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Consumers ‘picking up the tab’ for energy suppliers’ failure to pay industry bills

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Written by: Emma Lunn
02/10/2019
Citizens Advice has accused energy suppliers who haven’t paid their Renewables Obligations of passing costs on to customers.

Ofgem has ordered four energy suppliers to pay a total of £14.7m in Renewables Obligations by 31 October 2019, prompting Citizens Advice to criticise the levels of debt energy suppliers are allowed to build up.

Under the government’s Renewables Obligation schemes, suppliers have to demonstrate they have sourced enough electricity from renewable sources to meet their obligation by presenting Renewables Obligation Certificates (ROCs) to Ofgem by 1 September.

If suppliers do not have enough ROCs to meet their obligation, they must make up the shortfall by paying into a buy-out fund administered by Ofgem by 31 August.

Delta Gas and Power, Gnergy, Robin Hood Energy and Toto Energy all missed the original deadline of 1 September, and have not provided Ofgem with adequate assurances that they will pay by the late payment deadline.

If suppliers fail to pay by 31 October, Ofgem could start the process to revoke their licence to supply energy.

Gillian Guy, chief executive of Citizens Advice, said: “When energy suppliers fail to pay their bills, it’s customers who end up picking up the tab through higher bills of their own. This is not a new problem. Last year less than half of the initial unpaid Renewables Obligation (RO) was ever paid back.

“Energy suppliers should not be allowed to build up these levels of debt in the first place. The government needs to bring in legislation to require companies to make industry payments – including ROs – more regularly. This would limit the cost to customers when suppliers fail to pay or exit the market.”

Mary Starks, executive director of consumers and markets at Ofgem said: “The Renewables Obligation schemes provide important support to renewable electricity generators and play an important role in Great Britain’s journey to a net zero emission economy by 2050.

“Supplier failure to comply with the schemes undermines the integrity of the schemes and is unacceptable. 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.”

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