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Drax - Renewables Obligation Mutualisation

Updated: May 2, 2023



Updated 08/12/2022


Between April 2020 to March 2021 several suppliers went out of business and failed to meet their Renewables Obligation (RO) contribution. This resulted in an extra charge that the Office of Gas and Electricity Markets (Ofgem) requires us and other suppliers to pay to cover the shortfall.


Customers with a contract that passes through RO costs (those on I&C Clarity or Flex Clarity contracts) will receive a one off charge in February 2023.


What’s the RO?


The RO - run by Ofgem - is one of the main support schemes for renewable electricity projects in the UK. Under the scheme, UK electricity suppliers have to source increasing amounts of their energy from low carbon sources.


Between April 2020 and March 2021, 28 UK electricity suppliers were unable to fulfil their RO for compliance period 19 before the deadline passed.


What’s Renewables Obligation Mutualisation?


To recover any shortfall, Ofgem requires suppliers to pay a percentage of the total outstanding amount. This percentage is in line with their share of the market. This is something we’re obliged to pay to Ofgem and not something we benefit from.


How much will the RO Mutualisation cost be?


For 2020/2021 the total cost is £218.3m. Drax Customer’s share equates to £9.6m.


What does it mean for affected customers?


This will be 0.092p per kWh for the electricity used during the 2020/2021 compliance period. This will appear on invoices in February 2023.


This charge will apply to customers that have left but were on supply with us during the 2020/2021 compliance period.


Customers that receive ebills or EDI files should be aware that this charge will appear as a new line on the EDI.



 


0151 459 3388 | info@smart-energy.uk



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