Ofgem is weighing censuring five energy suppliers that missed a deadline to pay into a scheme supporting renewable energy, a process that could lead to them being stripped of their supply licences—if they don’t collapse anyway.
AmpowerUK, Whoop Energy, Goto Energy, Home Energy Trading and Colorado Energy collectively owe more than £7 million into the Renewables Obligation (RO) buyout fund and haven’t given Ofgem assurances that they will pay it.
Each year, British energy suppliers must demonstrate they have sourced sufficient electricity from renewables by presenting Renewables Obligation Certificates (ROCs), issued by generators, by 1 September. If they don’t have enough ROCs, they can pay into a buy-out fund by 31 August.
Every year precarious energy suppliers miss that deadline. Some will pay the required sums, plus interest, by the late deadline of 31 October.
But the five named suppliers have “failed to provide adequate assurances” that they will make that deadline, Ofgem said. The regulator is now consulting on issuing the companies with final orders, which could lead to financial penalties or the regulator revoking their supply licenses.
The list of companies that miss RO payments is often a preview of the energy market’s upcoming insolvencies. This year, with ten energy suppliers felled since August amid soaring gas prices, that applies more than ever.
Several of the energy suppliers warned by Ofgem over RO debt have shown other signs of financial distress.
AmpowerUK was recently expelled from the Balancing and Settlement Code (BSC) by operator Elexon. Elexon is a key cog in the electricity grid, comparing the amount of power generators say they will produce with the amount suppliers say will be consumed. Expulsion from the code means suppliers can’t sign up new customers. It’s also a sign of financial difficulty: Elexon expelled Avro Energy and Symbio Energy from the code shortly before they went to the wall last month.
Business energy supplier Whoop and Colorado Energy, which sells tariffs through letting agents, were also warned by Ofgem for failing to pay into the feed-in tariff (FiT) scheme in September, along with the now-collapsed Igloo.
Market watchers have predicted that as many as 39 energy suppliers could fold this year as natural gas prices reach historic heights.
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