Ofgem appoints company to take on CNG customers

Energy regulator Ofgem has appointed a new company to take on customers of Harrogate firm CNG Energy.

CNG ceased trading this month after 27 years and entered the regulator’s Supplier of Last Resort process.

The SoLR procedure was established as a safety net to ensure that when a company stops supplying energy, affected customers are guaranteed continuity of supply through other companies.

Ofgem has now appointed Pozitive Energy, which is based in Colchester, to supply energy to 41,000 customers of both CNG Energy and CNG Electricity.

In a statement on Pozitive Energy’s website, it said:

“We’ve reached out to all current CNG customers by post and email to let them know we are taking over their supply and what to expect over the next four weeks. We’ve confirmed current rates and how to secure more competitive rates with Pozitive Energy.”

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Meanwhile, Neil Lawrence, Ofgem’s director of retail, said:

“We understand that this news may be unsettling for customers, however they do not need to worry.

“Their energy supply will continue as normal, and domestic customer credit balances as well as some non-domestic credit balances, will be honoured.”

Downfall of CNG

The move follows the demise of Harrogate company CNG, which told its employees about the SoLR process in an email on November 3.

However, the company’s troubles became apparent in October when Paul Stanley, managing director of CNG, sent a letter to customers saying it was exiting the wholesale market.

The company, which is based on Victoria Avenue, supplied energy to about 15 to 20 retail energy companies through its wholesale business arm and also had around 50,000 business customers.

It had been impacted by spiralling global gas prices over the past few months.

About 145 jobs have been lost and staff have been told that wages for days worked this month are not guaranteed to be paid.

 

In Depth: Why Harrogate success story CNG ended in collapse

A sentence on CNG‘s website on Wednesday afternoon spelled the end of a company that for the majority of its 27 years was regarded as a Harrogate success story.

CNG had two business arms, supplying wholesale gas to around 20 energy providers as well gas to 41,000 small and medium-sized businesses, including several in the district.

But spiraling wholesale gas prices over the past few months meant CNG’s collapse was swift and unforgiving.

When was CNG founded?

CNG was founded by Colin Gaines following the deregulation of the gas industry in 1994.

The company began in a single office on the top floor of the Schlatter building on York Place but expanded to employ 145 staff with many in customer service and sales roles.

CNG president and former managing director Jacqui Hall told Insider Media in 2016 about the early days of the company:

“When we started we would knock on doors, word of mouth was critical. Lots of the staff used to work for British Gas and the clients were pubs and restaurants; independent businesses because we could make more margin.

“You could have easily built it on big contracts but if one went bust then the whole business would fall; the plan was lots of little, bigger-risk, bigger-margin clients – that was a strategic decision.”

Mr Gaines died in 2006 as did a second major shareholder within two days.

The company then had a number of partners including conglomerate Glencore, but in 2012, Ms Hall led a management buyout of the business.

CNG continued to expand and in 2014 moved from an office on Victoria Avenue into the former HM Revenue and Customs building on the other side of the road.

By 2016 it had posted revenue of £250 million — rising from £25 million in 2006.

CNG’s head office on Victoria Avenue

CNG was also synonymous with Harrogate Town football club, becoming the first-ever sponsor of their Wetherby Road ground from 2008 until 2020 when it was called the CNG Stadium.

The company was also well-known in Harrogate as a supporter of local charities and community projects. Garry Plant, Harrogate Town’s commercial director, told the Stray Ferret that the club was “deeply troubled” by their downfall.

He said:

“The club’s association with CNG was spread over many, many years and we are all deeply troubled by their demise.

“As a company they engaged in community projects across the district and they willingly gave a great deal back.

“We wish everyone at CNG the very best of fortune going forward.”

Timeline of CNG’s collapse

Why CNG failed

There has been a global squeeze on energy supplies with the price of gas rising by 250% since January.

This is, in part, due to a cold winter last year and increased demand from China.

