Centrica’s British Gas has bought Robin Hood Energy’s customer base for an undisclosed sum.
The company’s 112,000 residential customers, and 2,600 business customers across 10,000 sites will be transitioned over to the Big Six supplier by the 16 September. Customers have been advised that they do not need to do anything.
Robin Hood Energy has been struggling in recent years, posting a £23.1 million loss in its April 2018 to March 2019 results published in March 2020. Nottingham City Council – which owns the company – has been looking for ways forwards for the company, which was launched in 2015, including appointing Deloitte to advise the company in May and employing external auditors Grant Thornton to put together a Report in the Public Interest.
Leader of the Council, councillor David Mellen, said that the review the council has been carrying out has been comprehensive, and considered a range of options for the company. But whilst “significant improvements” have been made in its financial performance following the introduction of new management, it was still deemed best to sell the supplier.
“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.”
In an effort to save the company, it underwent a management shakeup in January. Gail Scholes, the former chief executive, and Robert Bains, the former managing director, were both terminated on the 16 December. David Bird, the ex-managing director of E.On UK and ex-CEO of Co-op Energy, Jeff Whittingham, were brought in in an effort to shake-up the energy supplier.
But despite changes, the supplier continued to struggling, leading Nottingham City Council to write off £24 million of the company’s debt in August.
An ‘inexcusable’ example of how to treat a workforce
The GMB Union has hit out at the sale, saying that it will see 230 jobs lost in Nottingham in November. In particular, a large proportion of the company has been working there for less than two years, and as such there is no legal entitlement to redundancy pay.
Additionally, a large proportion of Robin Hood Energy’s workforce is young, and will therefore only receive half a week’s pay for every year of work when they were under the age of 22.
GMB organiser Sarah Worth said today’s news was “devastating” for workers at the energy company.
“This is an example of a badly run local authority controlled company whose approach to industrial relations over the last nine months has been an inexcusable example of how not to treat a loyal and dedicated workforce.
“It’s time for RHE and Nottingham city council to make some form of amends and ensure every employee made redundant by RHE receives a minimum of three months redundancy pay. We will fight tooth and nail to ensure that these workers don’t end up on the scrap heap without a penny”.
Centrica continues to hone its business
British Gas has acquired the customers as part of its move to restructure to become a “simpler, leaner” group. This includes reducing the number of customer-facing business units and focusing on profitable growth.
Chris O’Shea, group chief executive at Centrica, said that as well as working to modernise the business, they were looking to "invest in value generating opportunities".
“Our customers are at the heart of everything we do, and we are delighted to welcome Robin Hood customers to British Gas. We are pleased to be able to offer every customer moving to British Gas a tariff which means their price will not be any higher and, importantly, they will be supplied with green electricity and have access to a range of other benefits - such as British Gas Rewards with free energy days and exclusive offers on services such as boiler cover."
The company has itself faced criticism over job losses this year, with 5,000 redundancies announced as part of the its restructuring efforts. Additionally, its employees are moving towards strike action due to its controversial ‘fire and hire’ policy, which could see changes in their pay and terms and conditions made.
The end of the council suppliers?
Robin Hood Energy was first set up by Nottingham City Council in 2015, in an effort tackle fuel poverty in the local area and concerns that the energy industry was not acting in the best efforts of consumers.
“The aim was to reduce energy prices in Nottingham and the company achieved this initially,” said councillor Mellen.
Nottingham was not the only city to create its own supplier in an effort to make energy more affordable, with Portsmouth City Council launching Victory and Bristol City Council launching Bristol Energy.
However, these have all struggled due to the huge costs involved in running an energy company in the current market. This led Victory to be shut down in 2019, while Bristol Energy sold its B2B book to the Yü Group and is planning to sell off the rest of its customer base as “success is impossible in such a volatile market".
With Robin Hood Energy and Bristol Energy both seemingly coming to an end, this may be it for civic energy suppliers in the UK. Many have criticised the currently system, which not only makes it expensive for council run suppliers but all small suppliers, leading to two energy companies to close this year – Effortless Energy and GnERGY – and at least 16 in the two years prior to 2020.
“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,” finished councillor Mellen.
“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.”