Government hits Robin Hood Energy with £12m tax bill

FINAL DEMAND COULD INCREASE CITY COUNCIL’S LOSSES

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 £12m out of the fee paid by Centrica to the city council. However, it has said it would “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 had 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 the 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 Renewable Obligation (RO) scheme.

“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 payments.

“If RHE fails to comply 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, leader of the Conservative group on the city council, 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.