Seven energy suppliers owe a total of £34 million to the Renewables Obligation (RO) and Feed-in Tariff (FiT) schemes and are at risk of losing their supply licences, Ofgem has said.
The Renewables Obligation scheme requires suppliers demonstrate they have sourced a certain portion of energy from renewable resources by presenting Renewables Obligation Certificates (ROCs), issued by renewable generators, to the regulator by 1 September. If they don’t hold enough ROCs, they must pay into buyout fund by 31 August.
24 active suppliers missed these deadlines, compared to 42 suppliers last year.
17 of these suppliers have since paid the amount they owe or given “satisfactory assurance” to Ofgem about meeting their obligation.
The remaining seven suppliers haven’t fully discharged their obligation either by presenting ROCs or paying into the buyout fund. They’ve also failed to provide adequate assurances that they will meet the late deadline on 31 October.
The seven suppliers include Co-Operative Energy, a white label brand for Octopus Energy, and its former brand Flow Energy, now also owned by Octopus; Robin Hood Energy, Nottingham City Council’s beleaguered not-for-profit supplier, recently sold to British Gas; and Tonik Energy, which recently passed 250,000 accounts. Small suppliers MA Energy, Nabuh Energy and Symbio Energy round out the seven. Collectively they owe £33,861,450.83 to the RO scheme.
Ofgem is now consulting on issuing the seven suppliers with final orders to compel them to make the payments by 31 October. Failure to meet this deadline could mean they lose their supply licences.
Failure to make RO payments is often a sign suppliers are financially struggling and a harbinger of their collapse. Among the suppliers that failed to meet RO deadlines last year, several went bust.
Breeze Energy received a provisional order over unpaid debts of £486,000 to the scheme and, despite accolades for its customer service, exited the market in December. GnERGY received a failure to comply notice over non-payment of £673,876 plus interest into the buyout fund and collapsed in March.
Robin Hood Energy was also warned over non-payment of nearly £9.5 million and had to be bailed out by Nottingham City Council to clear the balance. It was subsequently sold by the council, after accruing losses of £23 million last year. TOTO Energy also failed, with debts of more than £4.5 million to the RO scheme.
Last year late payments and defaults left a £97.5 million black hole in the Renewable Obligations fund, which was later mutualised across all suppliers, adding an estimated £4 to household’s annual energy bills.
Co-operative Energy, Flow Energy and Symbio Energy have also missed the deadline for these mutualisation payments for last year, owing a collective £148,534 for the first quarter.
Robin Hood Energy and Tonik Energy have also failed to make their annual levelisation payments into the Feed-in Tariff scheme, owing a cumulative £158,814.47. The FiT scheme pays owners of small-scale renewable generators, including residential generators, for the electricity they produce and is funded through levies on suppliers. The scheme closed to new generators in April 2019 but existing suppliers continue to receive payments.
Cathryn Scott, Ofgem’s Director of Enforcement and Emerging Issues, said: “The Renewables Obligations and Feed-in Tariff schemes provide important support for renewable generation, increasing the uptake of cleaner electricity and helping the country on its path to net zero emissions.
“Supplier failure to comply with these schemes and make the payments due undermines the integrity of the schemes and is unacceptable.
“This enforcement action sends a strong signal that suppliers must meet their obligations.”
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