Robin Hood Energy, the energy supplier owned by Nottingham city council, has failed to pass on £9.5m in renewable energy subsidies after collecting them from customers through their bills.
The supplier has already claimed the sum from its customers, to be used to support renewable energy projects, but missed the deadline to pay its share of the money to the industry regulator, Ofgem last month.
Ofgem has said the troubled energy supplier could have its supply licence revoked if it fails to pay by the end of October.
In total, four of the energy suppliers – Delta Gas and Power, Gnergy, Toto Energy and Robin Hood – could lose their licences if they fail to pay a total of £14.7m to the government’s renewable support scheme.
Robin Hood, set up in 2015, owes the largest sum of money followed by Toto Energy which owes £4.5m.
Mary Starks, the executive director at Ofgem, said it is “unacceptable” for suppliers to shirk the renewable energy payments, and warned that suppliers “must meet their obligations, or pay the consequences”
which could mean losing their licence.
Gillian Guy, the chief executive of Citizens Advice, the consumer watchdog, said that if the energy suppliers fail to pay, it would be customers who end up picking up the tab through higher bills.
“This is not a new problem. Last year, less than half of the initial unpaid renewables obligation was ever paid back. Energy suppliers should not be allowed to build up these levels of debt in the first place,” she said.
Citizens Advice has called for the government to bring in legislation requiring companies to make industry payments more regularly.
“This would limit the cost to customers when suppliers fail to pay or exit the market,” Guy said.
Energy suppliers are under pressure due to rising costs and a government cap on energy prices which, from 1 October, will fall from an average of £1,254 for gas and electricity per year to £1,179.
The latest blow to the authority-owned energy supplier comes after years of financial losses, and fears the company may collapse. The council-owned supplier’s struggle to weather the fierce competition in the energy market also raises doubts over Labour’s energy plans for a public energy supplier in every region.
Robin Hood made an annual loss of £713,000 in 2015, followed by losses of £2.5m in 2016 and £7.2m in 2017. It reported a small profit of £202,000 last year after Nottingham council offered it a £5.5m loan.