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Five UK suppliers given warning over payments to renewable energy scheme

Ofgem tells Orbit, Simply Your Energy, Delta, Social Energy Supply and Whoop they could lose licences

The energy regulator has threatened to strip five suppliers of their licences after they failed to hand over more than £500,000 collected from customers’ bills to help pay for a renewable energy support scheme.

Ofgem warned Orbit Energy, Simply Your Energy, Delta Gas and Power, Social Energy Supply and Whoop Energy to pay a total of £575,000 into the pot used to support small-scale renewable energy projects such as rooftop solar panels “immediately” or face enforcement action.

The suppliers all missed a payment deadline of 10 November and if they fail to comply with the latest order from Ofgem “they could end up having their licences revoked or face a financial penalty”, the regulator said.
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A struggle to meet industry payment obligations is often viewed by industry experts as an early sign of financial distress, which could ultimately lead a company to collapsing out of the market.

The UK’s energy market faces an unprecedented spate of company collapses this winter after a global surge in gas market prices that has caused the wholesale cost of gas and electricity to climb to record highs in recent months.

Since the beginning of September, 19 energy suppliers have gone bust, leaving more than 2m households in need of a new supplier.

The bulk of the outstanding cash earmarked to support the government’s renewable energy feed-in tariff scheme, more than £450,000, is owed by Orbit. The company was told last week by the electricity system administrator, Elexon, that it had defaulted and would not be allowed to register new customers on the system’s IT infrastructure.

Delta Gas and Power and Whoop Energy owe the energy regulator £46,701 and £19,013 respectively towards the feed-in tariff scheme. The pair were also late paying the regulator to support the government’s support scheme for large-scale renewable energy projects such as offshore wind and solar farms.
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They were given until the end of last month to pay their outstanding balances, plus interest, or face the possibility that the regulator may choose to revoke their supply licenses.

The final warnings come less than a fortnight after Ofgem promised to reform the energy market, and begin “raising the bar” on its standards for supplier finances to ensure they offer “a sustainable business model” that minimises risks to consumers.

Simply Your Energy and Social Energy Supply owe the regulator £28,353 and £28,735 respectively under the feed-in tariff.

The energy crisis could cost each home in Great Britain an extra £120 to cover the expense of dozens of energy supplier collapses this winter, which would plunge hundreds of thousands of households into fuel poverty for the first time.

Consumers in England, Scotland and Wales could be on the hook for a total of £3.2bn to cover the costs left behind by bust gas and electricity providers, on top of paying for record gas and electricity market prices, according to analysts at Investec.

The bank warned of a “substantial” burden on households to provide a safety net for the customers of bust suppliers, including the largest to go under so far, Bulb Energy, which plunged into a special administration process last week.

“The meltdown in the supply market is likely to see substantial additional costs land on every GB household, hardly welcome when fuel poverty is an issue, inflation is an issue, and commodity costs look set to push energy bills up,” the wealth management group Investec said.