Ofgem gives notice of proposal to fine Delta Gas and Power Ltd (Delta) £100,000 for late payments into flagship renewables scheme
Press release
- Publication date
- Company
- Delta Gas and Power Limited
- Industry sector
- Supply and Retail Market
- Scheme name
- RO
- Energy regulator, Ofgem, proposes to fine Delta due to missed payments into legally binding schemes
- Delta was required to pay the due sum of £530,809.20 plus interest into the Government Renewables Obligation (RO) scheme by 31st October 2022, but this was not paid until the end of November 2022
- Delta’s behaviour has drawn significant Ofgem resource in the context of difficult market conditions. Ofgem considers that Delta’s contraventions were deliberate as Delta knowingly failed to meet its scheme obligations on time. Ofgem therefore proposes to fine the company £100,000.00
Today (Thursday 26 January 2023), energy regulator, Ofgem, has issued a notice of proposal to fine Delta Gas and Power Ltd (Delta), £100,000.00, reduced to £70,000 if Delta agrees to settle, after it failed to pay the due sum of £530,809.20 (plus interest) into the Government Renewables Obligation (RO) scheme by the final deadline of 31 October 2022. This was despite multiple reminders, a Final Order being made, and accruing late payment interest.
Delta is a non-domestic energy supplier, serving 1,690 business customers in the UK.
The government-run RO schemes in Great Britain and Northern Ireland support large-scale renewable electricity projects, and place an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources, which is crucial to the future of homegrown secure energy.
In this case, Ofgem considers Delta’s actions to be deliberate in that Delta knowingly failed to meet its obligation on time.
Cathryn Scott, Director of Enforcement and Emerging Issues, said:
“It is not acceptable for suppliers to delay meeting their obligations until enforcement action is taken by Ofgem. Compliance and enforcement engagement is a resource and time intensive activity, and we take a very dim view of any repeat offenders.
“Schemes like the Renewables Obligation provide vital support to renewable electricity generators and are crucial to building a green energy system, helping Britain hit the Government’s net zero carbon emissions targets and shoring up our homegrown energy security. Suppliers that do not make payments on time undermine the integrity of these schemes, can make unfair financial gains, and could ultimately leave consumers and other suppliers to pick up the tab. This proposed fine sends out a strong message that late payment of these obligations will have consequences.”
This is the second time Delta has been subject to enforcement concerning its Renewables Obligation payments, as Ofgem issued Delta with a Provisional Order in respect of its 2020/21 RO. All other active suppliers in the GB energy market paid their 2021/22 RO on time. Delta only paid after extensive compliance engagement and formal enforcement action by Ofgem.
The effective administration of the environmental schemes by Ofgem, worth many billions of pounds, is dependent on the companies meeting their obligations by the legislative deadlines.
Failure to do so leads to Ofgem’s resources being diverted from other activities and could undermine the regulator’s ability more broadly to protect the interests of consumers. Shortfalls in RO scheme funds may also trigger mutualisation, leaving other suppliers to make up the shortfall, which is unacceptable across the industry.
Delta now has 21 days to respond to the notice of intent, after which an official decision will made on whether to issue the penalty.
Notes to Editors
The RO is an annual obligation and the company was required to present Renewables Obligation Certificates (ROCs) or make a payment in lieu by 1 September 2022. Delta failed to make the expected payment of £530,809.20, and was issued with a Final Order on 27 October 2022 requiring the company to pay the outstanding sum, plus accrued interest by the final late payment deadline of 31 October 2022.
On 17 and 18 November 2022, Delta paid £400,000 towards its RO, and on 25 November 2022, Delta paid the remaining balance of £136,797.16.
Ofgem has a statutory requirement to issue a Notice of Intention to Impose a Penalty before a penalty is issued. The statutory requirement includes a 21-day period for representations to be made by Delta, after which an official decision will made on whether to issue the penalty.
The Renewables Obligation schemes are government schemes in Great Britain and Northern Ireland to support large-scale renewable electricity projects in the UK. They place an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. Ofgem administers the schemes on behalf of government.
ROCs are certificates issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can trade ROCs with other parties. ROCs are ultimately used by suppliers to demonstrate that they have met their obligations.
Shortfalls in the late payment fund for the Renewables Obligation scheme will trigger mutualisation if the relevant threshold (£63.7 million for England and Wales for 2021/22, and £1.54 million for Scotland) is met. This means that suppliers who have complied with their obligations will be required to make up the shortfall.
The Final Order was issued on the grounds that (a) Delta was likely to contravene the requirement to pay the outstanding RO sum of £530,809.20, plus accrued interest, by 31 October 2022; and (b) an Order was required for the purpose of securing compliance with that requirement. was issued on the grounds that (a) Delta was likely to contravene the requirement to pay the outstanding RO sum of £530,809.20, plus accrued interest, by 31 October 2022; and (b) an Order was required for the purpose of securing compliance with that requirement.