GnErgy & Comparing Business Energy Alternatives
In March 2019, the troubled small energy provider GnERGY was forced to cease trading due to its struggles in paying its debts to the regulatory organisation Ofgem. The final blow came as the company failed to comply with the order that required it to pay £673k with additional interest to the Renewables Obligation (RO) buy-out fund. If you would like to read more information or learn more about the pricing of business energy, you can do so here .
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How Did GnErgy Business Energy Go Under?
One of the four companies that missed a deadline for August 31st 2019, to pay the outstanding fees alongside Toto Energy, Robin Hood Energy, and Delta Gas and Power. All four of the companies were eventually given until October 31st of that year to fully make their necessary payments or be faced with losing their trading licences.
GnERGY was expected to pay the sum after it failed to produce Renewables Obligation Certificates (ROCs) to Ofgem but couldn’t cough up the fee either. ROCs are used so that accredited renewable generation station operators can be issued and traded between them. They are an essential mechanism in these organisations, proving that they have been reaching the renewable energy standards that have been set, which all energy companies are expected to meet.
Ofgem’s executive director of consumers and markets, Mary Starks, said: “The Renewables Obligation schemes provide important support to renewable electricity generators and play an important role in Great Britain’s journey to a net-zero emission economy by 2050.”
She then explained that two of the four companies who missed the August 31st deadline managed to pay in full by October 31st. GnERGY was not one of them, however. Delta Gas and Power and Robin Hood Energy managed to meet the deadline. However, the two owed very disparate amounts, with the former paying only £91k plus interest compared to the latter’s £9.4 million plus interest.
GnErgy & Ofgem
Robin Hood didn’t pay out the large amount without complaint, however. They claimed that they had approached Ofgem in advance so that the two could discuss paying in instalments, something that other energy companies had done in the past. The CEO of Robin Hood Energy, Gail Scholes, was critical of the regulator to advise Robin Hood that such steps would be possible as long as they met a deadline in March 2020, before springing the news that payment was expected by October 31st 2019.
The CEO explained the negative impact of the confusion with a statement. “It is frustrating that, in our view, following our proactive and open conversation with Ofgem, we now find ourselves the subject of significant media interest, with questions being asked about our fundamental ability to operate as a business,” Scholes said in her statement earlier in the month. “This is incorrect.”
Toto Energy and GnERGY have ceased to trade, wrapping up a shocking and tumultuous period that saw 16 small energy companies fold in only two years in the UK.
Tikendra Dewan set up GnERGY to create a new life for himself and a community of fellow former Gurkhas in Farnborough, Hampshire. Gurkhas are military soldiers native to South Asia, mainly residing within Nepal and northeastern India.
Unfortunately, GnERGY did not turn out to be a success and was issued with a notice of failure to comply because it could not give the regulator Ofgem any assurance that it would meet its obligation.
GnErgy Customers
The company had 9,000 domestic customers, with a few more customers also being non-domestic. Upon the company’s closure, Ofgem switched the customer base to a new supplier. The regulator gave out reassurance to the director for future retail markets.
Philippa Pickford says, “GnERGY customers do not need to worry, as, under our safety net, we’ll make sure your energy supplies are secure and domestic customers’ credit balances are protected. Ofgem will now choose a new supplier for you, and whilst we’re doing this, our advice is to ‘sit tight and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.”
It was the first small supplier of energy to shut up shop in 2020. Still, it was part of a two-year wave that saw many of its competitors meet a similar fate due to claims of rising wholesale prices and increased regulatory pressures. This was to meet environmental standards as part of the increased push to mitigate global warming and meet the UK government’s aim of achieving a net-zero emissions economy by 2050.
The Renewables Obligation Certificates proved to be a system that moved large amounts of cash around. In 2019 alone, Ofgem paid over £100 million to suppliers via the mechanism. It was used to redistribute the late payment fees that the regulator received. The total handed out was proportion to the total ROCs presented to the regulator across all available ROC streams.
Energy suppliers received £6.80 for each ROC that they presented to the regulator, which was bumped up to £7.82 for the certificate from the redistribution of the buy-out fund.
Although this scheme is relatively new, it appears to be doing an adequate job of encouraging suppliers to provide renewable energy, which it was set up to achieve. Each certificate is seen as proof that suppliers are meeting their obligation to renewable energy sources. If a supplier does not submit enough of these certificates, they must pay to make the difference. This is then used for the buy-out fund.
GnErgy Business Energy – To Conclude
GnERGY failed to meet the requirements either through cash or ROCs.
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