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Two energy suppliers may be issued final orders over their failure to pay more than £1 million in Renewables Obligation (RO) payments.
Suppliers are obliged to present their RO certificates (ROCs) or make a buyout payment by the start of September but those who miss the deadline have until 31 October to pay in full, incurring a daily interest penalty.
Mutualisation is triggered if shortfalls in the late payment fund hit the relevant thresholds of £63.7 million for England and Wales and £1.54 million for Scotland.
Ofgem revealed on Wednesday (28 September) that non-domestic supplier Delta Gas and Power and domestic retailer Logicor Energy have failed to either present the required number of ROCs or their buyout payment.
The regulator said that Delta and Logicor owed £644,499.60 and £377,444.00 (excluding interest) respectively.
Ofgem added that it has engaged with all suppliers that missed the deadlines, seeking assurances that they will be able to make the necessary payments by the late payment deadline.
Both Delta and Logicor however have failed to provide adequate assurances they will make the payment by then.
If the final orders are confirmed following a 21 day consultation, the two retailers will be compelled to pay into the buyout fund by 31 October. A failure to do this could mean their licences are revoked.
Last week Ofgem confirmed the total UK obligation of 128 million ROCs and last week said that since then suppliers had presented 109 million certificates towards this, leaving an ROC shortfall of c.19 million to be made up through buyout and late payments.
Non-payment of the RO has been a contentious issue in the energy sector recently, with compliant suppliers having to pick up the bill through mutualisation for the past four years.
Last year the regulator confirmed that 28 retailers, the vast majority of which had exited the market, left more than £218 million in RO payments to be mutualised – a record amount.
The figure was more than six times larger than the 2019/20 period and more than double the previous record amount of £97.5 million set in 2018/19.
Utility Week has contacted Ofgem and asked how many retailers have failed to make payments and how much is owed but received no response at the time of publication.
Charles Hargreaves, Ofgem enforcement and emerging issues deputy director, said: “There has never been a more important time to make use of sustainable energy, and schemes such as the Renewable Obligation Certifications reduce carbon emissions from the supply of electricity.
“It is important suppliers follow through on their obligated payments not only to support consumer interests, but also the wider energy market ecosystem and the UK’s 2050 net zero ambition.”
The theme of balancing security of supply, decarbonisation and affordability sits at the heart of the agenda of the Utility Week Forum, which will take place in London on 8-9 November. Find out more here.
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