Misreporting RO data costs energy firm £125k

Ofgem has imposed a £125,000 fine on business energy supplier Opus Energy for misreporting the amount of electricity it supplied under the Renewables Obligation (RO)

The company has also agreed to retire 7,016 RO certificates (ROCs), with an estimated value of £360,000.

The regulator says the misreporting occurred in 2009/10 and was due to shortcomings in the Northampton-based company’s method for calculating its electricity supply data and in the firm’s internal procedures. Ofgem found that Opus underreported the amount of electricity it supplied to customers by 7.4% and that the company benefited financially by £360,000.

On its website, Opus claims to invest time and manpower into developing innovative IT systems to improve its working processes. However, Ofgem reports that the company’s senior management “failed to provide appropriate resources to the calculation and provision of supply data, and failed to arrange for appropriate checking and supervision by senior management and/or external auditors”.

Under the Electricity Act 1989, Ofgem is able to impose a financial penalty of up to 10% of the company’s annual turnover for such offences – which, for Opus, equates to £2 million. The regulator decided to impose the lower £125,000 fine because Opus had not contested the findings and had taken prompt action (by retiring the ROCs) to address the harm suffered by other market participants.

“Opus Energy’s willingness to engage in the settlement process was reflected in the level of penalty. Without this, the penalty would have been much higher,” confirmed Sarah Harrison, Ofgem’s senior partner in charge of enforcement.

In a statement, Opus said: “We are disappointed at this error in our procedures and apologise wholeheartedly. We have made substantial changes to our procedures to ensure this never happens again.”

Opus’ procedural changes include revising its methodology for calculating electricity supply data in line with Ofgem’s recommended approach, and reorganising its process so responsibility for RO reporting rests with the finance department.

The RO scheme, which was introduced in 2002, requires electricity suppliers to source a specified and annually increasing proportion of electricity they supply to customers from eligible renewable sources or pay a penalty. Suppliers present ROCs to Ofgem to demonstrate their compliance with the obligation.

The number of ROCs each supplier needs to present is calculated on the basis of how many MWh of electricity they supplied during the relevant obligation period – from 1 April to 31 March each year.