Our Power, an “ethical” energy supplier backed by the Scottish government, has become the eleventh energy firm to collapse in a little over a year.
Energy market regulator Ofgem will appoint a new supplier for Our Power’s 38,000 domestic customers. Supplies for these customers will continue as normal and customers’ credit balances will be protected. Prepayment customers can continue topping up their meter. But Our Power subscribers are urged not to switch energy supplier until the reassignment is complete and they are contacted by their new provider.
“We have seen a number of supplier failures over the last year and our safety net procedures are working as they should to protect customers,” said Ofgem’s director for future retail markets Philippa Pickford.
Our Power Energy was set up as a the UK’s first non-profit energy supplier at the end of 2015, with the high-profile backing of Scottish ministers.
Founded by a consortium that included some of Scotland’s largest housing associations, it bought gas and electricity at wholesale prices and then passed those same rates onto housing association tenants. It was intended to combat fuel poverty among Scotland’s most disadvantaged populations, trimming their utility bills by up to 10% compared to commercial tariffs.
At the time of the launch, Our Power hoped to supply gas and electricity to 200,000 homes across Scotland by 2020 and to save consumers more than £11 million across those five years.
Unusually Our Power charged customers the same rate whether they paid for their energy on a credit or pre-payment basis.
The firm was supported initially by a £2.5 million investment from the Scottish government, which is understood to have ultimately contributed more than £6 million to the supplier, along with several commercial rate loans.
“This ground-breaking company will make a real difference to tens of thousands of low income households who are currently disadvantaged in the energy market and struggling to pay their bills,” said Scottish Social Justice Secretary Alex Neil at the time of the launch in 2015.
However, Our Power ran into difficulties as wholesale energy costs rose over 2018. A billing system failure last year prevented Our Power from taking on new customers or charging existing ones, leading to cashflow issues.
A 2017 crowdfunding round brought the company £4.4 million in investment from more than 300 investors, all promised 6.5% annual returns on their bonds. The first annual payout to investors, of more than £300,000, was thought to be due this month. In a conversation with City A.M., chairman Alister Steele said that obligation contributed to the collapse.
He also cited rising wholesale prices and the squeamishness of investors to inject cash into energy suppliers, following the string of recent supplier failures.
“We were one of many new suppliers that entered the market over the last three years,” Steele said.
“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.”
Our Power employed 70 people, all of whose jobs are thought to be at risk.
The Scottish government said it was disappointed the company had ceased trading.
“The Scottish government has supported Our Power in its aim of tackling fuel poverty since 2015,” said Communities Secretary Aileen Campbell.
“This will be a worrying time for all the employees.”