People's Energy: What caused the Midlothian gas company to go into administration and what happens now for customers?
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The UK’s energy sector is facing tough market conditions as the prices of gas and electricity spike to record highs.
Ahead of the energy market cap rise from 1 October, households across the UK can expect to see further price hikes of household utility bills following a surge in wholesale gas costs.
August alone saw a 70% climb in these costs, delivering a fatal blow to several small energy businesses, including Midlothian company People’s Energy.
Here’s why the company folded and what will happen next to its UK customers.
Why did People’s Energy go bust?
People’s Energy ceased trading on 14 September 2021.
The company was created as the UK’s sole community interest energy supply company in 2017 by co-founders and joint CEOs, Karin Sode and David Pike.
The wife and husband duo created People’s Energy to be “an energy company that fights for people” and alternative to the Big Six energy companies in the UK.
Along with four other small UK suppliers which have gone into administration over the last month or so, the spiking costs of wholesale gas meant that People’s Energy could no longer afford to operate as before.
Visitors to the company’s website are now met with a statement from the company which says: “We are saddened to inform you that People's Energy is ceasing to trade."
How many employees and customers does People’s Energy have?
At the time of its closure, People’s Energy had roughly 450 employees in the Midlothian area and beyond.
In August 2020, the company expanded its business into the Scottish Borders, opening a site in Selkirk with 100 new jobs.
In addition to its Selkirk office and headquarters in Shawfair, People’s Energy also had offices in Edinburgh and Musselburgh.
The community interest gas and electricity supplier had over 350,000 domestic customers, 1,000 non-domestic customers and 500 business customers.
Midlothian North and Musselburgh MSP Colin Beattie said that he was “disappointed” to hear the news that the Shawfair company had entered administration and said he would be calling on the Scottish Government to outline any support measures for the company and those affected by the gas crisis.
“I have written urgently to the Scottish Government seeking reassurances and assistance for both the employees and customers,” Mr Beattie said.
"If any of my constituents are affected by this issue, please do not hesitate to contact me.”
What will happen to People’s Energy customers?
If you were a People’s Energy customer, you will now find that British Gas will be taking over your account.
The UK energy regulator, Ofgem, appointed the UK energy behemoth to take over People’s Energy’s customer base of 350,000 domestic and 1,000 non-domestic households.
Gillian Cooper, head of energy policy for Citizens Advice, said: "The failure of Utility Point and People's Energy leaves more than half a million customers facing uncertainty.
"With the energy price hike and cut to Universal Credit due in the next fortnight, this comes at a hugely unsettling time for many.
"With more customers affected at one time than ever before, Ofgem must provide support and protection - especially for those worried about their finances."
The transition to British Gas marks the fourth account switched over to British Gas as per Ofgem’s Supplier of Last Resort process this year.
Chris O’Shea, group chief executive of British Gas parent company Centrica, said in a statement: "We welcome People’s Energy customers to British Gas and we’ll ensure the switchover is as smooth as possible.
"We’re a brand trusted by millions and we’ll be working hard to gain the trust of our new customers too - so that they not only join but choose to stay with us.”
Mr O’Shea added: "The actions we have taken over the past couple of years mean Centrica is in a robust financial position, and, as a responsible energy supplier built on a sustainable model, we are well hedged for the coming winter.
We have now taken on the customers of four failed energy suppliers through Ofgem’s Supplier of Last Resort process in 2021."
To find out more, visit Ofgem’s website.