Blog Post

Robin Hood Energy sells customer base to British Gas

Richard Simmonds • Sep 04, 2020

Failed council-run energy supply company Robin Hood Energy has announced that it has sold its customer base to British Gas ahead of its full closure later in the year.

Redundancies

250 staff at the council-run energy supply company were informed on Thursday that they will be losing their jobs after the council agreed to a deal with British Gas to sell its customer base.

The deal will see British Gas acquire 112,000 household and 2,600 business customers.

Robin Hood Energy (RHE) was first set up back in 2015 by Nottingham council in an attempt to offer better energy deals for local consumers. The idea of council-run energy companies received support by the previous Labour Leader Jeremy Corbyn and London Mayor Sadiq Khan, but since then several similar companies have posted huge losses.

As with other council-run energy companies, RHE was haemorrhaging money with a report published by auditors Grant Thornton revealing that it had lost £34.4 million by March 2019 despite the council pouring £43 million of taxpayer money into it.

Increased Competition, Covid19 and Price cap blamed

Councillor David Mellen, leader of the city council, and said: “The review we have been carrying out over the last six months has been comprehensive and considered a range of options for the future of Robin Hood Energy.

“Significant improvements have been made in the financial performance of the business under the new management team the council appointed last year.

“However, given the current economic climate and the further levels of investment needed to enable the company to compete in an extremely difficult market, the review concluded that a sale was the right option”

“It provides the best possible deal for the council and city residents and reassurance to customers that they are transferring to a large, well-established company.

“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.

“The energy market has changed considerably over the last few years. At its peak, there have been over 70 energy suppliers competing to win new customers and the introduction of price caps has fundamentally changed the landscape with many smaller suppliers exiting.

“The council set up Robin Hood Energy back in 2015 in response to the level of fuel poverty in the city and concerns that energy industry was not acting in the best interests of consumers, particularly those who relied on pre-payment meters. The aim was to reduce energy prices in Nottingham and the company achieved this initially.”

Once customers have completed the move to British Gas, plans to close down RHE will be enacted, the authority added.

Criticism

The GMB union that is supporting the workers made redundant slammed the decision to sell and said it was an "inexcusable example of how not to treat loyal" workers.

“This news is devastating for workers. RHE is a badly run, local authority-controlled company. We will fight tooth and nail to ensure that these workers don’t end up on the scrap heap without a penny,” said Sarah Worth from the Union.

British Gas has said that the transaction is expected to be completed by September 16^th with the customers being transferred to them over the coming months. Once that is complete the authority said it will close down RHE permanently.

Bristol Energy

Bristol Energy has now also sold off its customer base after being put up for sale back in June.

In the case of Bristol Energy, Bristol City Council poured £35 million into the failed company and has since sold off the 4,000-business customer base to Yü Energy for just £1.34 million.

Bristol City Mayor, Marvin Rees said that the decision to enter the energy market was a mistake despite the council under his stewardship pumping millions into the company. An audit report published in May showed that the impacts created by the Covid19 pandemic had wiped £7 million off its value.

Angry opposition councillors have called for an independent inquiry into the firm and accuse Mr Rees of a coverup. Further anger over the project was created when council records showed that Bristol Energy’s former Managing Director was paid £220,000 a year.

“He was being paid over £200,000 a year to lose council taxpayer's money at a rate of over £1m a month. I will say one thing, he was consistent. Every month that that company has operated they've lost £1m of Bristol taxpayers' money. I'm not being funny, but I think my dog could have done a better job of running that company and he definitely would have charged a lot less than what has been paid.” said Liberal Democrat councillor Tim Kent.

Staff at Bristol Energy have been informed that it intends to sell off its domestic customer base.