Customers left in limbo as Scottish-government backed energy supplier goes out of business

Around 38,000 customers were been left in limbo today after a Scottish energy supplier became the eleventh provider to go out of business in just a year.

Ofgem has encouraged those affected by Our Power’s collapse to sit tight as it works to find a new supplier to take over their accounts. Customers’ credit balances are protected as part of the regulator’s safety net.

Read more: Our Power collapse — What to do if your energy supplier fails

The company adds its name to the graveyard of small suppliers to go bust in recent months, next to the likes of Spark Energy, Economy Energy and Extra Energy.

However, Our Power was a supplier with a difference.

With a £6m backing from the Scottish government, the supplier was an ethical not-for-profit venture designed to push down customers’ bills.

Businesses have been struggling in a tough market to get through the difficult winter months when high wholesale prices eat into margins.

However, Our Power also faced other financial pressures.

In 2017 the company raised £4.4m from a crowdfunding round, tapping 301 investors.

“The monies raised will enable Our Power to develop its energy supply business, through which it aims to help tackle fuel poverty and create 200 jobs in areas of high unemployment,” the company said at the time.

Investors in the bonds were promised 6.5 per cent annual returns, with the first payout thought to be due this month.

It is unclear if Our Power’s bond obligations are what tipped the company into bankruptcy. But the almost £290,000 payments would be sure to take a significant chunk out of the supplier’s accounts.

Our Power’s business model included charging customers the same whether they paid in advance or through credit. In 2017 it claimed to be saving customers an average of £75 per year compared to a standard variable tariff from the big six energy suppliers.

The business had lofty ambitions, planning to reach sales of 161m by 2024, up from 4.3m in 2017. Our Power also aimed to wipe out its £6m losses before tax by 2020, it said in 2017.

Read more: Spark Energy customers moved to a new supplier after company reaches deal with Ovo

Uswitch energy expert Rik Smith said: “While Our Power had laudable aims, the retail energy market is the same whether you're a private sector company or a not-for-profit organisation.

“Ultimately, all energy suppliers need to be able to finance their operations, have efficient and accurate processes for billing and payments, provide strong customer service, and meet any financial obligations they have.”