COLLAPSED ethical power firm People’s Energy sought £30 million survival cash from the Scottish Government, the Sunday National can reveal.

The four-year-old community interest company, which promised to revolutionise the market and plough three quarters of profits back to customers, went under shortly afterwards.

When it did, it had 350,000 customers across the UK and a workforce of 450 in Midlothian and the Borders.

Some of them are now preparing legal action over the way bosses handled the matter, claiming they failed to consult with the workforce over redundancies.

And, after being appointed to sweep up People’s Energy customers by the official regulator Ofgem, British Gas owner Centrica is amongst the major players to be refused UK Government subsidies in order to cope with the costs involved.

READ MORE: Ofgem appoints British Gas to take on People's Energy customers amid gas hikes

Today the Sunday National can reveal how People’s Energy sought urgent help to avoid going under. Talks were held in the weeks leading up to its final day a fortnight ago amidst soaring wholesale gas prices. Global pressures on supplies have pushed costs up in Europe and the UK. The 70% surge since August is part of a 250% increase experienced this year.

The problem’s particularly acute in the UK, which is one of the biggest users of natural gas in Europe, with 85% of homes reliant on this for central heating and one third of electricity generated by gas. Centrica had aimed to create a North Sea gas storage facility in Suffolk, but scrapped those plans in 2013, blaming a lack of government support.

Westminster, which retains responsibility for oil and gas, introduced an energy price cap to limit costs for households on standard tariffs two years ago. That’s set to rise within days, bringing a 12% hike in bills to around 15 million households from October 1, and it’s expected that this will be followed by another in April because of the profits squeeze on firms, meaning consumers may face two rises within six months.

The National: LONDON, UNITED KINGDOM - OCTOBER 29, 2019: Minister of State for Business, Energy and Clean Growth Kwasi Kwarteng arrives for the Cabinet meeting at 10 Downing Street on 29 October, 2019 in London, England - PHOTOGRAPH BY Wiktor Szymanowicz / Barcroft

Kwasi Kwarteng (above), UK Secretary for Business, Energy and Industrial Strategy, says there’s no shortage of supply and has ruled out state bail-outs for failed companies, saying: “There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop-up companies which have poor business models and are not resilient to fluctuations in price.”

Speaking to BBC Good Morning Scotland on Friday, Peter McGirr, whose Green Energy has also folded, said a Tuesday round-table meeting with Kwarteng had been “pretty pointless”, adding: “He finally listened and talked to all the small suppliers, but we were in there for an hour and it felt like for an hour we were talking about what colour to paint the stables now that all the horses are bolted.

Registered at Shawfair Park in Dalkeith, Midlothian, People’s Energy was led by its founders Karin Sode and David Pike, who were contacted for comment by the Sunday National. Accounts filed for the year ending December 2019 show 94% customer growth and a 327% jump in turnover. A TV ad campaign in 2020 drove another 283% boost in sign-ups and Pike’s report forecast that it would “continue its rapid growth”, having launched a community fund to support people experiencing fuel poverty – something that affects an estimated 25% of Scottish households.

The National: Colin Beattie MSP

It also noted the “industry-wide risk of volatility of price in the energy market”, but said actions had been taken to mitigate this. But the firm approached politicians including local Midlothian North and Musselburgh MSP Colin Beattie (above) several weeks ago as its fortunes dimmed. He said: “They came to me to try and get a bail-out from the Scottish Government. The minister did get involved but energy is not a devolved matter. Intervention by the Scottish Government by a subsidy or whatever is just not permitted, but we did lobby the UK Government. Very suddenly after that they collapsed – they couldn’t sustain the price rises.”

Beattie says he “would have liked to see” action to save the firm, which is understood to have sought £30m, if its model was found to be viable. On the position for staff, he went on: “A lot of these are at high risk and the the quicker other employment opportunities can be found, the better. We have been in touch with the Government’s PACE [Partnership Action for Continuing Employment] team, who are actively engaged with the company and shortly with the employees. I’m very hopeful.”

On the rising cost pressures on households, he went on: “The Scottish Government is extremely worried about the consequences of all these issues but we don’t have many levers because the economy is not in our power, gas is not in our power.”

A Scottish Government spokesperson said: “The Scottish Government engaged with both People’s Energy and Scottish Enterprise in recent weeks following a request for financial support. Scottish Enterprise were in the process of assessing due diligence, however, the company’s position further deteriorated and People’s Energy exited the market before this process could be completed.

“We remain concerned regarding the situation facing People’s Energy, based in Dalkeith and Selkirk, and know this will be a very difficult time for the company’s staff and their families. Scottish Enterprise have been working intensively with the company to try to secure a positive outcome for the business and its staff.

“In the unfortunate event of any employees being made redundant, the Scottish Government will offer support through the Partnership Action for Continuing Employment initiative. Through providing skills development and employability support, PACE aims to minimise the time individuals affected by redundancy are out of work.”

Overall, almost 1.5 million customers have been affected by multiple power firm failures in the past fortnight, including Avro Energy and Green. Official rules mean there will be no disruption to their supplies while a new firm is found to take over their accounts.

On the problems facing the energy market, Beattie, who is deputy convenor of the Scottish Parliament’s Economy and Fair Work Committee, went on: “We have got big problems out there, so what is Westminster doing about it? Our worry is that they don’t know what to do.”