Ofgem orders four suppliers to pay £14.7 million in Renewables Obligations by 31 October 2019

1 Oct 2019 12:35 PM

Ofgem is consulting on issuing four suppliers with final orders to compel them to make £14.7 million in outstanding payments they owe to comply with the Renewables Obligations schemes by 31 October 2019.

Four suppliers missed the original deadline of 1 September 2019 and have not provided Ofgem with adequate assurances that they will pay by the late payment deadline
If suppliers fail to pay by 31 October, Ofgem could start the process to revoke their licence to supply energy
Ofgem’s enforcement action sends a strong signal that all suppliers must meet their obligations or face the consequences

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

Under the governments’ Renewables Obligation schemes, suppliers have to demonstrate they have sourced enough electricity from renewable sources to meet their obligation by presenting Renewables Obligation Certificates (ROCs) to Ofgem by 1 September.

If suppliers do not have enough ROCs to meet their obligation, they must make up the shortfall by paying into a buy-out fund administered by Ofgem by 31 August.

The four suppliers have failed to pay into the buy-out fund or present the required number of ROCs by the 31 August and 1 September 2019 deadlines. They have until 31 October 2019 late payment deadline to make the outstanding payments, plus interest.

Ofgem has engaged with all suppliers that missed the 31 August and 1 September deadlines to seek assurances that they will be in a position to make the necessary payments by the late payment deadline.

The named suppliers failed to provide satisfactory assurances and Ofgem believes that they are likely to breach their obligations.

If the final orders are confirmed later this month, the suppliers will be compelled to pay into the buy-out fund by the 31 October. If they do not, Ofgem could start the process of revoking their licence to supply energy.

Other suppliers missed the 31 August deadline but have given satisfactory assurances to Ofgem on meeting their obligations.

If these suppliers fail to comply, Ofgem is ready to take appropriate enforcement action against them.

Mary Starks, executive director of consumers and markets yesterday 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.”

Further Information

The final orders will be consulted on for 21 days before being confirmed (subject to any representations or developments in the meantime). Ofgem hopes that the suppliers in question will now pay the outstanding amounts.
The named suppliers are, in Ofgem’s view, likely to contravene article 7 of the Renewables Obligation Orders, following their failure to meet the 31 August and 1 September 2019 deadlines and possibly the 31 October 2019 late payment deadline.
The Renewables Obligation schemes are government schemes to support large-scale renewable electricity projects in the UK. They place an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. Ofgem administers the schemes on behalf of government.
ROCs are certificates issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can trade ROCs with other parties. ROCs are ultimately used by suppliers to demonstrate that they have met their obligations.
Shortfalls in the late payment fund for the Renewables Obligation scheme will trigger mutualisation if the relevant threshold (£15.4 million for England and Wales, and £1.54 million for Scotland) is met. This means that suppliers who have complied with their obligations will be required to make up the shortfall.

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