Cornwall Insight comments on Renewables Obligation mutualisation

Commenting on the announcement that Ofgem has confirmed mutualisation has been triggered for the 2019-20 compliance period (CP 18) of the Renewables Obligation (RO), Tim Dixon, Wholesale Team Lead Cornwall Insight, said:

“This will be the third consecutive year in a row that mutualisation will have been triggered. This CP is slightly different from the previous two CPs where mutualisation was breached due to supplier exits alone.

“Cornwall Insight forecasts show that due to the supplier exits to date, mutualisation was on the cusp of being triggered over the £16.94mn threshold. Any further non-payments from suppliers including those that were issued Final Orders would have caused mutualisation.

“Unfortunately, this means that other suppliers will be picking up the costs of exited rivals across 2021 and 2022, which will ultimately be passed on to the consumers’ bill.

“While Ofgem will not confirm the total shortfall until early December, it seems unlikely that we will see a shortfall as large as the levels seen in 2017-18 and 2018-19. But the legacy of any defaulted payments will endure.”