Warrington Council-backed Together Energy lines up administrators
by 0 A residential energy supplier part-owned by a Cheshire local authority is lining up administrators amid suggestions that it could collapse as soon as this week.
Sky News has learnt that Together Energy, which serves about 170,000 homes, is preparing to call in insolvency practitioners from FRP Advisory, the London-listed restructuring firm.
One energy industry executive said they expected Together Energy to fall into administration this week, adding that the industry regulator Ofgem and Whitehall officials had been notified of the latest developments.
Together Energy has deferred making a £12.4m payment to Ofgem that is required under industry rules.
FRP is said to have been identified as the preferred administrator by Warrington Borough Council, which has invested tens of millions of pounds in the energy company but which Sky News reported last week had informed it that it would not provide any additional funding.
The local authority owns a 50% stake in Together Energy, and is facing scrutiny over its decisions to put council taxpayers’ money at risk by backing it and subsequently acquiring Bristol Energy, another council-owned supplier.
The company has been engaged in a search for new funding for the last two months, although the torrid industry backdrop meant that securing new funding was always likely to prove difficult.
If it does go bust, Together Energy would be the 26th gas and electricity company to collapse since August – a crisis that has caused the demise of suppliers to millions of UK households.
A spokeswoman for the company said on Monday that there was “no update” to an insistence last week that it was “still in active conversations” about finding new financing.
A rescue deal would be at odds with the industry trend, which has seen dozens of unhedged suppliers unable to withstand the pressures created by turbulent global energy markets.
Together Energy would be placed into Ofgem’s Supplier of Last Resort (SOLR) process, with other suppliers asked to bid to take on its customer base.
Kwasi Kwarteng, the business secretary, has held several rounds of talks with energy sector executives amid appeals for the industry price cap to be scrapped, or for the industry to be granted help in the form of emergency tax reliefs.
To date, the biggest supplier to collapse during the current crisis was Bulb, which has just under 1.7 million customers and went bust in November.
It was placed into a special administration regime, with taxpayers funding the company’s ongoing operations until a buyer can be found.
Together Energy, which has 350,000 customer accounts, insisted in November that it was “looking to source strategic long-term funding for growth, not short-term [capital]”, although this account was rejected by multiple industry sources.
Warrington Borough Council initially invested £18m in Together Energy in September 2019, arguing that the partnership was “an important part of the council’s work to address the climate emergency, tackle fuel poverty and create new job opportunities for local people”.
Last year, the local authority boasted that the supplier’s organic growth model projected that the company would have 850,000 customer accounts within three years.
In total, it is reported to have put £52m of local taxpayers’ money at risk through exposure to Together Energy.
Another local authority-owned supplier, Robin Hood Energy, which received millions of pounds in funding from Nottingham City Council, collapsed in 2019, with its customers transferred to British Gas.
Together Energy says that 100% of its electricity comes from renewable sources, and that it is “working towards offsetting 100% of our carbon gas by August 2023”.
It is thought to employ about 250 people.
The company’s other shareholders include Paul Richards, its chief executive.
A spokesman for FRP declined to comment.
