Ofgem says it hopes to collect more Renewables Obligation (RO) funds from failed energy suppliers, after revealing it managed to redistribute just £3.7 million in a period which saw the mutualisation of half a billion pounds.
Last week, Utility Week revealed that since 2016, the regulator has only managed to recover late payments from four suppliers overall. The vast majority of this (£3.4 million) came from GB Energy, which left the market owing £7.1 million.
In response, Ofgem explained that during the administration process there are usually a number of creditors claiming funds from the administrator, which has an impact on how much it receives back.
A spokesperson told Utility Week: “This process may take a few years. The funds we have received and dispersed so far have been from suppliers who went into administration prior to the increase in gas prices in 2021. These processes are common for companies undergoing administration and not specific to energy suppliers or ROs.
“We hope to start receiving further funds from the more recent administrations in due course which we will redistribute accordingly and as a priority. But the longer-term solution to this issue is a more financially resilient energy sector where suppliers are less likely to go bust in the first place as we move towards a cheaper, cleaner, homegrown energy system.
“That is precisely what Ofgem is creating via the robust changes we have and are introducing.”
Last year a High Court judge ordered failed energy retailers to hand over unpaid RO payments to Ofgem in what the regulator labelled a “significant outcome”.
The case sought to determine whether insolvent retailers are liable for monies owed both via the RO and customer credit balances.
Mr Justice Zacaroli ruled that Ofgem is a creditor of these companies for liabilities due under the RO and that it can therefore claim for owed payments from the insolvent estates.
He further ruled that Suppliers of Last Resort (SoLRs) are also entitled to be treated as creditors for the credit balances they have honoured for the customers of failed suppliers, meaning they too can claim back costs from the insolvent retailers.