Together Energy on the brink of collapse after funding bid fails
Council-backed supplier Together Energy is on the brink of collapse after its last-ditch search for new funding failed to bear fruit, according to Sky News.
The energy firm, which is 50 per cent owned by Warrington Borough Council and home to 170,000 customers, is likely to run out of money within weeks without an emergency cash injection.
Currently, it employs around 250 people, with 100 per cent of its energy originating from renewable sources.
Together Energy has been working with administrators Alvarez & Marsal (A&M) to secure new funds for the past three months, as it has looked to find a route back to profitability after it reported a £4.2m pre-tax loss in 2020.
Currently, it employs around 250 people, while 100 per cent of its energy comes from renewable sources.
A source close to the process told the news organisation the prospect of a solvent deal was now remote, although a spokeswoman for the company insisted on Wednesday that it was “still in active conversations” for new funds.
The energy firm told the media in November that it was looking to source strategic long-term funding for growth, rather than short-term capital, however this account was disputed by multiple industry sources and contradicts its current financial predicament.
An eleventh hour rescue deal would be at odds with gloomy industry trends this winter, as A&M previously worked with Avro Energy which collapsed last autumn still owing £90m to customers while doomed energy supplier Bulb failed to secure more money despite its partnership with US investment group Lazard.
Over the past three months, dozens of unhedged suppliers have been unable to withstand the pressures created by turbulent global energy markets and soaring wholesale gas prices, while also being constrained by Ofgem’s consumer price cap.
Together Energy’s woes reflect wider industry crisis
If Together Energy collapses, it would be the 26th to exit the industry since September, and its customers would be placed into Ofgem’s Supplier of Last Resort (SOLR) process, with other suppliers asked to bid to take on its consumer base.
Kwasi Kwarteng, the business secretary, is due to hold further talks with energy sector executives amid appeals for the price cap to be scrapped, or for the industry to be granted help in the form of emergency tax reliefs.
However, chancellor Rishi Sunak has warned the government’s ability to help UK households face soaring energy bills this winter, despite calls from MPs and peers to cut environmental levies and taxes to reduce costs.
So far, Bulb has been the biggest supplier to collapse during the current crisis – which was responsible for 1.7m customers and was the seventh biggest energy firm in the UK.
It went bust in November and entered special administration, and has been de-facto nationalised ever since, with the supplier propped up with public money and government loans until a buyer can be found.
Together Energy’s collapse would raise further questions about local authorities investing in potentially volatile sectors such as energy and commercial property.
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.
One source has since told Sky News that Warrington Borough Council will not provide any additional funding to Together Energy.
It’s no surprise to see another council-backed energy company facing collapse.
John O’Connell, chief executive of the TaxPayers’ Alliance said: “Failures like these leave locals with the double whammy of rocketing bills and council tax hikes. Local authorities must avoid experimenting in the energy market and focus on keeping council tax down.”
Several council-backed suppliers have lost their independence in recent years, including Bristol Energy which was sold to Together Energy in September 2020 for £14m.
Robin Hood Energy collapsed last year despite being supported by Nottingham City Council.
City A.M revealed last October that council-backed B&D Energy has received nearly £40m in public money to support an energy scheme in Barking and Dagenham, despite serving only 477 customers.
Together Energy’s public relations firm said on Wednesday that “there’s nothing more to add since before Christmas [and] the company is still in active conversations”.