DTI aims to secure renewables market after TXU-Maverick announcement
Following the announcement last week by British energy regulator Ofgem of a provisional enforcement order against TXU (UK) and Maverick Energy regarding the companies’ commitments under the Renewables Obligation (ESGM 9.187), the Department of Trade and Industry (DTI) has announced the UK government’s intention to undertake a consultation with the industry regarding the potential impact of any future shortfall under the Obligation. Under the terms of the enforcement orders, a failure by TXU (UK) to comply with its commitment under the Renewables Obligation could require a £23.1 million (EUR 33.2 million) payment from the company, while the corresponding figure for Maverick would be £0.5 million.
In announcing the planned consultation, the government also stated its intention that the cost to the Renewables Obligation of any supplier going into administration — as TXU did last November — would be borne by the industry itself. It also reiterated the use of legal action as an option in the pursuit of late payments under the obligation, as well as the expectation that the TXU administrator, Ernst & Young,
would eventually be able to contribute towards any money owed.
However, UK energy minister Stephen Timms praised the actions of Ernst & Young regarding its successful legal application to negotiate directly with those energy suppliers that may claim for losses resulting from TXU’s inability to meet its renewables commitments. Stressing the government’s commitment to the scheme, Timms said, “The Renewables Obligation remains the cornerstone of our policy to achieve our renewables targets. While I regret that trading in the renewables market has been disrupted, all other elements of the Obligation remain in place. The Government will work actively with industry to see confidence in the market fully restored”.
Under the Renewables Obligation, electricity suppliers must source a certain percentage of their energy from accredited renewable generators, which are presented with Renewables Obligation Certificates (ROCs) for their output and which may subsequently be sold separately or together with the corresponding electricity generated by the facilities. Suppliers can meet their obligation by the surrender of Renewables Obligation Certificates (ROCs), or through “buying out” their obligation at 3p/kWh for any shortfall, or through some combination of the two measures. CL
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