The founders of a collapsed British energy supplier are in line for a £50mn payout even as every household in the country foots the bill for its failure.
Administrators to People’s Energy Company, which collapsed last September, have recouped more than £285mn from the sale of its hedged energy, which was bought before the sharp rise in wholesale gas prices last year.
BP, the company’s largest secured creditor, has been paid £11mn, according to an administrator’s report filed in April.
BP said it supplied gas and electricity to the company and had “recouped outstanding fees as part of the administration process”.
The Edinburgh-based supplier had relatively few creditors, meaning its founders, David Pike and Karin Sode, who held a 25 per cent stake in the company, were next in line for a payout from the proceeds.
People’s Energy Company collapsed four years after it was established through a crowdfunding campaign in 2017, when it pledged to tackle fuel poverty in Britain.
UK insolvency law says shareholders are due any money left after a business’s creditors are paid off. The cost of transferring customers — for example, when an energy supplier fails — is borne by households through extra charges on customer bills.
More than 30 UK energy suppliers have collapsed over the past year as a result of poor capitalisation, surging wholesale gas prices and the price cap, which is set by the regulator Ofgem and limits how much customers can be charged.
At least £820mn in assets — including from the sale of hedged energy — has been recovered from energy firms that have been wound up, according to calculations by Bloomberg, which first reported the People’s Energy payout. People’s Energy accounted for around £315mn of that, it said.
Pike and Sode could be entitled to receive around £50mn or more once other creditors have been paid, according to people with knowledge of the administration process.
The payouts would come despite British households paying the £283mn cost of shifting People’s Energy’s 350,000 households and 500 business customers to British Gas.
Alan Whitehead, shadow minister for energy, said the payouts should “not be allowed to happen”. “The fact that directors of failed companies can walk away with tens of millions of pounds in profit . . . at a time households are facing an unprecedented cost of living crisis is repugnant,” he said.
The government opened up the industry to more competition almost a decade ago, with the intention of securing customers better deals, but the market became flooded with smaller suppliers with no industry experience and limited capital. An investigation into supplier failures accused Ofgem of giving entrants a “free bet” — enabling them to join with minimal risk and to exit with almost no downside.
The People’s Energy payout is dependent on a court case in October, where the administrators to numerous collapsed energy companies and Ofgem are asking for guidance on how to manage claims.
Ofgem is also trying to claw back as much as £500mn of the companies’ remaining assets to reduce the burden on customers but resolution may take years.
People’s Energy made large losses in the three years before its administration.
Since then, Pike has set up an “ethical” shopping site called Ethibuy.com. Sode, the former chief executive of People’s Energy, is a managing director of UK and Europe for YSC Consulting, according to her LinkedIn page.
Pike and Sode had not replied to requests for comment at the time of publication.
Alvarez & Marsal, the company’s administrator, declined to comment.
