Ofgem issues final warning to energy suppliers

Ofgem has issued GnErgy a final order to pay its Renewables Obligations (RO). The Hampshire-based community energy supplier needs to make an outstanding payment of almost £700,000, else risk having its operating licence taken away by the regulator.

Does this mean yet another energy supplier is about to go bust?

What’s the problem?

Under the terms of the RO scheme, all energy suppliers must be able to prove that they have sourced enough electricity from renewable sources to meet the required obligations.

In order to provide proof, suppliers had to present their Renewable Energy Certificates (ROCs) to Ofgem by September 1. If suppliers couldn’t supply enough ROCs to meet their obligations, they had to make up the shortfall by paying into a buy-out fund administered by Ofgem by 31 August.

And this has caused several suppliers a huge headache.

Earlier this month, Ofgem ordered four suppliers, one of which was GnErgy, to make the necessary payments into the buy-out fund or present the right number of ROCs by October 31.

Things looked bleak for all four suppliers, but Robin Hood Energy and Delta Gas and Power managed to make the payments. TOTO, on the other hand, couldn’t meet either obligation and has since gone bust - EDF Energy has been appointed the Supplier of Last Resort (SoLR)

And now GnErgy appears to be on the brink, having failed to provide satisfactory assurances that it will be in a position to make the payment of £673,876.62 by tomorrow.

A spokesperson from GnERGY said: “Our appeal to Ofgem to allow us a payment plan has been declined and we do respect their decision.

“Small companies cannot survive selling energy alone, we have therefore remodelled ourselves and established a TRIPARTIE ALLICANCE with LOGICOR and SENAPT. This will also enhance our current debt collection which stands at £1.6 million and we do hope to retrieve this amount to meet our commitments., while still negotiating with Ofgem.”

Ofgem has revealed that there are more, as yet unnamed, suppliers who have given assurances that they will make the necessary payments by the October 31 deadline.

If not, Ofgem has said it will take “appropriate enforcement action” against any suppliers who can’t comply, which means we could see even more suppliers go bust.

Why do energy suppliers go bust?

Of the multiple energy suppliers that have gone bust over the last couple of years, most have highlighted a number of issues that have contributed to their demise, including RO payments.

Other problems include an increase in wholesale prices and the energy price cap, all of which have affected the rates suppliers can charge and put pressure on existing tariffs, especially smaller suppliers that provide loss-making deals to try and encourage households to switch energy deal.

What to do if your energy supplier goes bust

If your energy supplier goes bust, don’t panic - Ofgem’s ‘safety net’ means there’ll be no loss of service and your gas and electricity supply won’t be cut off.

The regulator will appoint a new supplier to take over your contract, and you’ll then pay them for the gas and electricity you use. It’s unlikely your new supplier will place you on their most competitive rate, so once appointed, compare energy suppliers with UKPower and switch to a better deal.

Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.

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