Together Energy becomes 27th victim of mounting UK energy crisis

The UK’s energy crisis has deepened with the news that Together Energy has become the latest supplier to go collapse. The council-owned company appointed administrators after record-high gas market prices left it facing a financial crisis.

Together Energy and its subsidiary Bristol Energy served about 176,000 homes in the UK. The company has been 50% owned by Warrington Borough Council since 2019, when the administration ploughed a sizeable investment into the energy supplier.

After more than a decade of central government austerity, local authorities across Britain have been forced to gamble public money on private businesses, in the hope the returns could help plug holes left in their budgets. This was the case when Warrington sank around £52 million in equity, loans and guarantees into Together Energy, which is based in Clydebank. At the same time, the Council hoped that its stake could be used to help tackle issues such as fuel poverty and global heating.

Throughout 2021, however, the UK’s energy market has been in an ever-deepening crisis. With gas prices having spiked to record rates, many small and mid-market suppliers have seen their operating margins decimated. Following the likes of PFP Energy and Bluegreen Energy, Together Energy has become the 27th such supplier to collapse in the last year.

In an announcement of the news, Bristol Energy said it was “saddened” to announce its exit from the market, but remaining was “untenable”. The company also denied press reports suggesting it had failed to secure enough gas and electricity to meet its customers’ needs. Now, energy regulator Ofgem will appoint a new supplier to take on the households impacted by Together Energy and Bristol Energy’s collapse.

According to reports from Sky News before the collapse, professionals from FRP Advisory were being lined up for the administration. The consultancy specialises in restructuring work, and was last year involved in the winding down of Wembley Stadium contractor Cleveland Bridge.

Blame game

Together Energy had actually assured its customers that the business was stable shortly before its downfall, despite record-high gas market prices. However, the news that it has succumbed to the crisis will not come as a surprise to some critics. Opposition figures have been warning the Council that the energy supplier was a bad investment from the start. This was due to the company’s poor customer ratings – as well as concerns that it was a risk to wrap up taxpayers’ money in a complex industry exposed to changeable wholesale markets.

Councillor Ken Critchley, who speaks for the opposition Conservatives on finance, noted that Together Energy was loss-making before Warrington bought its stake. He added that “the taxpayers and residents of Warrington… are going to bear the consequences of this ill-judged investment” before emphasising the decision was taken “by the Labour led Council,” though this conveniently side-steps the policies of the Conservative led central government – which have pushed councils into such risk-taking investment strategies.

Speaking to the Guardian earlier in January, Warrington Borough Council’s Deputy Leader, Cathy Mitchell, noted, “I would rather not be involved in investments as we have better things to do.” Mitchell serves as the administration’s portfolio holder for corporate resources, and further added, “But as long as we aren’t funded properly by the government, I don’t feel we have much choice.”