Ofgem takes action over payment shortfall

Publication date
21st November 2018
Information type
Policy area

Under the government’s Renewables Obligation schemes, suppliers who do not source the required proportion of electricity from renewable sources have to pay into a buy-out fund administered by Ofgem.

The amount of payments outstanding into the buy-out fund for 2017-2018 at 31 August was £102.9 million.

Suppliers had until 31 October to pay outstanding sums into the late payment fund to meet their obligations.

Ofgem confirms today that, subject to review by an auditor, a shortfall of £58.6million remains.

Suppliers who have not met their obligations in full are in breach of the Renewables Obligation Orders.

Ofgem has today launched investigations into Economy Energy and Spark Energy over their non-payment and will seek to ensure the outstanding amounts are paid.

Ofgem has also today given notice that it requires two other non-compliant suppliers – URE Energy and Eversmart – to deliver all outstanding payments by 31 March 2019 through monthly instalments.

If they fail to do so, Ofgem is ready to issue a final order to require full payment.

Separately, there is a shortfall of supplier payments into the periodic levelisation fund for the second quarter of Year 9 of the government’s Feed-in Tariffs scheme which is administered by Ofgem.

This scheme provides payments to owners of small-scale renewable generators and is funded through levies on suppliers.

Suppliers who have failed to pay by the levelisation deadline are in breach of the Feed-in Tariffs Order.

The total outstanding shortfall for the scheme is £4.2 million.

Ofgem will shortly write to suppliers who did not meet their obligations in full under the Feed-in Tariffs scheme advising them that they are non-compliant and the matter has been referred to the regulator’s enforcement team for consideration.

Shortfalls in the late payment fund for the Renewables Obligation scheme and the levelisation fund for the Feed-in Tariffs scheme will trigger mutualisation. This means that suppliers who have complied with their obligations will be required to make up the shortfall.

In both instances Ofgem will seek to secure the best outcomes for consumers and the wider energy market.

Notes to editors

1. Links to the notices on the launch of the investigations are here:

https://www.ofgem.gov.uk/publications-and-updates/investigation-economy-energy-s-compliance-its-renewables-obligations

https://www.ofgem.gov.uk/publications-and-updates/investigation-spark-energy-s-compliance-its-renewables-obligations

2. The Renewables Obligation scheme is a government scheme to support large-scale renewable electricity projects in the UK. It places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. Ofgem administers the scheme on behalf of government. More information is here: https://www.ofgem.gov.uk/environmental-programmes/ro

3. The Feed in Tariffs scheme is a government programme designed to promote the uptake of smaller scale renewable and low-carbon electricity generation. It requires participating electricity suppliers to make payments on both generation and export from eligible installations. Ofgem administers the scheme on behalf of government. More information is here: https://www.ofgem.gov.uk/environmental-programmes/fit/about-fit-scheme

Further information

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