CNG’s troubles became public on October 14 when Mr Stanley sent a letter to customers saying it was exiting the wholesale market.

The Stray Ferret understands the company was in talks with the government in an effort to save the business.

But the talks were to no avail. In a statement published this week after it ceased trading, Mr Stanley said the global energy crisis meant it could not continue trading.

The company had offered fixed-term tariffs to businesses over several years, but with wholesale prices rocketing it meant it had to pay the difference, which was ultimately unsustainable.

Mr Stanley said:

“The global energy crisis and extremely high wholesale energy costs have affected many suppliers already and unfortunately CNG is the next casualty. We have tried and exhausted all options to remain in business.”

Jamie Hailstone, former news editor of specialist energy website Utility Week, told the Stray Ferret that due to the current market crisis, it was inevitable that CNG would go out of business.

He said:

“CNG is the 19th business supplier to go out of business to September. The current crisis in the energy sector has been caused by the massive hike in prices, which has puts smaller suppliers like CNG under immense pressure, because they do not have the reserves of larger suppliers.

“It’s unlikely they will be the last casualty this Autumn, as the sector is bracing itself for more suppliers to go under.”

What happens next

CNG has now entered the Supplier of Last Resort process operated by the government’s energy regulator Ofgem.

The SoLR procedure was established by Ofgem as a safety net to ensure that when a company stops supplying energy, affected customers are guaranteed continuity of supply through other companies.

Administrators are expected to be appointed to wind up the company. All 145 jobs have been lost and staff have been told that wages for days worked this month are not guaranteed to be paid.

Businesses supplied by CNG also are unprotected by an £1,277 annual price cap, which is only for domestic consumers.

These business owners, including Grantham Arms landlord Simon Wade in Boroughbridge, will now be exposed to much higher gas bills.

He said last month:

“I’m facing a massive hike and it’s nothing to do with us.

“We’re completely shackled and it’s put us in a bad position”.

David Simister, chief executive, Harrogate District Chamber of Commerce told the Stray Ferret that the collapse of one of Harrogate’s best-known businesses is a “real blow” to the town.

“I feel incredibly sad for those 145 employees who have lost their jobs.

“Over the years, CNG, became one of the best-known business names in the district. It was a great supporter of local charities and a proud sponsor of Harrogate Town Football Club.

“It is the latest victim of the surge in wholesale energy costs, and more than likely it won’t be the last. For those firms who were supplied by CNG, they will now be contacted by a new supplier and placed on a new tariff, which I’m afraid to say will be higher than their previous agreement.”

Harrogate energy firm CNG ceases trading

Harrogate-based gas and energy supplier CNG has ceased trading after 27 years.

It has now entered the Supplier of Last Resort process operated by energy regulator Ofgem.

The SoLR procedure was established by Ofgem as a safety net to ensure that when a company stops supplying energy, affected customers are guaranteed continuity of supply through other companies.

An email sent to staff this morning by CNG chief executive Paul Stanley, which has been seen by the Stray Ferret, informs employees that the SoLR process has been approved by Ofgem.

The company has posted an update on its website this afternoon that says “After 27 years we are saddened to say CNG Energy Limited is ceasing to trade.”

The email from Mr Stanley said:

“Ofgem has confirmed that the SoLR process has been approved by them and will be on their website from 3pm today.

“We will be amending our website at the same time and we will then be able to offer clearer statements for customer service teams and sales people to use in discussions with customers, broker and other third parties.”

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The company, which is based on Victoria Avenue, supplied energy to about 15 to 20 retail energy companies through its wholesale business arm and also had around 50,000 business customers.

It had been impacted by spiralling global gas prices over the past few months.

The company is now expected to enter administration and the vast majority of staff made redundant.

Staff have been told that wages for days worked this month are not guaranteed to be paid.

The Stray Ferret has approached CNG for comment.

Major Harrogate employer CNG ‘enters liquidation’

A member of staff at one of Harrogate’s biggest companies has told the Stray Ferret that it has gone into liquidation today.

