Symbio told Covid is no excuse for late RO payments

Ofgem has rejected protestations by energy retailer Symbio that a £100,000 penalty for failing to pay into renewables schemes on time was disproportionate.

The supplier said the regulator had “failed to make sufficient allowance for the particular challenges posed by Covid”.

As a small supplier that had “effectively” been trading for just a year when the pandemic hit, Symbio claimed the level of the fine – representing more than a third of its operating profit for 2020 – was excessive. Symbio pointed out that in similar cases of late payment, Ofgem had not issued fines and said it had been “unfairly singled out for unduly punitive sanction”.

It went on to state that as well as “disproportionally” affecting smaller, newer entrants to the market, penalties of this magnitude ultimately harmed the consumer, as competition would be reduced.

Ofgem rejected the arguments, pointing out that the fine equated to 8.7 per cent of the “substantial” total paid late – just under £1.2 million. It added that other smaller players had managed to meet their obligations and that in separate cases of late payment by other suppliers, settlements had been reached or companies had exited the market. It stressed that “no other supplier made a series of late payments similar to Symbio”.

The penalty was first announced in January. It relates to deadlines missed last year to pay into the renewables obligation (RO) scheme buy-out fund or present a required number of RO certificates by the initial deadlines of 31 August and 1 September 2020. Symbio then missed the 31 October late payment deadline by a fortnight, making payment on 13 November.

The retailer also missed three other payment deadlines over a four-month period for the government’s environmental schemes. This included two FIT quarterly levelisation payments, which pay owners of small-scale renewable generators and is funded through levies on suppliers. These payments, due in August and November, were respectively fully paid in September and December.

Symbio also failed to pay one RO mutualisation payment, which suppliers must make to cover the shortfall in the previous year, on time. This payment of £55.80 was due on 31 August but was not paid until 19 October.

Symbio complained that Ofgem had treated this final payment as of a similar gravity to the FIT amounts, which were each over £300,00. The supplier’s counsel said: “The regulator has failed to distinguish between the severity of the breaches.”

However, Ofgem contended that it considered “the contraventions are of moderate seriousness when considered together.”

On the background to the late payments, Symbio’s counsel said Covid “presented the company with exceptional challenges which are unlikely ever to be repeated”.

“We submit on behalf of Symbio that Ofgem has failed to make sufficient allowance for the particular challenges posed by Covid, given the sensible, if I may say so, policy of forbearance that it was asked to adopt and given its inability to access other forms of finance.

“Ofgem knows that the policy of forbearance would impact the financial position of companies and in particular, I may submit to you, the position of a small challenger company. I say, for the avoidance of doubt, that the market and consumers are best served by challenger companies not being crushed by action by the regulator because competition is inherently of benefit to them.”

The regulator responded that it appreciated the efforts energy suppliers have gone to in order to keep customers connected and that difficult decisions in a fluid situation had been necessary.

“However, it is the responsibility of all suppliers to ensure they can meet their obligations, and other suppliers, struggling with similar financial pressures, have done so including small or new suppliers. The authority repeatedly reminded suppliers of these upcoming obligations during the summer of 2020 and Ofgem engaged in extensive correspondence with Symbio reminding it of its obligations.”

Having considered Symbio’s arguments, as well as two unpublished submissions from a member of the public and Centrica, Ofgem today (5 May) confirmed its proposal to impose a penalty of £100,000.