Ofgem has ordered four suppliers to pay £14.7 million in Renewables Obligations by 31st October 2019. The Renewables Obligation scheme (RO) is administered by Ofgem on behalf of the government. Energy companies must participate to help fund the development of renewable electricity projects. The amount is worked out according to how much energy is supplied by each company. If suppliers fail to pay by 31st October, Ofgem could start the process to revoke their licence to supply energy
Gillian Guy, Chief Executive of Citizens Advice, said “When energy suppliers fail to pay their bills, it’s customers who end up picking up the tab through higher bills of their own. This is not a new problem. Last year less than half of the initial unpaid Renewables Obligation (RO) was ever paid back.
“Energy suppliers should not be allowed to build up these levels of debt in the first place. The government needs to bring in legislation to require companies to make industry payments – including ROs – more regularly. This would limit the cost to customers when suppliers fail to pay or exit the market.”
Citizens Advice research (Picking up the Pieces June 2019) showed that 10 failed domestic energy suppliers left behind an estimated £172 million in unpaid industry bills.
Last year only 43% of the amount owed to Ofgem’s buy-out fund after the first payment deadline was paid. The scheme has a mutualisation mechanism, so that any shortfall over a threshold amount is left to industry to make up, with the cost eventually ending up on people’s bills.
The suppliers are:
- Delta Gas and Power Ltd – outstanding amount: £91,937
- Gnergy Ltd – outstanding amount: £637,876
- Robin Hood Energy Ltd – outstanding amount: £9,435,925
- Toto Energy Ltd – outstanding amount: £4,555,880
The named suppliers failed to provide satisfactory assurances and Ofgem believes that they are likely to breach their obligations. Other suppliers missed the 31st August deadline but have given satisfactory assurances to Ofgem on meeting their obligations.
Mary Starks, executive director of consumers and markets said “The Renewables Obligation schemes provide important support to renewable electricity generators and play an important role in Great Britain’s journey to a net zero emission economy by 2050.”
“Supplier failure to comply with the schemes undermines the integrity of the schemes and is unacceptable. It also adds to the costs of other suppliers who do meet their obligations as they have to absorb or make up any shortfall. This enforcement action sends a strong signal that suppliers must meet their obligations, or pay the consequences which could mean losing their licence.”