The CNG Group, which is based on Victoria Avenue and employs about 180 staff, is one of numerous companies affected by the spiralling increase in wholesale gas prices.

According to the source, staff were today informed they have lost their jobs.

The company supplies about 15 to 20 retail energy companies through its wholesale business arm and also has around 50,000 business customers.

The Stray Ferret understands that CNG has entered into the Supplier of Last Resort (SOLR) system and the administration and liquidation process.

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The employee, who requested anonymity, told the Stray Ferret:

“The staff were told to stay on and help the company close, they said that there was £12 million in the pot for redundancy pay outs.

“Just a couple of days later and today they have said that we will only be entitled to statutory redundancy through the government.

“There will be plenty of staff in a tricky financial situation, some have told me they are unsure how they will be able to pay their bills while they wait for the money to come through.”

The Stray Ferret has approached the CNG Group for comment but had not received a reply by the time of publication.

Boroughbridge pub fears energy bills could increase seven-fold

A pub landlord in Boroughbridge has said he fears his energy costs could increase seven-fold overnight amid concerns over the future of Harrogate-based energy firm CNG Group.

The Stray Ferret reported this morning that CNG is to stop supplying gas to energy customers, amid record wholesale gas prices.

It has also been reported that there is a deadline of tomorrow for organisations to submit bids to buy CNG’s small and medium-sized enterprises arm, which directly supplies gas and electricity to more than 40,000 SMEs.

One of those is the Grantham Arms in Boroughbridge. Owner Simon Wade told the Stray Ferret the move would have a major impact on his business.

Mr Wade is three years into a five-year contract with CNG, which provides gas to heat the pub at a rate of 5p a unit.

However, if the company collapses, he has been told by his energy broker that he will be placed on an emergency tariff that could be as much as seven times higher than what he currently pays.

He said:

“I’m facing a massive hike and it’s nothing to do with us. It’s a major concern”

“We’re completely shackled and it’s put us in a bad position”.

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Mr Wade said the pub had a good reputation and has been busy since reopening after lockdown but he was concerned that sky-high energy bills would eat into his takings.

He urged businesses to check their contracts or get in touch with their energy brokers to see if they are with CNG and, if so, make contingency plans, such as moving towards renewable energy.

He added:

“If you have an old building that relies on gas it eats into your budget.

“We’re backed into a corner, but we’re small fry.

“A lot of people will suffer and it’s not any of our doing.”

The Stray Ferret asked CNG for details of its current situation but did not receive a response by the time of publication.

Harrogate firm CNG to stop supplying energy companies

Harrogate-based energy supplier CNG Group is to stop supplying gas to energy companies, amid spiraling gas prices that have caused several companies to close.

CNG, which is based on Victoria Avenue, was set up 27 years ago and is one of Harrogate’s major employers with around 180 staff.

It supplies about 15 to 20 retail energy companies through its wholesale business arm. It also has about 50,000 business customers.

However, an email from chief executive Paul Stanley to customers, seen by the Stray Ferret, said the current energy crisis had caused “significant financial damage to CNG” and it was exiting the wholesale market.

The email urged customers to find alternative suppliers.

It said:

“The past few weeks in the energy market have been unprecedented. Market volatility has caused many suppliers to exit the market in a short space of time, causing a significant amount of financial damage to CNG.

“We expect more suppliers to fail in the coming weeks, further compounding the issue. We have been exploring options to sustain CNG’s shipping services, but it is with regret that I have to inform you that we do not have any further option but to exit CNG’s wholesale business.

“This means CNG will no longer be able to provide gas shipping services. We advise you to seek alternative shipping arrangements through other known gas shippers in the market.”

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Mr Stanley hailed the company’s return to profit in the latest annual report, published in June. This was in part due to improvements in its now stricken wholesale division.

But since June, the energy crisis has deepened and the future of the company appears uncertain.

