Turbines and power station chimneys are seen near Drax in northern England
Turbines and power station chimneys are seen near Drax in northern England June 19,2008. REUTERS

North Yorkshire based power generation firm Drax has been hit with a record £28m fine by Ofgem after it failed to meet environmental obligations.

InterGen, another power company, has been fined £11m by the energy regulator.

Both companies failed to meet targets to insulate homes under the Community Energy Saving Programme (CESP), part of the government's Home Energy Saving Programme.

The scheme was designed for customers in low income areas to provide them with loft and wall insulation, and new boilers and so reduce bills.

Previously the largest fine handed out by Ofgem was £15m to the National Grid, following an appeal in 2010.

Sarah Harrison, senior partner in charge of enforcement at Ofgem said: "Drax missed its target by a clear margin, disadvantaging several thousand households in some of the most deprived areas in Britain.

"Not only are these consumers missing out on energy efficiency measures that would help keep their homes warm, they also face higher energy bills as a result. Today's agreement to pay £28m reflects the seriousness of the consequences of these failings for consumers."

Regarding InterGen, she said: "The £11m payment reflects the seriousness of these failings and means InterGen has not gained through its non-compliance."

Dorothy Thompson, chief executive of Drax, said: "We are deeply disappointed with the magnitude of the fine. However, we believe it is in our shareholders' interests to settle this matter and, as the nation's single largest power provider, focus on delivering a reliable supply of electricity this winter.

"We are pleased to be working with National Energy Action to develop a package of measures which would benefit vulnerable energy consumers."

British Gas, SSE, Scottish Power, and GDF/Suez are awaiting similar decisions over CESP, which will be announced in the coming weeks.