Renewables Obligation Late Payment Distribution 2017 - 2018
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- Publication date
- Scheme name
- RO
We redistributed the 2017-18 RO late payment fund on 30 November 2018. We paid a total of £44,571,252 to suppliers who presented Renewables Obligation Certificates (ROCs) this year. Suppliers received £5.42 per ROC presented after the redistribution of the buy-out fund. From the redistribution of the late payment fund, they have received an extra £0.43 per ROC. This means that the final recycle value for 2017-18 is £5.85.
Details of the late payments we received from suppliers 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.
Thirty-four suppliers failed to meet their obligation by the deadline of 1 September, as outlined in Table 2:
Of the 34 suppliers who failed to discharge their obligation by the deadline of 1 September, 20 have fully discharged their obligation by the late payment deadline of 31 October. The remaining 14 suppliers did not meet their obligation in full:
This resulted in a total shortfall of £58.6m, distributed across the schemes, as follows:
RO: £53,411,386.49
ROS: £4,418,135.49
NIRO: £816,702.44
The 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.
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.
We announced in a press release on 21 November 2018 that Ofgem has launched investigations into Economy Energy and Spark Energy over their non-payment and will seek to ensure the outstanding amounts are paid. We also announced that Ofgem has also 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.
In the cases of Ampower UK, Brilliant Energy and Planet 9 Energy, as their payments were made in full very shortly after the deadline, we will be seeking acknowledgement of their failure to discharge their obligation by the deadline.
If a supplier makes a payment after the late payment deadline, they will remain non-compliant and the mutualisation amount is based on the amount owing on 31 October 2018.
Since this announcement, Extra Energy and Spark Energy have ceased trading and had their licences revoked meaning that we are unable to pursue Enforcement action against these parties. Similarly, Future Energy Utilities, GEN4U and Iresa ceased trading earlier this year and have had their supply licences revoked during the obligation period. Electraphase and Snowdrop are also in the process of exiting the market. We will seek to recover outstanding payments through the organisations’ Administrators where appropriate.
Through our work on these issues, Ofgem will seek to secure the best outcomes for consumers and the wider energy market.
In the case of Click Energy, as a Northern Ireland supplier we have referred the matter to the Northern Ireland Authority for Utility Regulation for their consideration.
Contact: REcompliance@ofgem.gov.uk