It was the Christmas list no-one wanted to be on. This week, 14 energy retailers were named as those that had failed to stump up their Renewables Obligation (RO) fees in time for Ofgem’s late payment deadline of 31 October.

The defaults have led to an eye-watering £58.6 million shortfall in this key support mechanism for large-scale renewable electricity generation projects in the UK, triggering a mutualisation process among suppliers for the first time ever.

It’s not the best pre-holiday PR for anyone looking to be invited to the industry’s Christmas party.

And nor is it the cheeriest of festive stories for the sector as a whole – especially when coupled with the fact that since the initial deadline, two suppliers have gone bust – effectively leaving everyone else to pick up their share of the tab.

Add to this the three retailers that folded earlier on this year, and then the two more that are currently in the process of exiting the market, and you don’t have to be Ebenezer Scrooge to fear that the current scheme is humbug.

As has been pointed out in this column at regular intervals throughout the course of this year, the RO development is just the latest in a string of bad news stories for beleaguered energy retailers, already squeezed on profits and increasingly having to help bail out failing players and systems.

Many will be glad to see the back of 2018, although there seems little hopeful prospect of things improving about the RO situation in 2019, at least in the short term.

The regulator has given two non-compliant suppliers until the end of March to deliver on their outstanding debts by monthly instalments.

And while those that have missed the late payment deadline will still have to come up with their share of the mutualisation amount, they will receive nothing out of the scheme’s fund.

Without doubt, renewables are an ever more vital part of our country’s energy mix and deserve regulatory support.

However, this all seems to be stacking up as a recipe for more energy retail cashflow trouble ahead – along with potential pain for struggling suppliers and ultimately their customers.

It is a situation that only looks set to snowball.

 

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