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Customers face “picking up the tab” for suppliers failure to pay industry bills, says Citizens Advice

1 October 2019

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.”

Background

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

  1. Citizens Advice includes the national charity; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
  2. Citizens Advice is the statutory consumer advocate for energy and post. We provide supplier performance information to consumers and policy analysis to decision makers.
  3. The Citizens Advice Witness Service provides free, independent support for prosecution and defence witnesses in every criminal court in England and Wales.
  4. Citizens Advice offers Pension Wise services at 500 locations in England and Wales.
  5. Citizens Advice’s services are free, independent, confidential and impartial, and available to all regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  6. To get advice online or find your local Citizens Advice, visit citizensadvice.org.uk
  7. For consumer advice, call the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 to talk in Welsh.
  8. We helped 2.6 million people face to face, by phone, email and webchat in 2017-18. For service statistics see our monthly publication Advice trends.
  9. Citizens Advice staff are supported by over 23,000 trained volunteers, working at over 2,500 locations in England and Wales.