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Residents who signed up to a council-owned energy company are being moved over to British Gas after the collapse of a supplier that was keeping it running.
Southend Council partnered with Robin Hood Energy (RHE) at the start of the year in an arrangement that meant RHE would provide the energy supply for Southend Energy’s 6,000 customers.
But on Monday the owner of RHE, Nottingham Council announced the company was closing and from October British Gas would take on all its customers, including those who are part of Southend Energy.
The announcement has left uncertainty over the future of Southend Energy and the council says it is “considering its options”.
Liberal Democrat leader Carole Mulroney, who oversees environment said: “We know this is a very sad day for Robin Hood Energy and its employees, who have played a part in creating a more dynamic and customer orientated market for all energy consumers.
“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.
“The introduction of price caps by energy regulator Ofgem in 2019 fundamentally changed the landscape, forcing larger energy companies to lower their prices with many smaller suppliers subsequently exiting the energy market.
“The council set up Southend Energy back in 2015, initially in partnership with OVO, in response to the high local level of fuel poverty, as well as concerns that energy industry was not acting in the best interests of consumers, particularly those who relied on pre-payment meters.
“The aim was to save Southend residents money on their energy bills and we have achieved this.”
She added that customers will be contacted with details in the coming weeks but they will be “no worse off as a result of the transfer”.
Ms Mulroney did not mention the severe financial issues that had plagued RHE for several years leading it to lose close to £35million since it was formed.
Throughout this turmoil, council bosses in Southend continued to express confidence in RHE and decided to finalise their partnership just months after energy regulator Ofgem threatened to withdraw the company’s license to operate, due to it not paying its bills on time.
Councillor Tony Cox (Con) has called for an investigation into why the deal was done.
He said: “There needs to be an investigation to ask how a company with questionable finances allowed to be given a contract like this.
“It is not good for residents, particularly some of the most vulnerable who have now had to change supplier again after we told them they can save money. Now they are back on with the one of the big six.”