Utility Week

16 | 23RD - 29TH NOVEMBER 2018 | UTILITY WEEK This week RO shortfall triggers mutualisation Ofgem to publish the level of the shortfall, which will then be mutualised, after an external audit Ofgem has confirmed a mutuali- sation process will be triggered following a shortfall of payments into the Renewables Obligation (RO) late payment fund. The industry regulator said an external party has been appointed to carry out an audit. Once completed, Ofgem will publish the level of the shortfall, which will then be mutualised for the first time ever. A spokesperson for the regulator said: "Suppliers that have not met their obligations are in breach of the Renewables Obligation Orders and Ofgem stands ready to take action as needed to secure good outcomes for consumers." In a further statement, Ofgem announced that a shortfall of payments into the levelisation fund for the feed-in tariff (FIT) scheme has also triggered a mutual- isation process. The spokesperson added: "To ensure consumers continue to benefit in full from the scheme, Ofgem will be issuing reduced payments to complying FIT suppliers and will issue invoices to these suppliers requesting mutualisation payments." The regulator said it is similarly ready to take action against suppliers in breach of the Feed-in Tariff Order. Last month it was revealed an "unprecedented" 34 suppliers had missed the 1 September deadline for meet- ing their obligations under the RO scheme. Earlier this month an industry source told Utility Week suppliers still owed more than £50 million following the 31 October deadline for late payments. Another industry insider suggested the figure could be as high as £70 million. AJ ENERGY Spark in merger talks after RO failure Spark Energy has entered merger negotiations with another energy supplier aer missing £14.4 million in Renewables Obligation (RO) payments. The company blamed rising wholesale costs and the govern- ment's decision to introduce a price cap on energy bills for its failure to meet the 31 October deadline for late payments. The firm said in a statement: "Due to its strong growth, Spark is eligible for annual Renew- ables Obligation Certificates (ROCs) payments, and despite having met all its payments in previous years, this year it missed its annual payment… in common with an unprecedented number of other suppliers." Chief executive Chris Gauld said: "We have been in discus- sions with a number of other energy companies who are in the same boat. As a result, we are now in merger negotiations with another, medium-sized UK energy supplier and both of us believe this offers a long-term solution." ENERGY SSE profits plunge by more than 40pc SSE has announced a fall in adjusted pre-tax profit of more than 40 per cent in its latest set of financial figures. The company posted its interim results on 14 November for the six months to 30 Septem- ber, which include a 40.9 per cent fall in underlying pre-tax profit, to £246.4 million. The firm also posted a reported pre-tax loss of £265.3 million for the same time period. Earlier this month, it was revealed that the merger between Npower and SSE's retail arm was being delayed because of "adverse developments in the UK market", such as the fact that both have lost retail custom- ers. SSE retail customer numbers fell by 460,000 to 6.48 million in the year to September. ENERGY Npower expects loss after customer exits Npower has lost half a million customer accounts since the beginning of 2018 – about a tenth of the previous total – according to parent company Innogy. The supplier is expected to post a loss over the full financial year, Innogy chief financial officer Bernhard Günther revealed in a media call covering the group's third-quarter results. Innogy did not provide any specific figures for Npower's financial performance during the period aer reporting the com- pany's income and expenses as discontinued operations in prep- aration for its planned merger with the retail arm of SSE. Renewables: suppliers 'in breach' of Obligation Stock watch Drax shares fell sharply between 13 and 16 November, which coincided with the European Court's ruling on 15 November to overturn a 2014 decision by the European Commission to authorise the capacity market scheme under state aid rules. The Drax share price closed at 427.2 pence on 13 November, before falling to 387p at market close on 15 November and again to 376.2p at market close on the following day. Finance & Investment 440 420 400 380 360 DRAX SHARE PRICE, FIVE DAY 26 Oct 2 Nov 9 Nov 16 Nov DRAX SHARE PRICE, ONE MONTH 440 420 400 380 360 15 Nov 16 Nov 19 Nov 20 Nov pence pence

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