BES Utilities says it plans to sue Trading Standards, which raided its premises in 2016.
The company will seek £8.6 million in damages against Cheshire West and Chester Trading Standards.
BES Utilities recently took two individuals to court alleging they waged a campaign of misinformation about the company.
BES claims this may have played a role in triggering the Trading Standards investigation.
It is understood the individuals have given voluntary undertakings not to attempt to interfere with the business, although they are understood to have strenuously denied doing so.
BES Utilities founder Andy Pilley, said he had “no doubt” that Trading Standard’s decision to investigate the company was influenced by the actions of the two individuals.
“We have now lodged a claim for damages against Cheshire West and Chester Trading Standards in the High Court,” said Pilley.
The company claims that 18 months after the Trading Standards action, no company director or employee has yet been interviewed by investigators.
However, Trading Standards says its investigation into alleged mis-selling is ongoing.
BES says its claim relates to reputational and financial loss to the business, along with sister company, Commercial Power, which was also visited under warrant.
BES was hit with a £980,000 penalty by Ofgem in 2015 for treating customers unfairly. The regulator said it had not told customers about important contract details when they signed up. The company said it has since hired more staff and improved processes to address the issues.
BES supplies 42,000 business customers.
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