Nottingham City Council has sold struggling supplier Robin Hood Energy to British Gas, ending an experiment in local authority-owned suppliers which had earned the support of Labour and SNP politicians and been emulated across the country.
The deal will see 112,000 households and 2,600 business customers transferred to British Gas, the UK’s largest supplier and one of the Big Six that Robin Hood Energy had been set up to counter. 230 staff will be made redundant.
British Gas said customers served by Robin Hood Energy and its white-label brands will be offered a tariff with renewable electricity for the same rate they paid before.
Chris O’Shea, chief executive of British Gas parent company, Centrica, said: “We are delighted to welcome Robin Hood customers to British Gas.”
The sale follows a damning report from auditors Grant Thornton this summer, which revealed the not-for-profit company had lost £34.4 million as of March 2019, despite receiving £43 million of public funds and £16.5 million in loan guarantees.
Last year, Nottingham City Council has forced to bail out the supplier with a £9.5 million loan after it failed to pay its dues to the Renewables Obligation fund which supports clean energy generation.
That contributed to the £23 million loss Robin Hood Energy made in 2019, following a slim profit of £200,000 the year before.
The report accused the council of “institutional blindness" in continuing to prop up the supplier.
Leader of the council David Mellen said: “We know this is a very sad day for the business and its employees who have played a part in creating a more dynamic and customer orientated market for all energy consumers.”
Documents suggest the sale, estimated at £26 million, will not cover public investment in the supplier, which according to leaked documents tops £38.1 million.
"There will be significant amounts of money we won't be able to recoup,” Mellen admitted.
The council launched the supplier in 2015 to give consumers an alternative to large, for-profit energy companies and to tackle local fuel poverty. Councils across the country, from Islington (Angelic Energy) to Leeds (White Rose Energy), launched their own suppliers as white label brands for Robin Hood Energy.
Nottingham was quickly joined in the energy market by Bristol City Council’s supplier, the similarly troubled Bristol Energy. Bristol is now trying to offload the supplier, which has made operating losses of £29.3 million over the last three years.
Meanwhile, Portsmouth’s council-owned supplier, Victory Energy, was shuttered before signing up a single customer but following public investment of £2.5 million.
Councils have blamed the failures on a fiercely competitive energy market, which has seen 20 small suppliers collapse since the beginning of 2018, most recently Go Effortless Energy last week.
Even the largest suppliers haven’t been immune to losses following price wars and fluctuating wholesale costs. Centrica itself lost £1.1 billion last year and this summer crashed out of the FTSE 100 for the first time in its history.
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