Robin Hood Energy owes another £12 million in environmental taxes to the Government, but has said it is not likely to be able to pay.
The company’s customer base was sold by Nottingham City Council to British Gas owners Centrica for a figure understood to be around £26 million.
It is not yet clear whether Government energy regulator OFGEM will be able to claw back the £12 million owed to them from the fee paid by Centrica to the city council, however OFGEM has said it will ‘take other action’ to retrieve the money owed.
If so, this would further impact the city council’s losses from the venture, which it is understood the city council previously estimated to be £38 million.
The latest bill relates to Renewable Obligation Certificates (ROCs).
Under the rules, energy companies which don’t produce their own energy – such as RHE – are obliged to pay for ROCs, which then fund large-scale renewable energy projects.
However, RHE has not purchased ROCs, and has told OFGEM it is not likely to be able to pay.
Failing to purchase ROCs is not a new problem for the company – last year OFGEM issued a £9.5 million bill and threatened to withdraw RHE’s operating licence.
At the time this meant the company had to go to its ‘parent’ – Nottingham City Council for a loan.
It is not clear whether it will do the same this time, but documents leaked in September revealed city council bosses were concerned that any further financial assistance to RHE could breach state aid laws.
Now, OFGEM has issued a technical notice known as a Final Order, and demanded payment of £12,057,879.42, plus interest which is accruing daily.
It states: “The authority (OFGEM) has engaged with RHE and sought suitable assurances (for example, a bank guarantee, confirmation of undrawn credit facilities, or confirmation of support from a parent company or other investor) that RHE will be in a position to make payment of the outstanding sums and interest.
“RHE has refused or failed to provide the authority with satisfactory assurances that it will be able to make the necessary payment(s) within the late payment period.
“The authority considers it important to protect the integrity of the RO scheme, which is a government scheme designed to incentivise the uptake of renewable electricity within the UK.
“A key aim of the scheme is to encourage UK electricity suppliers to obtain an increasing proportion of the electricity they supply from renewable sources.
“Compliance with regulatory obligations, including financial obligations, is not optional. Suppliers must meet these obligations in full and on time.
“The authority is not in the business of providing commercial credit to suppliers and will not do so.
“The RO scheme has been in place since 2002 and there is no excuse for suppliers not to be aware of their obligations and ensure they are in a position to meet them, whether by holding sufficient ROCs or having sufficient funds available to make the necessary payments.
“The authority notes that RHE was the subject of a notice of proposal of a Final Order in relation to the Renewables Obligation in the previous scheme year.
“It subsequently paid its obligation in relation to that scheme year.
“The authority has taken RHE’s payment history into account in deciding to issue this notice of proposal.
“If RHE fails to comply with the FO by making the required payment(s) the authority may initiate the process of revocation of the licence or take other action to enforce payment.”
Councillor Andrew Rule is the leader of the Conservative group on Nottingham City Council, and said: “Given the Final Order OFGEM has issued against Robin Hood Energy for £12 million it is hard to see how this will not increase the council’s write off on its outstanding lending to Robin Hood Energy.
“As the Leader of the Council appears to be Nottingham Labour’s lead spokesperson on Robin Hood Energy urgent clarification is required from him on this point.”
Nottingham City Council and Robin Hood Energy declined to comment.