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Ofgem issues four suppliers with final ROC payment orders

Image: Robin Hood Energy.

Image: Robin Hood Energy.

Four energy suppliers have been ordered by Ofgem to pay outstanding Renewables Obligations fees by the end of the month or risk having their licences revoked.

However Robin Hood Energy, one of those to have received an outstanding fee notice, has refuted Ofgem’s versions of events, claiming that it held proactive meetings with the regulator last month and was therefore surprised to receive a final demand notice today (1 October 2019).

The four suppliers – Delta Gas and Power, Gnergy, Robin Hood Energy and Toto Energy – owe a combined £14.7 million in outstanding payments under the RO schemes, and have failed to provide the regulator with “adequate assurances” that they will pay by the late payment deadline.

Energy suppliers in the UK must comply with the RO scheme, which is used to demonstrate they source electricity from renewables sources to meet their obligations. When purchasing renewable power they are issued with Renewables Obligation Certificates (ROCs), which must in turn be provided to Ofgem by 1 September.

Suppliers that do not have enough ROCs to meet their necessary quota must make up the shortfall by contributing towards a buy-out fund, which is administered by Ofgem, by 31 August.

All four suppliers have missed both deadlines and now face late payment fees, plus interest.

Ofgem believes all four suppliers are likely to breach their obligations and, as a result, has issued a public warning that they face “appropriate enforcement action”.

Mary Starks, executive director of consumers and markets, said that suppliers that fail to comply with the RO risk undermining the integrity of the scheme.

“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,” she said.

Robin Hood Energy, the supplier established by Nottingham City Council, owes the most significant amount, with its outstanding fees standing at just shy of £9.5 million.

In a statement, Robin Hood said it had met with Ofgem last month to discuss the possibility of making its payment in installments, described as a “prudent business decision” to help it more effectively manage the forthcoming winter period where energy demand spikes.

It also said it wished to do so to mitigate any potential market risks surrounding a no deal Brexit.

The supplier claimed that this approach was initially welcomed by Ofgem and assurances were made that as long as the full amount was settled by March 2020, the matter would be resolved. But a letter was received by the supplier today demanding payment in full by 31 October.

“It is frustrating that, in our view, following our proactive and open conversation with Ofgem in August, we now find ourselves the subject of significant media interest, with questions being asked about our fundamental ability to operate as a business. This is plainly incorrect.

“We operate in a tough market but we remain on track to report a profit for this financial year and next. As a business, we are paying all other suppliers as per the terms of those contracts,” the statement, written by Robin Hood CEO Gail Scholes, read.

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