British Gas has been fined £11.1m by the regulator Ofgem over its failure to deliver energy efficiency measures on time.

The regulator said British Gas delivered just 62% of its community energy saving programme (Cesp) by the deadline of the end of 2012. This meant that thousands of households had to wait for energy efficiency measures, such as insulation, to be installed during the winter.

It also missed its carbon emissions reduction target (Cert), designed to help reduce carbon emissions in domestic properties.

“British Gas’s failure to deliver two environmental obligations on time is unacceptable,” said Sarah Harrison, Ofgem’s senior partner with responsibility for enforcement. “Thousands of households had to wait for energy efficiency measures, like insulation, to be installed during the winter.”

Cesp was designed to lower carbon emissions through the delivery, free of charge, of energy-saving measures such as loft and cavity wall insulation to households in low-income areas. The government set individual targets for generators as well as energy suppliers.

Suppliers could meet their Cert obligations through measures such as installing insulation, distributing real-time displays or switching a household’s heating fuel (such as from oil to gas). British Gas achieved 99% of its obligation on time and made up the shortfall seven weeks later.

Eventually it over-delivered by 2.3% for Cert and 1.5% for Cesp, with an additional 20,000 homes benefiting.

“We’re pleased that in the end we managed to help more vulnerable people under this scheme than was required,” said Claire Miles, managing director of British Gas New Energy.

Ofgem and British Gas,which cited bad weather as one of the reasons for the delay, said the £11.1m penalty would be used to help vulnerable customers through energy-efficiency advice and improvements. However, it unclear how this will be paid out so that those affected by the mistakes benefit directly from the money.

One option under consideration is to use the British Gas Energy Trust, which is designed to help those who are struggling to pay their energy bills.

“It’s right that Ofgem holds British Gas to account for not meeting its legal obligations,” said Which? executive director Richard Lloyd. “Energy efficiency schemes are vital for helping consumers save money by saving energy. The fine should be used to assist the most vulnerable households struggling with their bills.”

Energy and climate change secretary Ed Davey said: “This shows that if energy companies don’t put consumers first, there will be consequences.

“We’re working to make sure consumers are protected right across the energy market, and cutting people’s bills permanently by making 1m homes warmer and cheaper to heat by March next year.”

British Gas is not the only company to be fined for failing to meet its targets. Last week power generator Drax was fined a record £28m for failing to meet its obligations under Cesp.