Ofgem confirms record RO mutualisation of £218m

A total of 28 suppliers, the vast majority of which have exited the market, have left more than £218 million in Renewables Obligation (RO) payments to be picked up by the rest of the industry.

The figure confirmed by Ofgem constitutes the largest ever amount to be mutualised under the scheme. It is more than 6 times larger than the 2019/20 period and more than double the previous record amount of £97.5 million set in 2018/19.

Under the RO scheme suppliers have until 1 September to present Renewables Obligation Certificates to Ofgem or until 31 August to make buyout payments. Those who have not met their obligations in full by this date must make late payments by 31 October, incurring a daily interest penalty.

Ofgem has previously confirmed 37 suppliers failed to discharge their obligations by the buyout deadline.

It subsequently announced that 12 obligations were fully discharged by the late payment deadline across the versions of the scheme for England and Wales, Scotland and Northern Ireland and has now revealed that 54 remain which have not been met in full. 

At the 31 October deadline, Avro Energy owed the most out of any supplier by far at more than £56 million across both RO Enaland and Wales and Scotland. It recently became the largest ever retailer to go through the supplier of last resort (SoLR) process, leaving Octopus Energy to pick up its 580,000 customers.

Other recently failed suppliers have also left the market owing significant amounts. People’s Energy owed almost £24 million, Green Network Energy more than £22.3 million, Igloo £15.6 million, Pure Planet £15.4 million and Utility Point £15 million.

Only three suppliers out of the 28 named by Ofgem are still trading. Of these Clydebank-based Together Energy owes more than £12.4 million, Delta Gas and Power £381,000 and Whoop Energy £56,300.

In October Ofgem issued provisional and final orders to seven suppliers to make the outstanding payment plus interest by the late payment deadline.

Final orders were issued to Ampower and Whoop Energy, while provisional orders were issued to Delta Gas and Power, Entice Energy, MA Energy, Neon Reef and Together Energy.

Of these Ampower, Entice, MA and Neon Reef have ceased trading meaning Ofgem cannot pursue enforcement action against them. However, the regulator has said it will seek to recover outstanding payments due from failed retailers through administrators “where appropriate”.

In a statement Ofgem said the RO scheme plays a vital role in providing support to renewable electricity generators.

It added: “The shortfall to trigger mutualisation has been reached.

“For suppliers that did not meet their obligation, each will be considered on a case-by-case basis and further enforcement action may be taken as appropriate, which could result in a supplier having its licence revoked.

“Where suppliers have outstanding obligations and have ceased to trade, we will seek to recover outstanding payments due from them through the organisations’ administrators as appropriate.”

So far this year a total of 27 suppliers have exited via the SoLR process, triple the previous record total set in 2019.

This means almost 2.7 million customers have been appointed a SoLR. Additionally, large supplier Bulb recently entered administration with 1.7 million customers. Bulb was not among the suppliers that failed to discharge their RO obligations by the late payment deadline.