Energy suppliers are increasingly failing to meet legal requirements on environmental, efficiency and social programmes.
Ofgem has revealed a 23% increase in incidents where a supplier has failed to comply with a scheme’s legal requirements.
The regulator has warned that failing to meet legal obligations will “ultimately result in extra costs for bill payers”.
Ofgem’s latest Supplier Performance Report also warns that “suppliers that perform poorly are more likely to face compliance action, including escalation or enforcement sanctions where appropriate”.
It adds: “Poor performance may also be an indication of underlying issues within a supplier, and this intelligence is shared with other regulatory teams in Ofgem.”
Conversely, suppliers that perform well are “more likely to be delivering scheme outcomes as intended, including a more positive experience for consumers”, Ofgem’s report states.
The report, which covers the second half of 2022, reveals that there were 85 incidents where suppliers failed to meet their legal obligations.
That is compared to 69 incidents of non-compliance reported during the same six-month period in 2021.
Types of non-compliance include missing deadlines set out in the relevant legislation or submitting inaccurate data to the regulator.
CFR (The Central Feed-in Tariff Register) non-compliances form the majority of the reported legislative incidents, accounting for 34% of the total.
Also significant were missed payment deadlines in relation to Renewables Obligation (RO) mutualisation (27.1%), missed data deadlines for FIT (Feed-in Tariff) levelisation (16.5%) and missed FIT levelisation payment deadlines (10.6%).
The report adds: “It is the responsibility of each supplier to have awareness of, and to meet their obligations in line with the relevant scheme legislative deadlines. However, we regularly engage with obligated suppliers ahead of legislative deadlines to highlight the actions required.”
Despite an increase in legislative incidents, suppliers recorded fewer administrative errors than in the past.
In total, suppliers reported 208 administrative errors between July 2022 and the end of the year, representing a 42% decrease compared to the previous year.
Among these the most common type of errors were made by suppliers participating in the FIT scheme. Specifically, issues on the FIT CFR and issues with FIT Biennial Meter Verification account for 75.0% and 13.9% of administrative incidents, respectively.
Ofgem’s report adds: “Where suppliers are making administrative errors, this requires additional resources to be allocated for investigation and resolution. This can potentially lead to delays in generators receiving support under the scheme.”
Total non-compliance incidents by type
| Type of incident | Incidents
July to Dec 2021 |
Incidents
July to Dec 2022 |
Change |
| Administrative | 363 | 208 | -42.7% |
| Legislative | 69 | 85 | +23.2% |
| Total | 432 | 293 | -32.2% |