Eon UK boss Michael Lewis has called for the sector to stamp out the drivers of poor behaviour after recent supplier failures left behind a £300 million “black hole of debt”.
Lewis was speaking in response to the news that more than £33 million is to be mutualised after suppliers failed to pay their renewables obligation (RO). It is the third year in a row that missed payments have been mutualised.
Ofgem revealed earlier this week that a total of 10 energy suppliers owe more than £17.8 million in RO payments but that it will not be able to pursue them because they have either ceased trading or gone into administration.
From analysing Citizens Advice’s 2019 report, Picking Up the Pieces, as well as Ofgem’s latest figures on late payment distributions, Eon calculates that failed suppliers have left behind £300 million in various debts.
Lewis said: “In the last three years, more than 30 suppliers have left this market, leaving behind a £300 million black hole of debt, outstanding customer balances and unpaid renewable energy commitments – with the costs having to be picked up by well-run suppliers and their customers.
“Responsibility for that obviously lies with those suppliers that failed to meet those obligations, but after three years and many lost millions you have to question why the changes made to industry rules have failed to put a stop to this issue.
“The drivers of poor behaviour in this market must be stamped out; the current system allows and even encourages abuse by allowing some suppliers to use funds for other purposes – such as setting unsustainably low tariffs – only to crash out of the market when the bill comes due and leave others to pick up the bill.”
Suppliers using cheap tariffs to undercut competition has been a source of frustration for the sector, with some newer entrants operating on unsustainable business models in order to do so.
In a recent interview with Utility Week Green Energy UK boss Doug Stewart said the market was “broken” in terms of retailers trying to deliver very cheap tariffs at great cost to the industry.