Page last updated at 16:28 GMT, Wednesday, 22 October 2008 17:28 UK

Power company in administration

Plug and socket
Electricity prices have risen sharply this year

An electricity company which supplies 40,000 small businesses has gone into administration, the BBC has learned.

A buyer was unable to be found for Electricity 4 Business (E4B), which is based in Milton Keynes, energy regulator Ofgem confirmed.

Customers will not be disconnected, but will automatically be transferred to another supplier in a process organised by the regulator.

Customers' tariffs may change, but they will be free to switch supplier.

A spokeswoman for E4B said they would not be commenting on the situation on Wednesday.

The company had 140 members of staff, of which 100 were made redundant on Wednesday. The remaining staff will stay as the business is run down.

'Unusual'

Existing measures are in place for situations such as this.

This will leave thousands of small businesses looking for new deals on their energy in an extremely volatile market
Federation of Small Businesses spokesman

Ofgem will invite other suppliers to take on the business's customers before appointing a supplier.

"This situation is very unusual but not unprecedented," said Philip Cullum, deputy chief executive of watchdog Consumer Focus, formerly Energywatch.

"Ofgem has robust procedures in place to make sure that that these very small businesses are not left high and dry without an energy supply."

An Ofgem spokesman said that a report regarding the future for customers would be released by the end of the week.

'Cutting costs'

On its website, E4B says that it is aimed at cutting electricity costs for small and medium-sized businesses spending less than 10,000 a year on electricity. It does not produce electricity.

Its customers include a number of sole trader businesses. They will be contacted by their new supplier.

"It is disappointing that E4B is gone," said a spokesman for the Federation of Small Businesses.

"This will leave thousands of small businesses looking for new deals on their energy in an extremely volatile market. We would urge Consumer Focus to get involved immediately to ensure new deals offered to small businesses are fair."

E4B signed businesses on to relatively long-term contracts which allowed them to pay in regular instalments throughout the year.

It bought electricity at wholesale prices, which have remained stubbornly high over the last year.

"The decision by the directors of E4B to place the company into administration comes as a result of volatility in the energy market," said Stuart Maddison, joint administrator and partner at PriceWaterhouseCoopers.

"We will be working closely with Ofgem to ensure an orderly wind-down of the company's activities and would like to reassure E4B's customers that the administration will not affect their supply of electricity."




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