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Collapsed Avro Energy paid directors £2.2m despite £28m loss

·2-min read
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An energy supplier that collapsed this week leaving 580,000 customers in the lurch paid out £2.25m to a company run by its two directors in the same year that it made a £28m loss.

Avro Energy, whose directors are former footballer Jake Brown, 27, and Philip Brown, 57, on Wednesday became the latest casualty of soaring wholesale gas and power prices.

Six household energy suppliers have collapsed this month, with more than 1.4m customers to be moved onto another supplier and potentially higher tariffs as a result.

Avro Energy's latest published accounts, for the year ending June 30, 2019, showed a £2.25m payment to Sentido Marketing for "management charges".

Sentido's directors are listed as Jake Brown, Philip Brown and a third man, William Brown. The company is classed as an advertising agency on Companies House.

Avro's finances will be scrutinised by administrators in coming weeks as concerns mount about the resilience of the retail energy industry.

The company is among dozens of smaller suppliers that rushed into the market amid efforts to encourage competition.

Many have struggled to survive, leading to concerns about whether they had insufficient backing and knowhow. The failures have also led to anger among the stronger suppliers forced to pick up costs they leave behind.

The market comprises less than 50 suppliers compared with about 70 in 2018, stealing about a quarter of market share from "big six" companies such as British Gas.

Many more small suppliers are expected to collapse, with wholesale gas prices about six times as high as this time last year and power prices about four times higher than is typical for the past decade.

Suppliers that failed to lock down lower prices are vulnerable, as the price cap means they cannot pass on soaring wholesale costs to customers.

Avro, founded by former Atherstone Town midfielder Jake Brown in 2015, made a loss of £28m in 2019 on sales of £389m, with wafer-thin margins, accounts show.

Under Ofgem's safety net, Avro's customers will be moved to a new supplier, where it is likely they will be put on default tariffs, due to rise by 12pc on October 1. Industry sources say it could cost larger suppliers £550 to £700 to take on each customer, including buying their energy for the winter and covering bad debts.

Commenting on The Telegraph's estimates, Ellen Fraser, of Baringa Partners energy consultancy, said they showed the "stark reality of just how much money is needed to protect consumers of failed suppliers in this turbulent market".

Avro did not respond to a request for comment.

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