Four energy suppliers have missed deadlines for payments into a government scheme to support green energy and could lose their licences if they don’t clear their debts, energy regulator Ofgem has said.
Delta Gas and Power, GnERGY, Robin Hood Energy and TOTO Energy all missed a deadline last month to comply with the Renewables Obligation (RO) scheme.
Under the scheme, energy suppliers must demonstrate they have generated a minimum amount of electricity from renewable resources by presenting Renewables Obligation Certificates (ROCs) to the regulator by 1 September. If they don’t have enough ROCs, they must make up the different by paying into a buy-out fund by 31 August.
The four suppliers all failed to meet either present the required number of ROCs or pay into the buy-out fund and now have until 31 October to make the payments, plus interest. If they fail to do so, Ofgem has said it will take “appropriate enforcement action,” which could involve stripping the firms of their supply licences.
Failure to make RO payments also indicates a supplier may be having financial difficulties. Of the three firms which failed to make their RO payments last year, one had its licence revoked and the other two went bust.
Robin Hood Energy, the not-for-profit supplier owned and run by Nottingham City Council, owes the most in outstanding RO payments: £9,435,925.
Gail Scholes, chief executive of Robin Hood Energy, said: "Since July 2018 we have only bought 100% renewable electricity, but as we do not physically own any electric generation capabilities, we pay into Ofgem’s buy-out fund.”
Robin Hood Energy insisted it had reached a deal with Ofgem in August to make the payments in instalments and to clear the balance by March of next year.
"This was a prudent business decision to help us more effectively manage the high demand of the winter period, a potential general election as well as mitigating potential market risks around a No-Deal Brexit,” Scholes said.
"Despite welcoming our proactive approach and advising that as long as our ROCs payment was made by March 2020, which we had always planned to do, then this matter would be resolved. However, Ofgem has now written to us today (1st October 2019) demanding payment in full by 31st October.”
In response Ofgem said it had been working with all suppliers who have yet to comply with the scheme and "reiterated to them all the importance of making the payment by 31 October, the deadline set out in legislation.”
TOTO Energy owes £4,555,880 to the scheme. A spokesperson for the Brighton-based company said: “We regret Ofgem’s decision to issue this consultation at this time. We disagree with the reasons for their decision. We remain committed to meeting our all of our obligations and continuing to deliver excellent service to our customers.”
GnERGY, founded by Ghurka veteran Tikendra Dewan, owes £637,876. GnERGY said the timing of the RO deadlines harms small suppliers and discourages companies from joining the energy market.
“When it comes ROC, the fact is that Ofgem expects us to pay on behalf of our customers who have not paid us. While we are obligated to offer payment plans to our customers, the same does not apply when it comes to Ofgem,” a spokesperson for the supplier said.
“This defeats the purpose of competition and encouragement to join the industry, hence the Big Six will always dominate.”
Meanwhile, Delta Gas and Power owes £91,937.
Mary Starks, Ofgem’s Executive Director of Consumer 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.”
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