FEARS are growing for the future of Warrington Borough Council backed Together Energy following reports it could be on the brink of collapse later this month.
Together Energy, which is 50%-owned by Warrington Borough Council, faces running out of funding later this month according to a report by Sky News.
They report a source close to a process run by advisers to Together Energy stating that Alvarez & Marsal (A&M), the professional services firm, was close to concluding its search for new funding for the business and that the prospect of a solvent deal was now “remote”.
A spokeswoman for the company insisted that it was “still in active conversations”.
Warrington South MP Andy Carter said: “This really is a stark example of how this Labour Council has failed Warrington. Not only have they racked up eyewatering levels of borrowing, more than £1.6bn, higher than almost any other local authority in the country, they’ve made chancy investments using public money into some of the riskiest sectors. Global energy markets are notoriously volatile, Labour Councillors have behaved like they’re running a hedge fund, putting £52m of our money at risk in Together Energy rather than focusing on delivering well-run services for local people. If reports are true, that there are no viable alternative investors, it is local people who will pay the price.”
“We need urgent transparency from the Council in terms of the performance of all their investments and we need certainty that they will halt their risky strategies. While some Councillors might argue there are upsides to making these commercial investments, there are stark downsides too and Warrington council taxpayers simply cannot afford to be bailing out failing commercial businesses with public money.”
Meanwhile, the opposition Warrington Conservative group say a full Council meeting should be called urgently to discuss the risks posed to Council finances and local services by the potential failure of Council investments in Together Energy. The Council last confirmed a potential exposure of more than £52million to the energy supplier with news reports now suggesting that attempts to secure new funding and the prospect of a solvent deal are now remote.
Leader of the Conservative Group Cllr Kath Buckley said: “All Borough Councillors should be fully briefed on the potential implications were this investment to fail. The Council has borrowed public money and invested in a commercial business, this is public money and quite rightly there should be complete transparency on the risks to Council finances, local services and how the Council would manage were Together Energy to enter administration.”
“We’ve previously put forward motions calling on the Labour Council exit their investment in Together Energy and for fully transparency regarding the options being considered, these motions were rejected by the Labour-run Council, since then the exposure has grown and even more public money has been put at risk.”
“All Councillors should be fully briefed before further decisions are taken, we cannot have a situation where further loans are granted without full authorisation from elected members. The next full council meeting is scheduled for the end of February, this issue is so serious that it must be discussed in the coming days.”
If it does collapse, Together Energy would be the 26th energy supplier to cease trading since August, as spikes in wholesale prices have left businesses hamstrung by the industry price cap.
It would be placed into Ofgem’s Supplier of Last Resort (SOLR) process, with other suppliers asked to bid to take on its customer base.
Together Energy must also find £12.4m to pay its renewable energy obligations. The money should have been paid by the end of October but it must be now paid to the regulator, Ofgem, by January 27.
The council has an original £18m investment and a recently increased £20M revolving credit facility and the Orsted guarantee now reported at £14m.
In an interview with Warrington-Worldwide in December council chief executive Prof. Steven Broomhead, who is a non-executive director on the board of Together Energy admitted to being “anxious” following the demise of 15 other energy companies in the past two months but didn’t believe Together Energy would be in that position.
After being contacted Warrington Borough Council was unable to provide a comment at this stage.