Another smaller energy supplier has gone bust
First it was GB Energy a while back (which was bought by Cooperative Energy), then it was Brighter World Energy at the end of 2017, and now Future Energy announced they had ceased trading.
What does this mean for customers? While it may be worrying for people who were customers of Future Energy, in reality, their supply is 100% safe.
If your supplier goes bust, Ofgem ensures that your power and gas keeps flowing.
Who wants all the hassle and mess?
How can you be sure that your energy supplier is robust and not about to go under? The key factor that determines how resilient an energy supplier is the extent to which they are able to and have bought sufficient energy ahead of time (this is called hedging). Obviously, on top of that, you will want your supplier to be cost savvy, good at managing a lean business, and great at forecasting how much energy their customers need. That goes without saying – but not all companies are run that way.
How can you know that your energy company is protected?
The companies that have gone bust most likely didn’t have sufficiently robust hedging strategies in place. Take Brighter Energy. Just before Christmas the gas prices went through the roof. This was caused by a set of unlucky incidents, all happening at once – e.g. a large gas pipe burst, and cold weather and no wind meant that some electricity had to be produced through gas, pushing up the price. If a company hadn’t bought sufficient gas ahead of time, they were very vulnerable. This is likely to be a key contributing factor to Brighter Energy’s demise.
How can you know if your energy supplier is protected? You may want to ask the company directly how they are shoring themselves up for cold spells and high prices. What is their hedging strategy? Obviously larger companies are likely to have more resources to hedge ahead of time. But they are also typically the most expensive suppliers, partly because they can more or less set the prices they want, and they don’t worry about charging you more than they need to, to line the pockets of their shareholders. Whilst they may give you a sense of confidence due to size, it is not necessary to go for old and ‘trusted’ (as in customers’ belief in their ability to stay solvent – not necessarily in terms of how focused they are on looking after your interests). There are other savvy and well managed companies out there that can give you a great deal and who have created a solid business that you can trust
How are People’s Energy protected?
At People’s Energy, we have secured a significant credit line from a large, robust company, to be used for buying up energy in advance. This allows us to create a very resilient business and a secure cash-flow that is not going to be knocked off course by fluctuating prices. In addition, we are a very lean company – we are managing our costs very tightly. We are so conscious about how we spend the money, because the energy and the money are not ours. We were funded by the public, and we consider the company and the energy we sell theirs in the first place. This means everyone in the team are taught to ask themselves, ‘would our customers and co-owners of this company want us to spend money on this?’. If the answer is no, we find a way of doing what we need to do in a less expensive way. Our executive leaders are seasoned business people who knows how to run a tight ship. We are committed to have a positive social impact, but we can only fulfil our strong green and social values if we have a robust business that generates profits for our customers. Our focus is on creating a resilient company that will allow us to give customers back what is rightly theirs, through money back when we make money and free shares in the company later.