Preston-based GB ceased trading last weekend due to “swift and significant increases in energy prices over recent months”.
Co-operative Energy will honour all outstanding credit balances for both current customers, and for past GB customers who are still owed money. For current customers, any credit on their account will be used to offset future energy use. The appointment follows a competitive process run by Ofgem to get the best deal possible for GB’s customers.
“When GB was giving indications a few weeks ago that they wanted to sell, we started completing due diligence on their systems and finances,” said Ben Reid, chief executive of the Midcounties Co-operative, which owns Co-operative Energy. “However, on completion of the due diligence, we didn’t believe we could offer the money necessary, so we withdrew on Friday [25th November].”
On Saturday, GB announced it would cease trading, and Ofgem contacted Co-operative Energy and other companies looking for a supplier to take it over.
“As we had done all of the due diligence previously, over the weekend we put together a bid that stood us in good stead – Ofgem also liked that we are member-owned,” said Mr Reid.
Ofgem has recently worked closely with Co-op Energy to resolve problems after the installation of an IT system caused issues around its complaints resolution, call handling and billing processes. Earlier this month, Co-op Energy agreed to pay out £1.8m in compensation to consumers.
“Following those issues, we had to build a team capable of solving complex problems like this – as a result, Ofgem knows us and our systems, and know we have a match-fit ‘special forces’ team in place,” said Mr Reid.
“When we got into difficulties, Ofgem thought we were an ordinary company. However instead of reaching for lawyers, we asked them for help, and when they came in, they realised that as a customer-owned business we had a different ethos – they got a sense of what the co-op model is.”
GB customers on both fixed deals and standard variable tariffs will now be offered the same price as they were paying before. Customers will be eligible to change their tariff, and no exit fees will be charged if they choose to leave the co-operative. The cost of protecting customers’ balances will be partly met by Co-operative Energy and the rest will be covered by the safety net put in place by Ofgem, which is funded by a levy spread across all energy suppliers.
“As the only member-owned energy supplier in the UK, we put customers’ interests first and are pleased to be able to offer GB Energy Supply’s customers this same commitment,” said Mr Reid, who added that current Co-op Energy customers would not be affected by the move, either in terms of price or disruption. He also confirmed that current Co-op Energy customers will not be offered the GB tariffs at they are separate agreements made through Ofgem.
“The benefit of doing the due diligence was that we know GB is a good business – it had just run out of cash as it was selling energy below cost and energy prices didn’t increase as they thought they would,” added Mr Reid. “When current GB contracts complete, Co-op Energy will review what tariffs customers can go on.
“Being a supplier with nearly 400,000 customers across England, Scotland and Wales gets us to a threshold we had planned for the later part of our three year strategy. It puts us in a different league and is also positive for the co-operative movement as we will be able to push the co-op message further.”
Rachel Fletcher, Ofgem senior partner for consumers and competition, said: “We are very pleased to have been able to secure a deal with Co-operative Energy, where GB Energy Supply customers will be paying the same price for their energy as they were before.
“Co-operative Energy will be supporting GB Energy Supply’s customer contact centre, making sure that customers have a smooth transition to their new supplier. Our advice for customers of GB Energy Supply is to wait until Co-operative Energy contacts you. They will give you more information about the tariff you are on, and about your credit balance.
“Customers with questions should contact the GB Energy Supply customer contact team as normal should they have an enquiry.”
Co-operative Energy was launched by the Midcounties Co-operative in 2011 and produces 68% of its energy from renewable sources and is the only supplier in Europe to enable customers to choose where their energy comes from. Customers of GB Energy Supply will be contacted by Co-operative Energy over the coming days with more information about their tariff and current credit balance.