Renewables Obligation Late Payment Distribution 2018 - 2019
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Publication date
Scheme name
RO
We redistributed the 2018-19 RO late payment fund on 04 December 2019. We paid a total of £109,529,764 to suppliers who presented Renewables Obligation Certificates (ROCs) this year. Suppliers received £6.80 per ROC presented after the redistribution of the buy-out fund. From the redistribution of the late payment fund, they have received an extra £1.02 per ROC. This means that the final recycle value for 2018-19 is £7.82.
Details of the late payments we received from suppliers (including interest) and the amounts we redistributed for each RO scheme are in Table 1 below:
Table 1
We redistributed late payments to the suppliers on the same basis as the buy-out fund, i.e. in line with the proportion of the total ROCs they presented across the three schemes. Therefore, each supplier received the same proportion of the late payment fund as they did from the redistribution of the buy-out fund.
As with the buy-out fund, the amounts we redistributed included interest earned on the funds while in our accounts, and are rounded down to the nearest pound.
Suppliers have until 1 September to present ROCs to us or make buy-out payments to meet their obligations. Suppliers who have not met their obligations in full by this date must make late payments by 31 October. Late payments incur a daily interest penalty, at an annualised rate of 5% + Bank of England base rate (so 5.75% this year). This is specified in RO legislation.
Forty-two supplier groups across 44 licences failed to meet their obligation by the deadline of 1 September, as outlined in Table 2:
Of the 42 supplier groups across 44 licences who failed to discharge their obligation by the deadline of 1 September, 23 licences have fully discharged their obligation by the late payment deadline of 31 October. The remaining 21 did not meet their obligation in full:
Whilst the above figures include interest due, the total shortfall is determined by reference to article 72 of the Renewables Obligation Order 2015 and article 48 of the Renewables Obligation (Scotland) Order 2009. As such, the interest paid during the late payment period is excluded from the total shortfall.
Therefore, the total shortfall amount across all RO schemes is £97,507,140.70. This is distributed across the schemes, as follows:
RO: £88,104,505.42
ROS: £9,402,635.28
NIRO: 0
As a relevant shortfall has been reached, mutualisation has been triggered for both RO and ROS. In line with the RO Orders, suppliers who discharged part of all of their obligation will be contacted to make quarterly payments to make up the shortfall, in proportion to their obligation. Further information on mutualisation can be found within chapter 7 of our Renewables Obligation: Guidance for Suppliers.
Of the suppliers who failed to comply by the 31 October late payment deadline, 16 are either in administration or have had their licence revoked.
On 29 October 2019 Ofgem issued a final order to Gnergy Ltd to compel the supplier to make the outstanding payment plus interest by 31 October 2019. On 31 October 2019, Ofgem issued Breeze Energy with a provisional order and Nabuh Energy with a provisional order, to compel them to pay all outstanding amounts plus interest by 31 October 2019.
Nabuh Energy Ltd, Planet 9 Energy and Hudson Energy, made payment shortly after the late payment deadline. Payments received after the late payment deadline total £38,695,643.72. This sum will be redistributed at a later date.
RO legislation does not provide for payments received after the late payment deadline. As such, the amount to be mutualised is calculated by reference to the total shortfall in the late payment fund as of 31 October and the mutualisation sum is not recalculated to account for payments received after the late payment deadline. We are unable to pursue Enforcement action against Brilliant Energy, Economy Energy Trading Limited, Electraphase Ltd, Eversmart Energy Ltd, Extra Energy Supply Limited, GEN4U, Iresa, One Select, Our Power Energy Supply Limited, Rutherford Energy Supply Limited, Snowdrop Energy Supply Limited, Solarplicity Supply Limited, Spark Energy Energy Supply Limited, TOTO Energy Ltd, Ure Energy Limited and Usio Energy as these suppliers ceased trading before obligations became due. We will seek to recover outstanding payments through the organisations’ Administrators where appropriate.
Through our work on these issues, Ofgem seeks to secure the best outcomes for consumers and the wider energy market.
Contact: REcompliance@ofgem.gov.uk