Ofgem has taken away small energy supplier URE’s supply licence after it failed to pay its Renewables Obligation bill. The supplier owes over £200,000.
Under the Renewables Obligation, energy suppliers are obliged to buy a certain amount of power from renewable sources. If they do not, they pay into a buyout fund.
The cost of the RO is added to the customer bill and the suppliers then pay into the fund at the end of the year.
Many of the small suppliers that have lately gone bust failed to pay into the RO buyout fund as they struggled to stay afloat. Many used the money for working capital as they got into trouble after wholesale prices rose and counterparties tightened terms.
The buyout fund was £58.6m light for the 2017-18 period. Ofgem acknowledged the scale of the problem last November, announcing it was tightening rules for new market entrants. Within days, several more firms that owed millions in RO payments had ceased trading, with two more casualties in recent weeks.
Ofgem told URE to pay the £209,013.78 owed for 2017-18 by no later than 5pm on 31st March 2019. It hasn’t paid and after being given more than the statutory three months to do so, the regulator has revoked its licence.
Cornwall Insight suggests the RO buyout fund will be up to £43.8m short for 2018-19, indicating that more small suppliers may be set to fail.
The order against URE takes effect from 14 September.