A residential energy supplier partly owned by a local authority in Cheshire is lining up administrators amid suggestions it could collapse as early as this week.
Sky News has learned that Together Energy, which serves around 170,000 homes, is preparing to bring in insolvency practitioners from FRP Advisory, the London-listed restructuring firm.
An energy sector executive said he expected Together Energy to come under administration this week, adding that sector regulator Ofgem and officials at Whitehall had been briefed on the latest developments.
Together Energy has postponed a payment of £ 12.4million to Ofgem which is required by industry rules.
FRP has reportedly been identified as the preferred administrator by the Warrington Borough Council, which has invested tens of millions of pounds in the energy company but which Sky News reported last week had informed him that he would not provide any additional funding.
The local authority owns a 50% stake in Together Energy and faces scrutiny over its decisions to endanger municipal taxpayers’ money by backing it and subsequently acquiring Bristol Energy, another supplier owned by the municipality.
The company has embarked on a search for new funding over the past two months, although the scorching industry backdrop meant that securing new funding was still likely to prove difficult.
If it goes bankrupt, Together Energy would be the 26th gas and electricity company to collapse since August – a crisis that has left suppliers to millions of UK homes missing.
A spokeswoman for the company said on Monday that there had been “no update” after insisting last week that it was “still in active talks” about finding a new funding.
A bailout deal would be at odds with the industry trend, which has seen dozens of uncovered suppliers unable to withstand the pressures created by turbulent global energy markets.
Together Energy would be placed in Ofgem’s Supplier of Last Resort (SOLR) process, with other suppliers invited to bid to take its customer base.
Kwasi Kwarteng, the business secretary, held several rounds of talks with energy executives amid calls for the removal of the industry’s price cap or for support to industry in the form of emergency tax breaks.
To date, the biggest supplier to collapse during the current crisis was Bulb, which has just under 1.7 million customers and went bankrupt in november.
It was placed under a special administrative regime, with taxpayers financing the day-to-day operations of the business until a buyer could be found.
Together Energy, which has 350,000 accounts receivable, insisted in November that it “seeks to find long-term strategic funding for growth, not the short term.” [capital]”, although this account has been rejected by several industry sources.
Warrington Borough Council initially invested £ 18million 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 employment opportunities for the local population ”.
Last year, the local authority boasted that the supplier’s organic growth model called for the company to have 850,000 accounts receivable within three years.
In total, he is said to have endangered £ 52million of local taxpayer money by exposing himself to Together Energy.
Another locally-owned supplier, Robin Hood Energy, which received millions of pounds in funding from Nottingham City Council, collapsed in 2019 as its customers moved to British Gas.
Together Energy claims that 100% of its electricity comes from renewable sources, and that it “is working to offset 100% of our carbon dioxide by August 2023”.
It would employ around 250 people.
Other shareholders of the company include Paul Richards, its chief executive.
A spokesperson for FRP declined to comment.