Customers face “picking up the tab” for suppliers failure to pay industry bills, says Citizens Advice
Citizens Advice has responded to an announcement by Ofgem that it has ordered four energy companies to pay £14.7 million in Renewables Obligations by 31 October 2019.
Gillian Guy, Chief Executive of Citizens Advice, said:
“When energy suppliers fail to pay their bills, it’s customers who end up picking up the tab through higher bills of their own. This is not a new problem. Last year less than half of the initial unpaid Renewables Obligation (RO) was ever paid back.
“Energy suppliers should not be allowed to build up these levels of debt in the first place. The government needs to bring in legislation to require companies to make industry payments - including ROs - more regularly. This would limit the cost to customers when suppliers fail to pay or exit the market.”
Citizens Advice research (Picking up the Pieces June 2019) showed that 10 failed domestic energy suppliers left behind an estimated £172 million in unpaid industry bills.
The Renewables Obligation scheme (RO) is administered by Ofgem on behalf of the government. Energy companies must participate to help fund the development of renewable electricity projects. The amount is worked out according to how much energy is supplied by each company.
Last year only 43% of the amount owed to Ofgem’s buy-out fund after the first payment deadline was paid. The scheme has a mutualisation mechanism, so that any shortfall over a threshold amount is left to industry to make up, with the cost eventually ending up on people’s bills.
Notes to editors
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