Energy supplier owed £12m to customers when it went out of business
Failed supplier Economy Energy owed nearly £12m to customers when it went out of business earlier this year, according to new documents.
Filings with Companies House show the company was £67.6m in debt when it entered administration at the beginning of January.
Read more: Ofgem bans E from buying customers from failed provider Economy Energy
Most of the money was owed to Ofgem for a £27m renewables fee, and £1.5m to pay back small energy producers who had fed energy into the grid.
Administrators Grant Thornton also identified £11.9m owed to Economy’s 50,000 non-prepaid customers – or around £240 each. However some customers were in debt to the firm.
The company had 180,000 customers on prepayment meters, and employed 203 staff, the report revealed.
Administrators said the company had cash flow difficulties since 2017 when customers used more energy than their direct debit payments covered.
Propped up by revenues from its prepayment customers, the firm managed to keep trading, but these dropped off during last year’s unusually warm summer.
Faced with growing problems, the owners tried to sell, but did not get enough interest. And in October, when its renewables payments were due to Ofgem, Economy Energy realised it would not be able to pay.
A month later Ofgem opened an investigation into the company and rival Spark Energy for their failure to pay into the renewables fund. Days later Spark filed for administration.
As Spark Energy and a series of other challenger suppliers went bust, conditions became even worse for the survivors such as Economy.
Concerned suppliers lowered or removed the amount of credit they would extend to Economy Energy, and the company was no longer able to pay for electricity in arrears.
Tightening belts forced the company to try to refinance in December last year, but again there was not enough take-up.
City PM later revealed that while the Economy was looking for extra cash at least eight customers were hit by mystery inflated meter readings on their online statements.
Read more: False Economy: Failed supplier gave mystery readings to energy customers
At the beginning of January Economy Energy started preliminary talks with administrators. Just days later Ofgem banned the firm from taking on new customers until it improved its service. Then the firm went bust.
Economy’s 235,000 customers, including businesses, were moved to Ovo Energy under Ofgem’s so-called supplier of last resort process. The move protected the money owed to customers, which will now be footed by the new provider.