Extra Energy, the midland based energy provider went into administration this week, we review the situation.
The UK energy market was deregulated back in the 1980’s but it has taken a long time for competition to properly emerge in the market, which remains dominated bythe larger players such as British Gas plc, but now with a myriad of smaller players.
Extra Energy broke into this market and picked up 300,000 customers accounts, however the announcement of a price cap, caused a real challenge for the company, which being relatively newly established did not have the economy of scale or the strength of balance sheet to absorb the losses that this change presented.
This is not however the whole story. There have also been a string of compliants about their customer service team, and their website, whilst functional did not offer anything like the sophistication of many of the more established market participants.
Scottish Power has now stepped in to pick up its existing customers, but something to watch out for is that customer moving over are going on the standard tarrif that Scottish Power offer rather than like for like ones.
Customers are free to move and at least there is continuity of supply.
The accounts of Extra Energy show that as at 31st December 2016, the date of their last filed accounts they have a balance sheet negative net worth of £40.446m so a weak financial position in any event.