Gas and electricity supplier Together Energy has been forced to cease trading amidst the ongoing energy crisis.
The firm, and its subsidiary Bristol Energy, are the latest to have been hit by the effects of the ongoing energy crisis, making it the 27th supplier to go bust since August last year.
Together Energy is backed by Warrington council, Warrington council said it had invested in Together to create local jobs and provide “100 per cent green energy” to customers, expressing that they were “very disappointed” with the collapse.
“We know that Together Energy’s operating model was resilient and our approach to hedging extremely robust, but the enormous and sustained wholesale price rises mean that it is now one of many companies that has had to leave the market,” it added.
Even though Together owed a £12.4m payment plus interest to Ofgem, the company had said it was optimistic about its prospects as recently as this month.
With Warrington council being a labour council, Conservative councilors in Warrington were quick to criticize and question the council’s involvement, as seemingly in 2019, when Warrington council made its investment, Together made an £11.4m loss and had net liabilities of more than £19m.
“Today’s announcement is a clear demonstration of Labour’s total lack of expertise, due diligence and oversight from the outset of these high-risk investments,” said Councilor Mark Jervis. “It is the council taxpayers of Warrington who will bear the financial consequences.”
In new developments, British Gas has said they will take on the 176,000 customers of Together Energy.
British Gas is owned by Centrica, an international energy services and solutions company, and is the current leading energy supplier in the UK market with over 500,000 businesses and over 11.6 million UK homes being supplied with gas and energy each year. (https://www.energybrokers.co.uk/suppliers/bgb-british-gas-business-centrica?utm_source=British+Gas+takes+on+Together+Energy%E2%80%99s+170%2C000+Customers&utm_medium=Article&utm_campaign=TR24_01_22)
A British Gas statement said: “In line with the regulatory framework, it has been agreed with Ofgem that relevant costs, including the costs of buying energy incurred by British Gas that it is not able to recover as a result of taking on the customers, will be recoverable through the established industry levy in a timely manner.
For existing Together Energy customers, energy supplies will continue as normal after they were switched over to British Gas on 23 January, which will be a source of relief for customers of Together. ”In the coming days, we will be in touch with Together Energy customers about the process of moving over.” Said British Gas.
Collapsed Energy Firm CNG’s Finances Revealed
After collapsing back in November 2021, the state of CNG Energy’s finances has been revealed after its administrators published its first report into the company.
CNG was established in 1994 after the deregulation of the UK gas industry, and at one point was the biggest independent shipper of gas in the UK. Based in Harrogate, its main purpose was supplying gas to business customers, over 45000 of them at that. https://www.energybrokers.co.uk/suppliers/cng-energy-supplier-review-2021?utm_source=Collapsed+Energy+Firm+CNG%E2%80%99s+Finances+Revealed+&utm_medium=Article&utm_campaign=TR24_01_22
Due to a mammoth rise in wholesale gas and electricity prices, the firm went out of business last year, and now in the first public report published by Interpath Advisory, the administrators appointed to take charge of the company, has revealed CNG owes £3.6 million to HMRC and other “secondary preferential creditors”.
The report says:
“Based on current estimates, we anticipate that secondary preferential creditors should receive a dividend. We have yet to determine the timing and quantum, but we will do so when we have completed the realization of assets and the payment of associated costs.”
The company’s debt to HMR is not all though, with more than £4 million owed to trade creditors and £6 million to consumer creditors.
Sadly, all but 21 employees of CNG were made redundant, with 145 staff losing their jobs.
Administrators also found that the company had been in financial difficulty for some time due to “significant cash flow pressures primarily caused by sharp price increases in wholesale gas prices and the general volatility in the energy market”.
The company was already operating on “thin margins” before the energy crisis and the covid pandemic began, and as a result had taken out a secured loan of £35 million from Glencore, a multi-national oil and gas firm.
However, the failure of a number of key customers and spiralling wholesale costs left the company unable to finance itself. The report says:
“In the absence of the financial and operational support of CNG Wholesale and other group entities, the company did not have the financial resources required to operate as a standalone business or bear the £35 million loan that was due to Glencore.
“As a result, the directors and Glencore began to explore ways to facilitate an orderly exit from the market.”
CNG have not been the only energy firm impacted by the rise in wholesale gas prices. Since the beginning of 2021, around 30 energy companies have ceased trading, leaving over two million customers dependent on the safety net provided by the market regulator, Ofgem, to maintain their supplies and protect their credit balances while it moves them to a new supplier.
Will the Government really cut VAT on Energy to Zero?
After denying that a VAT cut on energy bills could come to fruition, the measure is now reportedly “on the table” of government discussions about possible solutions for the energy crisis.
Millions of households across the UK could reportedly see a VAT cut on their energy bills as support for the measure builds up momentum. In the past few weeks, the government has been in “live discussions” with suppliers and important people in the industry to find potential ways to relieve the public from mounting pressure of increasing bills. One of these temporary measures reportedly included scrapping VAT.
According to the Daily Mail, (https://www.dailymail.co.uk/news/article-10433301/Boris-Johnson-U-turns-VAT-energy-bills.html) The Prime Minister and Rishi Sunak are set to meet to discuss the options this week and intend to make an announcement before February 7, which is when the energy price cap level is set. It is feared bills could rise by 50 per cent from April. According to government source last night, the proposed VAT cut has ‘never not been one of several options’ under consideration despite Mr Johnson’s comments, but stressed that no decisions have been made.
This is seemingly a u-turn from just two weeks ago, as Boris Johnson dismissed calls to scrap VAT from Energy Bills, stating “The difficulty is that you end up also cutting fuel bills for a lot of people who perhaps don’t need the support in quite the direct way that we need to give it.”
Back in October 2021, Whitehall sources told the BBC that slashing the 5% VAT to zero would be ‘poorly targeted’, and that lower income households would be better helped through other schemes. The cost of slashing the VAT on Energy would cost HMRC about £1.7m.
How much would households save?
VAT on domestic fuel bills in the UK is currently charged at 5%, so it would be whatever 5 percent of your energy bill is. The saving for households would depend on how much energy they use, what tariff they are on and which provider they buy from, as everyone’s energy bills are different.
To calculate your current energy bill, visit :https://www.energybrokers.co.uk/electricity/calculate-your-electricity-bill-online?utm_source=Gov+VAT+Article&utm_medium=Article&utm_campaign=TR17_01_22
To adapt to the challenging need for energy, Ofgem is raising its energy price cap in April and anylists like Cornwall Insight are forecasting that the domestic default tariff price cap for Summer 2022 will increase to approximately £1,865 per annum for a typical dual fuel customer, with the potential for further increases between now and February 2022. This represents an increase of just under 50% on the current Winter 2021-22 cap level of £1,277 per annum – which is a record high.
But why are energy prices rising so rapidly? The main factors causing this are wholesale prices rising way beyond record. (see wholesale gas price chart here: https://www.energybrokers.co.uk/gas/historic-price-data-graph?utm_source=VAT+Zaro&utm_medium=Article&utm_campaign=TR24_01_22) There has been a worldwide squeeze on gas and energy supplies, and the reasons for this is a cold winter in Europe in 2020/21, which put pressure on supplies and, as a result, meant stored gas supplies dropped, and a relatively windless summer, meaning it was difficult to replenish those supplies and meet increased demand from Asia – especially China – for liquefied natural gas.