Bust TelDaFax to keep power flowing as customers fret

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Bust TelDaFax to keep power flowing as customers fret

The insolvency administrator for low-cost power provider TelDaFax is seeking to calm fears from customers that their electricity will be immediately cut off. But prepaid customers may end up losing money.


“The uninterrupted supply of electricity and gas is a priority,” said Wolfgang Weber-Thedy, the spokesman for court-appointed administrator, on Wednesday. “Of course we’re delivering to customers.”

TelDaFax had roughly 700,000 customers throughout Germany before it declared insolvency on Tuesday. That followed a year of financial turmoil in which it was accused of shoddy accounting practices and running a business that could only stay afloat by rapidly attracting new prepaid customers.

In recent weeks, the company appeared to be doing everything possible to cut expenses, most notably by bowing out of a sponsorship deal with the Bayer Leverkusen football team – a move which was expected to save the company €13 million ($18.7 million).

While the strategy of requiring customers to pay in advance was convenient and gave the company immediate cash infusions, it may ultimately prove damaging to people who prepaid thousands of euros for energy up to a year in advance.

Consumer advocates have said it was unlikely that they would get all their money back. It is not yet clear if TelDaFax will be completely liquidated – Weber-Thedy said he was trying to get an overview of the situation – but, in general, TelDaFax customers have three months to find new energy providers, according to the Handelsblatt newspaper.

The Federation of German Consumer Organisations said it deplored the situation and called for stricter regulation of the energy sector.

“We cannot have a provider advertise with cheap prices, require payment in advance and then leave the consumer in the rain,” said the group's director Gerd Billen.

DAPD/The Local/mdm


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