A council-backed supplier which provides energy to 170,000 homes is reportedly working with Avro Energy’s administrators to secure new funds, amid a deepening industry crisis that has affected four million customers nationwide.
Together Energy, which is 50 per cent owned by Warrington Borough Council, has asked Alvarez and Marsal to help raise additional capital, according to Sky News.
Alvarez and Marsal previously worked with Avro Energy, which ceased trading this autumn still owing £90m to customers.
The administrators are reportedly to pitching to prospective investors that Together Energy is well-positioned to acquire underperforming rivals once wholesale energy markets begin to stabilise.
The energy firm reported a £4.2m pre-tax loss for the year ending 2020, and has reportedly partnered with the administrators to plot a route back to profitability.
The company employs around 250 people, and 100 per cent of its energy comes from renewable sources.
It is unclear how much of a funding shortfall the Together Energy faces.
Three weeks ago, it delayed a £12.4m payment to Ofgem, saying it was in the best interests of the company.
The market regulator has reportedly threatened to revoke its licence.
Funding push raises fresh questions over council-backed energy firms
Warrington Borough Council first invested £18m in Together Energy in September 2019.
It argued the partnership would help the council address climate change, tackle fuel poverty and boost job opportunities in the local area.
Earlier this year, the local authority suggested the supplier’s organic growth model projected the company would have 850,000 customer accounts within three years.
This outlook looks increasing questionable, as the energy crisis engulfs the industry.
Since September, 21 energy firms have ceased trading amid soaring wholesale prices, which they have been unable to pass on to consumers due to the energy price cap.
Leading energy bosses including Scottish Power’s CEO have now called for the price cap to be reformed or even scrapped.
Bulb has also entered special administration, with Sky News reporting that Teneo Restructuring is being lined up by Ofgem as Bulb’s special administrator.
Over four million British households have seen their energy supplier fall into insolvency proceedings since the summer, with more companies expected to follow.
The funding push will also raise questions about the viability of energy firms backed by councils.
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 month 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.