Britain’s biggest independent pay-as-you-go energy supplier is poised to shrug off a price cap imposed by the industry regulator as it plots a £120m sale to new investors.
Sky News has learnt that Utilita Energy is in advanced talks with at least two prospective buyers, with a deal expected to be struck within weeks.
Details of the sale, on which Utilita is being advised by PricewaterhouseCoopers, have emerged 24 hours after energy prices were thrust back into the spotlight by British Gas’s decision to increase electricity prices by 12.5% from next month.
The Government was forced to defend the absence of a broader price cap from the Queen’s Speech despite its appearance in the Conservatives’ election manifesto, but indicated yesterday that a move to legislate against spiralling energy prices could still be on its agenda.
Utilita has already been subject to a price cap since April, as 99% of its 545,000 domestic customers are on pay-as-you-go tariffs.
Ofgem, the industry watchdog, said in a letter to suppliers unveiling the cap that competition authorities had “found that pre-payment customers have suffered particularly high levels of detriment”.
“These customers have not been able to benefit from competitive prices in the same way as other customers, and unlike for other customers, where prepayment customers pay too high a price, the detriment may be felt in abruptly curtailed consumption,” Ofgem said.
The identity of the bidders for Utilita was unclear on Wednesday.
Roughly two-thirds of the company’s shares are held by Secure Meters, a provider of smart metering technology, with 20% owned by Bill Bullen, Utilita’s chief executive.
It is unclear whether Mr Bullen will sell his stake as part of any transaction or whether he intends to remain with the company.
The energy group’s customer base has more than doubled during the last two years, although it has warned that the pre-payment price cap will have a significant impact on profits this year.
“We said this to the CMA a year ago… you have chopped the margins in the prepayment market down so low the only option for many companies is going to be to extract that margin from somewhere else,” Mr Bullen told one newspaper earlier this year.
Utilita recorded an operating profit in 2016 of £27.3m on turnover of £271m.
The company has struck partnerships with football clubs including Leeds United and Sunderland as it seeks to raise its profile.
Last month, it passed 1m supply points in the UK across its various operations.
A Utilita spokesman confirmed that a sale process was underway but declined to comment further.