Nottingham City Council will lend Robin Hood Energy £9.5 million to pay off its renewables obligation (RO) payments.
The retailer, which was set up by the council, was named by Ofgem as one of four suppliers which failed to meet the initial RO payment deadline, leaving them owing a total of £14.7 million.
The supplier’s chief executive Gail Scholes said: “We have agreed an arrangement with Nottingham City Council which will see us paying our renewable obligations certificate (ROC) payment in full by the October deadline.
“The arrangement will see us paying our shareholder back over the next six months with interest.”
Meanwhile a council spokesperson said: “Nottingham City Council has agreed to continue its support of Robin Hood Energy to enable it to continue the successful work it has undertaken to date.
“Our executive board has today agreed to provide assistance to RHE to enable it to make its renewables obligation in line with the Ofgem requirements. This will be repaid by the end of this financial year at a state aid compliant rate of interest.”
The loan was first report by the Nottingham Post.
Speaking to Utility Week previously, the supplier said it understood it had been given until March next year to pay what it owed after asking Ofgem for a payment plan.
This it said was to help it manage business better in the light of uncertainty caused by several factors, including the possibility of a no deal Brexit.
As well as this the company says that when the Capacity Market is eventually reinstated, it will have to make an additional multi-million pound payment.
The Post also reported that an auditor had warned that the city council’s accounts could not be signed off until an annual audit of Robin Hood Energy was published.
This was thought to be dependent on a letter of guarantee being published by the city, which had not been published at the time of the auditor’s comments.
Last week it was announced that councillor Neghat Khan will take over from Steve Battlemuch as the new chair of the energy company.
Battlemuch, who took over from Alan Clark in 2017, will remain as a board director.
The three other suppliers named by the regulator as owing RO payments are:
- Delta Gas and Power Ltd – £91,937
- Gnergy Ltd – £637,876
- Toto Energy Ltd – £4,555,880
Under the RO scheme, 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 buy-out fund administered by Ofgem by 31 October.