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Energy regulator Ofgem has revealed around £39 million* of network charges have been deferred as of the end of August.
Under the scheme, announced in June, energy networks agreed to defer up to £350 million of charges as a last resort for struggling suppliers and shippers.
So far 18 companies have had costs delayed under at least one of three schemes which allow networks to put off up to three months’ worth of charges relating to gas transportation, electricity distribution and electricity transmission.
The companies have up until March 2021 to pay the charges owed in full.
When announcing the measures in June Ofgem said while the implementation details would vary in each sector, the schemes would broadly:
- Be sized and available so as not to threaten a network’s ability to comply with its financial covenants and credit metrics.
- Require a minimum payment of 25 per cent of the monthly invoice amount.
- Be capped at £1.6 million per electricity supplier group and at £1 million per gas shipper (both per network licence area and over the scheme length of three months), offering around £350 million in total for eligible companies.
- Be capped per network company group.
- Ensure that any deferred payments would accrue interest at the default rates set out in the relevant industry codes (currently c. 8 per cent), to incentivise suppliers and shippers to only defer as much as is necessary and return to normal payment terms as quickly as possible.
- Require that any deferred payments be repaid by the end of March 2021 with instalments payable prior to that deadline.
- Require electricity suppliers and gas shippers to self-certify that their companies will not pay dividends or executive bonuses until deferred charges plus interest are repaid.
The schemes cannot be used by companies that have an investment grade credit rating and can be reasonably expected to be able to access alternative finance arrangements.
Ofgem added that it will publish the final figures for the take-up of the three schemes in October when they are closed to new applicants.
*This story was updated on 11 September 2020 after Ofgem informed Utility Week it had recalculated the amount owed.
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