British Gas has acquired Robin Hood Energy, the failing council-owned energy supplier whose clients include former Labour leader Jeremy Corbyn.
The company, which has fallen into heavy debt, has made more than 250 employees redundant as a result, company sources say.
Staff were told this afternoon that they no longer had jobs.
Robin Hood's 112,000 residential customers and 2,600 business clients will transfer to British Gas over the next few months after the deal closes on Sept 16. British Gas owner Centrica did not disclose how much it was paying for the company.
Chris O’Shea, Centrica chief executive, said the deal was a "value-generating" opportunity. "We are delighted to welcome Robin Hood customers to British Gas. We are pleased to be able to offer every customer moving to British Gas a tariff which means their price will not be any higher and, importantly, they will be supplied with green electricity and have access to a range of other benefits.”
Robin Hood Energy had hired Deloitte to oversee the sale of its book to British Gas.
The firm was launched by Nottingham City Council in 2015 but fell into financial difficulty last year.
The council was forced to write off loans worth more than £24m after the supplier failed to make money.
Robin Hood’s parlous financial situation was revealed in August when the company finally released long-overdue financial statements following a delay of more than seven months.
The accounts show that the company lost £23m in 2018-19, and that Nottingham council’s investment is now worthless.
The company has been rocked by the departure of several senior executives in the past year. Nottingham City Council said that it had “recognised for some time that the long-term financial outlook for Robin Hood Energy was not sustainable”.
An investigation was ordered by Councillor Graham Chapman in 2018, and was undertaken by law firm Grant Thornton.
The final report, seen by The Telegraph, paints a damning picture of how the energy supplier was run. It found that more than £43m of public funds were used to prop up the business.
This funding led to budget cuts from other areas of the council’s services, the report suggests. MPs have criticised the company for its failings, saying that “lessons must be learnt”.
“The question is why did they fail,” said one energy industry source. “They actually had a decent team in place but the private sector didn’t marry up with council intent, capability, or understanding to make effective decisions.”
Meanwhile staff at fellow council-owned Bristol Energy have been told that the business intends to sell its domestic customer accounts after falling into financial trouble, a company source said.
Bristol City Council has injected £35m into the struggling business since 2015. Earlier this month, the company said that it had sold its 4,000 business customer accounts to supplier Yü Energy for £1.3m.