Three start-up energy companies have disputed a national media report which claims they are in debt following an “investigation” into the accounts of companies offering some of the cheapest tariffs on the market.
The chief executive of People’s Energy and the co-founder of Pure Planet say an article which quoted financial reports showing net and net current liabilities is misleading as it represents outdated statements.
Toto Energy has also issued a statement to Utility Week, which suggests that the information in the article did not “reflect accurately” on small suppliers.
Furthermore a city utility analyst has voiced his concerns that the figures used are “potentially misleading”.
The article in question appeared on the website of The Sunday Times and claimed the companies had “run up big debts” or “missed deadlines” for filing their accounts.
It outlined “fears are growing that many others are on the brink because the prices they offer are unsustainable,” drawing reference to suppliers which have already gone bust this year.
People’s Energy for example was reported by The Sunday Times to have £30,817 as a “net liability”, however on Companies House it is listed to have “net current liabilities” of £30,817 in a report of accounts to the period to 31 December 2017 – months after the company launched.
Net current liabilities is the amount a company owes within a year while net liabilities means long-term debt owed by a company.
David Pike, chief executive and founder of Musselburgh-based People’s Energy, said the £30,000 net current liability his company had at that time was a “drop in the ocean” considering it had only been trading for four months when the information on Companies House was taken.
He said: “The data is correct but I guess the issue I have with it is £30,000 in net liability at the end of 2017 for a company that had only been trading for four months is not really that surprising, it’s a very different situation now.
“We have just started repaying the crowdfunders who helped bring us into existence. We would hardly start paying the money back if we were financially in trouble.
“We are not in any trouble at all, we have money in the bank and we are in control.”
Pike added the company now has a turnover in excess of £30 million.
Similarly Pure Planet was shown to have a net liability of £3.4 million on Companies House in the period to 30 September 2017.
Steven Day, co-founder of Pure Planet, said: “Pure Planet is proud to be recognised by The Sunday Times in their ‘Best Buy’ tables for offering our members 100 per cent renewable electricity and carbon offset gas at one of the most competitive rates on the market.
“We’re backed by BP, one of the biggest energy businesses in the world, in a partnership which gives us unique support and capability.
“The energy industry in this country desperately needs challengers and innovation, we’re proud to be driving that change towards a low-carbon economy and a cleaner more sustainable future.”
So Energy and Toto Energy were two other companies that were mentioned in the article as having net liabilities of £1.48 million and £196,313 respectively.
Yet the Companies House website shows Toto to have net current liabilities of £1,581,071 and total assets less current liabilities of £196,313.
A spokesperson from Toto said the article did not reflect accurately on small suppliers.
They added: “Small suppliers are fortunate to benefit from lower operating costs, more agile systems and the flexibility to grow their market share in numerous ways.
“Toto Energy is fully-hedged for the winter. Our Renewables Obligations were paid in full and we sell positive gross margin products through a variety of channels.”
Nigel Hawkins, city utility analyst, added: “I think the smaller energy companies have faced a number of problems with several recent bankruptcies.
“It is though very difficult and potentially misleading to assess their financial liability on the basis of historic liability figures.
“Operating in the energy supply market means regular trading which can be materially affected by fluctuating energy prices.”
So Energy was contacted for comment but had not responded at the time of publication. The Sunday Times has also been contacted about the article.
Several domestic suppliers have indeed gone bust in the past year, with the most recent demise of One Select Energy taking the number to eight.
Iresa, Spark, Extra, Usio, Future Energy, Gen4U and Snowdrop have also all failed in 2018.
Several small suppliers have referred to tough market conditions and fluctuating wholesale prices as contributing factors to their demise.