Ofgem has found that two of the UK's biggest renewable subsidy funds have a funding shortfall worth more than £60 million. The reason is that energy suppliers have been late in making their payments to the funds, which were independently reviewed by an auditor.
The energy regulator confirmed that the shortfall is worth £58.6 million, and it affects the Renewables Obligation Scheme's buy-out fund. This scheme requires suppliers who aren't sourcing sufficient renewable electricity to pay into the Ofgem managed fund.
The payments are used to cover the costs of the renewables subsidy scheme, and the balance is given proportionally to suppliers according to the amount of renewable-based electricity supply they are currently producing.
Last year, however, the fund gap stood at a shocking £102.9 million, and Ofgem implemented a two-month deadline to suppliers to meet their outstanding payment contributions.
An investigation has now been launched into two suppliers - Spark Energy and Economy Energy - for non-payment, and if the suppliers are found to be in breach of their obligations under the ROO, they will be subject to legal recovery. Eversmart and URE Energy have also been required to bring their account payments up to date by the 1st April next year via a monthly payment instalment scheme.
Spark Energy is currently in talks with an unnamed energy firm in order to better cement its future in a struggling energy industry, which has been affected both by rising wholesale costs and energy price caps. A spokesman said that the company was fully prepared to meet its payments in line with the regulator's mandate.
Ofgem has also found a similar gap in payments due by suppliers to the FIT tariff. The gap is worth £4.2 million, and the regulator is progressing recoveries.