Failed suppliers have left behind an unpaid Renewables Obligation (RO) bill of £72 million for 2018/19, according to BFY Consulting.
The figure is well above the thresholds for activating the mutualisation process, which last year was triggered for the first time after suppliers failed to make more than £58 million late buyout payments by the annual deadline on 31 October.
BFY Consulting also told Utility Week there will be a £5 million shortfall for 2019/20 due to further failures since the beginning of the year in April.
| Obligation Period | Payment Date | Covering | Total (£m) | SoLR (£m) |
| 2018/19 | 31/08/2019 | 01/04/2018 – 31/03/2019 | £ 5,355 | £ 72 |
| 2019/20 | 31/08/2020 | 01/04/2019 – 31/03/2020 | £ 6,314 | £ 5 |
Source: BFY Consulting
The numbers do not cover the debts of suppliers that are still operational but have nevertheless failed to meet their obligation in full.
Ofgem has issued provisional orders against Nabuh Energy and Breeze Energy over the £872,000 and £486,000 in late payments which they owe respectively, while Gnergy was slapped with a final order over its shortfall of £674,000.
Nabuh has insisted that its bill will be paid in full next week.
Under the government’s RO schemes, suppliers have to demonstrate they have sourced enough electricity from renewable sources to meet their obligation by presenting renewables obligation certificates (ROCs) to Ofgem by 1 September.
If suppliers do not have enough ROCs to meet their obligation, they must make up the shortfall by paying into a buyout fund administered by Ofgem by 31 August. They then have until 31 October to make any late payments.
If the remaining deficit exceeds the relevant shortfalls of £15.4 million for England and Wales and £1.54 million for Scotland then the mutualisation process will be activated.
Mutualisation has been a point of increasing concern and frustration among compliant energy suppliers who have to pick up the bill.
Recently Ofgem released its latest consultation on the supplier licensing review regarding ongoing requirements and exit arrangements and the mutualisation process was one issue it examined.
Under the proposals, a proportion of credit balances and government scheme costs will be protected (by a minimum of 50 per cent in the case of credit balances).
Furthermore, chief executive Dermot Nolan has proposed to introduce monthly RO payments.
Speaking at Utility Week Congress in early October, Nolan said: “There are elements of the SoLR process, the way ROs are issued and collected, that have given some firms the licence to be, shall we say, a little too venture-some in their activities.
“We are closing such gaps and I am conscious that some of the failures that have not been optimal and have been facilitated by firms that took too risky a strategy with their consumers’ funds.”