Energy supplier Our Power “ran out of cash” as investors ran scared after string of bankruptcies in sector

Failed Scottish energy provider Our Power “ran out of cash” the company’s chairman said just hours after being forced to admit defeat in the battle for its survival.

Our Power, which serves 38,000 customers mainly in Scotland and Wales, became the eleventh small supplier in a year to close its doors yesterday as rising wholesale prices take their toll on the industry.

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“We were one of many new suppliers that entered the market over the last three years,” chairman Alister Steele told Morning Wire

“It is now generally accepted that it is unclear what the level of financial backing is required for a new entrant to cope with market volatility and regulatory change. The market is now going through considerable enforced restructuring, there’s a bit of inevitability about it.”

The provider joins the likes of Economy Energy, Spark Energy and Iresa, which have all gone bust in the past 12 months.

The not-for-profit was set up with £9.5m backing from the Scottish government and worked closely with social housing landlords.

“We are hugely disappointed to learn that Our Power has ceased trading. The Scottish government has supported Our Power in its aim of tackling fuel poverty since 2015,” Scottish cabinet secretary for communities and local government Aileen Campbell said.

Other funding included a £4.4m crowdfunding round which completed in 2017. The first returns on the bond – a payment thought to total nearly £300,000 a year – were due this month.

Steele told Morning Wire that Our Power had written to investors some weeks ago to say it could not meet obligations to pay out in January. However, the business was still hopeful it could survive.

“Things turned against us in the past week or so. We’re engaging with all investors, but until administrators come in we can’t say what will happen to their investments,” he said.

The supplier was hit by a triple-blow when it needed to find a new customer management system after its old provider pulled the product. This meant Our Power could not bring on new customers while struggling to bill some existing ones.

Rising wholesale prices also squeezed margins while investors, seeing a string of bankruptcies in the sector, were reluctant to provide the cash needed to keep Our Power afloat.

Read more: Customers left in limbo as Scottish government backed energy supplier goes out of business

“There was a real nervousness from investors after all the recent troubles in the sector which hit our ability to raise bridging finance,” Steele said.

Steele and the government said they would work to ensure that Our Power’s approximately 70 full-time staff are able to find new work as quickly as possible.