Drax to pay $33M for breaching reporting requirements for wood used in energy production

In the UK, on May 31, 2023, Ofgem opened an investigation into whether Drax Power Limited was in breach of annual profiling reporting requirements relating to the Renewables Obligations (“RO”) scheme and other related matters. The investigation focussed on the data governance and controls Drax had in place to inform its reporting of profiling data to Ofgem in order to comply with its obligations under the Renewables Obligation Order 2015 (“ROO”). 

The investigation concluded that there was an absence of adequate data governance and controls in place that had contributed to: 

Drax misreporting data in relation to their annual profiling submission to Ofgem for compliance period April 1, 2021 to March 31, 2022 (“CP20”)

Drax being unable to provide Ofgem with sufficient evidence demonstrating how its CP20 annual profiling submission had been arrived at and unable to support the reliability of its profiling data reporting of forestry type and sawlogs for Canadian consignments for that same period 

Drax has engaged constructively with the case team during the investigation and will continue to engage with Ofgem in this regard following closure of the investigation and   as a result:

Drax has accepted the findings of the investigation.

·      Drax is submitting a payment to Ofgem’s Energy Industry Voluntary Redress Fund in the amount of £25m.

·      Drax has agreed to re-report their CP20 annual profiling submission in respect of forestry type and saw log proportions.

Drax has confirmed it has updated its policies and procedures around the reporting requirements relating to data profiling under the RO; however, it will commission an independent external audit of the profiling data from its international supply chain and its profiling data reporting for the compliance period April 1, 2023 to March 31, 2024 (referred to as CP22). This audit will cover 98% of Drax’s supply chain. Ofgem will hold Drax accountable for the delivery of this audit which aims to provide Ofgem with the assurance of the accuracy of its future reporting. The findings of the audit will be published.