Worries over Spark Energy future as energy supply wing ceases trading

Chris Gauld, chief executive of Spark Energy in Selkirk.
Chris Gauld, chief executive of Spark Energy in Selkirk.

More than 400 jobs hang in the balance today as Selkirk company Spark Energy has called in auditors KPMG to assist in saving the company’s future.

This afternoon, Spark Energy Supply Limited, the part of the Spark Group which holds its energy licence, ceased trading in the energy supply market.

Energy supplier watchdog Ofgem had been investigating Spark Energy Supply Ltd’s alleged non-payment of a Renewables Obligation Order – a levy due to be paid by suppliers which do not utilise the required proportion of electricity from renewable sources. That investigation ended when the company ceased trading.

As several other energy suppliers have gone bust this year – the latest being Extra Energy – there were fears that Spark calling in KPMG could lead to the company going into administration - and the loss of more than 400 jobs would be a massive blow to the area.

However, a spokesperson for Spark Energy today said it was instead looking to secure the future of the company by making it “part of one of the UK’s largest independent energy suppliers”.

The spokesman said: “The company referred to in today’s Ofgem press release is Spark Energy Supply Ltd, the part of the Spark group which holds our energy supplier licence.

“Meanwhile Spark Energy Ltd, the group’s parent company, has been working on creating an opportunity for our workforce which could see us becoming a part of one of the UK’s largest independent energy suppliers. KPMG has been assisting us in this process.

“If successful, it would mean Spark becomes a standalone part of this large independent supplier – operating from our offices in Selkirk, Edinburgh and Horsham, supplying our customers under the new parent company’s licence.”

Last week, Spark chief executive Chris Gauld said that the rising costs of wholesale energy and a Government-enforced price cap on standard variable tariffs were “hammering the sector”.

Spark Energy Supply Ltd served around 290,000 customers, but due to Ofgem’s ‘safety net’, these customers’ energy supply will continue as normal.

The outstanding credit balances of domestic customers will also be protected.

A statement by Ofgem, released at 3pm this afternoon, read: “Ofgem will choose a new supplier to take on Spark Energy’s customers as quickly as possible. This supplier will contact these customers shortly after being appointed.”

In the release, Ofgem advised Spark Energy’s customers not switch to another energy supplier and take a meter reading ready for when your new supplier contacts them.

Mary Starks, Ofgem’s executive director for consumers and markets, said: “Our message to energy customers with Spark is there is no need to worry, as under our safety net we will make sure your energy supplies are secure and your credit balance is protected.

“Ofgem will now choose a new supplier and ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.

“Although we have seen a number of supplier failures this year, our safety net procedures are working as they should to protect customers.”

Earlier this week, Extra Energy, an energy supplier with about 108,000 domestic and 21,000 business customers, also ceased to trade. Ofgem is in the process of choosing a new supplier to take on Extra Energy’s customers as quickly as possible.

We’ll bring you more on this story when we have it.