Sources told Sky News that CNG was preparing its wholesale business for insolvency. Sky News also reported yesterday that the company has a Friday deadline for bidders for its small and medium-sized enterprises arm, which directly supplies more than 40,000 SMEs.

CNG was formerly the main sponsor of Harrogate Town’s stadium on Wetherby Road, which was called the CNG Stadium.

The Stray Ferret has asked CNG for a statement and if it expects to make any job losses but we had not received a response by the time of publication.

Harrogate Town’s ground renamed ‘EnviroVent Stadium’

Harrogate Town’s stadium on Wetherby Road has been renamed the EnviroVent Stadium ahead of the new season kicking off next week.

EnviroVent is a Harrogate-based manufacturer of ventilation equipment to homes and social housing, employing over 230 people at its Hornbeam Business Park headquarters.

The firm has a long-standing relationship with the club and has sponsored a stand for the past seven seasons.

2020 marks 100 years since the opening of the stadium, which was previously known as the CNG Stadium.

EnviroVent’s managing director Andy Makin said:

“We are delighted to extend our sponsorship of the club and obtain the naming rights. We are extremely proud of our local club, they have come very far over the past few years and have achieved so much recently.

“The club is an important part of the local community and it’s an honour to be able to play a part in its journey at this monumental time.”

A new main stand was recently constructed at the ground with close to 1,000 seats, boosting capacity to 5,000.

Garry Plant, managing director at Harrogate Town, added:

“We would like to thank EnviroVent for their continued support and look forward to working to making them proud!”

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The first few home games of the season will be played at Doncaster Rovers’ Keepmoat Stadium as Harrogate’s artificial 3G pitch is replaced with grass due to English Football League regulations.

The club aims to be back at its ground by early October.

The club kick-off their first-ever campaign as an EFL club with a trip to Tranmere Rovers in the EFL Cup on Saturday.

COLUMN: Businesses still face months of change and challenge

This column is written for The Stray Ferret by Jacqui Hall, non-executive director for CNG, a commercial based gas supplier in Harrogate, and regional chair of the CBI Yorkshire and Humber district:

Coronavirus and its impact has crept into every part of our lives. The world of business looks a very different place to what it did just a few months ago, and as it starts to reopen and begin its road to recovery, it will not look how we knew it.

The economy was hit hard by the necessary shutdown at the end of March, and recent data suggests the full impact of that difficult decision is still yet to come. Temporary closures and reduced operations have led to financial concerns with many business having faced or facing reduced income.

As businesses start to reopen, the Government has released some guidance on how to do so. The CBI has worked closely with the TUC and the Government to deliver a plan that works for employers and employees. All this builds on the good proactive plans many firms have developed during lockdown. Excellent employee engagement, fast workplace innovation and transparency have helped many companies support livelihoods. The financial support has been a lifeline for businesses and as the economy restarts and situations continue to change this is ever adapting to become more individual sector specific.

But even with all this support – the battle is not necessarily over yet. Businesses still face months of change and challenge as they navigate through the recovery phase, operational costs are higher, overheads are increasing and most businesses are having to operate at a reduced capacity in order to adhere to government guidelines.

Most businesses look extremely different to what they did prior to lockdown, with many of their operating models changing completely. We’ve seen B2B businesses move to B2C, restaurants become takeaways and innovators stimulating new technology adaption or bringing technologies already in place to the forefront of their businesses. As we move toward the ‘new normal’ these business are now faced with a new challenge – do they revert back to old ways or continue with the new model they’ve adopted? Customer habits and needs are changing and it is hard to predict where the next six months will go.

It’s not all doom and gloom though, it is an opportunity for businesses to adapt and change – there is an appetite for them to learn from others, adopt new strategies and build back better.

At CBI we are committed to this effort to ensure Yorkshire and every region across the UK is positioned to bounce back from this crisis as quickly as possible whilst making investments in skills, infrastructure and technology needed to sustain inclusive growth.

It’s not going to be easy, but it is just as important now than ever that we pull together – this is a long road, but one we aren’t on alone.

 

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