% of Drax’s supply chain, with Ofgem overseeing its implementation and findings being made public.

Impact on Energy Consumers and the Industry

Ofgem has confirmed that the investigation did not uncover any evidence of incorrectly issued Renewable Obligation Certificates (ROCs) or that Drax failed to meet the government’s requirement that at least 70% of biomass must come from sustainable sources.

However, Ofgem Chief Executive Jonathan Brearley underscored the importance of compliance:

“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.”

This case highlights the necessity for rigorous data governance and transparency, particularly for companies receiving substantial public subsidies.

What This Means for Business Energy Buyers

For businesses operating in the energy sector, this investigation reinforces the need for transparency and due diligence when engaging with suppliers. At Smart Energy Company, we provide businesses with expert guidance on navigating the complexities of energy procurement and ensuring compliance with industry regulations.

By working with us, your business can benefit from:

• Reliable market insights to help make informed energy procurement decisions.

• Regulatory expertise to avoid compliance pitfalls.



• Tailored energy solutions designed to ensure cost efficiency and sustainability.

If you want to secure a more transparent, cost-effective energy contract, contact Smart Energy Company today for a free consultation and energy review.

Looking Ahead

While Ofgem has concluded this investigation, it will continue to oversee Drax’s compliance with its updated policies and the independent audit process. The findings of this audit will be published to maintain industry-wide transparency.

For the full Ofgem case closure statement, visit: Ofgem website.