Concerns mount as energy firm looks to rescue fundraising

A Coventry gas and electricity supplier to nearly 250,000 homes is understood to be seeking a rescue fundraising to avoid becoming the latest in a string of companies in the sector to collapse this year.

Economy Energy has appointed KPMG to undertake a review of its “strategic options”, which are said to include a capital injection or a sale of the business, Sky News reported.

According to a document headed “Project Wattley”, the accountancy firm is advising an unnamed utility which boasts a “significant customer base at 244,000 customers”.

Economy Energy was set up seven years ago by Lubna Khilji. According to its accounts, its turnover is £134m and it had pre-tax profits of £2.1m in the year to March 30, 2017. It owes creditors £26.8m.

Economy Energy’s hunt for funding comes following a string of collapses of smaller suppliers, such as Spark Energy, which saw its 290,000 customer accounts acquired by rival Ovo Energy late last month. Others to have ceased trading include Extra Energy, Future Energy and Iresa.

Economy Energy was revealed earlier this month to owe regulator Ofgem £15.5m, more than any other energy firm.

Ofgem said that 15 suppliers missed a final deadline for green taxes, totalling £58.6m.

Electricity providers who do not get enough of their energy from renewables are required to pay into the fund, which supports major green energy projects across the UK.

Ofgem said that it has already collected around half of the £103m shortfall it identified at the end of August, but there is still £58.6m missing from the fund.

Economy Energy has been contacted for comment.