By Paul Homewood
h/t Joe Public
https://labour.org.uk/manifesto/
As with much else, Labour’s answer to Britain’s energy problems is to nationalise.
They have a big problem though. Four of the so called Big Six energy suppliers are foreign owned. RWE and E.ON are German owned, EDF is French, and Scottish Power is part of the Spanish company, Iberdrola.
Somehow I don’t think the EU will allow Labour to nationalise their assets.
They have therefore had to fudge the issue.
This was their manifesto promise last year.
So what about these local, cooperative ventures? Surely they will be able to lower prices and improve service, as they will be non profit making?
Well, maybe not!
We have already seen several small energy companies fold in the last couple of years, as they simply did not have the financial strength to manage the ups and downs of the energy market.
Back in 2015, Bristol’s Lib Dem led City Council set up Bristol Energy. It seemed to tick all the right boxes:
Bristol Energy is a national gas and electricity company that’s making a positive difference.
Paying too much for your energy? No idea where your money is going? We believe there’s a better way.
Better for your family, better for your business, and better for communities around us.
Better for you
We keep our prices as low as we can. So if we make a saving on the energy we buy, we pass this on to you. Simple. Fair. Transparent. The way it should be.
Better for communities
Our profits will go straight back into Bristol. We’re owned by Bristol City Council, so the money you pay for your energy will help local communities. Feels good doesn’t it?
Better for business
We offer fair deals for business customers too, as well as 100% green electricity. So you can be more sustainable at work and at home.
Keeping it simple
Our Bristol-based customer care team makes energy clear, simple and straightforward. And we’re a friendly bunch. Live in Bristol? Come and see us at the Bristol Energy Hub on Bristol’s Harbourside.
Kinder to the planet
Choose our My Green Plus for 100% green electricity for your home. And we’ll get greener as we grow, to give you more sustainable energy whichever deal you choose.
https://www.bristol-energy.co.uk/
What could possibly go wrong?
Quite a lot as it turns out!
The BBC were natural quite bullish at the outset, despite reservations from other councillors. In Feb 2016, they reported:
A municipal energy firm is promising to reinvest its profits back into the community.
Bristol Energy, which provides gas and electricity, was set up by the city council and is its only shareholder.
Although the social benefits of the company will centre on Bristol, its tariffs will go on sale through the United Kingdom.
Future projections of the firm’s profitability have been disputed by some councillors.
Figures questioned
Bristol’s elected mayor George Ferguson said he is in the process of switching his home energy requirement to the new company.
Asked if the council would follow Mr Ferguson’s lead and switch its energy provider, a spokesman said: "Bristol Energy does not currently supply the council, but will be taking part in the next competitive tendering processes for the supply contracts."
Bristol City Council owns the company’s shares, and said that any profits will be returned to it, making a return by 2019.
But UKIP councillor for Hengrove, Michael Frost, said there was nothing to substantiate or suggest how the authority would make any money from the venture.
"I’m a bit concerned that anybody looking at this – and talking 35% profit – I mean how many businesses make 35% profit?" he said.
Bristol Energy’s managing director, Peter Haigh, said the company hoped to set itself away from other suppliers "as a force for social good".
"We have to pay energy bills anyway, so why not pay them to a company that will spend the profits on local services and projects?," he said.
Bristol City Council took the decision to set up the company in 2010.
Last February it produced its business plan, which was formally approved by the council’s cabinet in July 2015 and it was given the green light to start trading in December.
http://www.bbc.co.uk/news/uk-england-bristol-35588573
A year later, things were not quite as rosy, as the BBC again reported:
A council-owned energy company set up a year ago has said it is on course to return a profit by 2021.
Bristol Energy provides gas and electricity, with tariffs on sale across the UK.
The firm said it had revised its original business plan after customer take-up was lower than expected and said it was now hitting those targets.
Bristol City Council has invested £15.3m in the business and said it was "showing a positive trajectory".
The council would not say when its investment would be paid back as the information was "commercially sensitive".
http://www.bbc.co.uk/news/uk-england-bristol-39803173
A month ago, however, the local Bristol Post newspaper gave a much more frank assessment:
Bristol City Council’s energy company is running at a £8.4million loss despite having an eye-watering £17.3million worth of taxpayers money sunk in to it.
Officially launched in 2015, Bristol Energy provides gas and electricity to almost 65,000 customers including 13,000 in Bristol.
But there are rumours swirling around City Hall that all is not well with the company.
The Bristol Post has learnt the council has rejected its latest draft business plan as it was not satisfied with its projected number of customers.
A council source also revealed concerns have been raised about the amount of time Bristol Energy will take to pay back its sizable loan – which will continue to increase as the council pays the company an undisclosed annual fee.
When asked, a company spokesperson said they could not disclose the figure as it is considered to be a “commercially sensitive information”
The roots of Bristol Energy go back to 2010 and the former Liberal Democrat administration.
The company is based on the honourable ethos of providing ethically sourced, low cost energy to people across the country and returning all profits to Bristol City Council.
But the enterprise is yet to climb out of the red, and the expected date for making a profit keeps being pushed further back from its initial estimate of 2019 to the latest projection of 2021.
These timescales are not unusual for new businesses, especially ones with a social interest in a highly competitive and volatile market.
However, Bristol Energy is not a typical private company. The firm is run by the council which is itself facing unprecedented financial constraints due to previous mismanagement and a reduction in funding.
In fact, the £17.3million the council sunk in to the company makes up a sixth of its £108million five-year deficit, for which is Mr Rees is having to carry out a series of punishing service cuts to balance.
https://www.bristolpost.co.uk/news/bristol-news/bristol-energy-running-84million-loss-1132124
Unfortunately for Bristol’s taxpayers, this is the sort of thing that happens far too often when politicians and bureaucrats decide they can run things better than the private sector.
Bristol Energy claim in mitigation that their customers save on average £200 pa on their energy bills. But given that 80% of their customers live outside the city, Bristol council taxpayers must be furious that they are subsidising consumers in Newcastle and Norwich.
Even the claim of £200 pa savings is a fake one, as it seems to have been calculated against Standard Tariffs, which are much more expensive than other deals around.
I have plugged my details into Uswitch, and get these offers. E.On and British Gas are mong the top six, all at similar prices.
Bristol Energy’s offer is back in the pack in 12th place, about £50 pa dearer.
The reality is that the market place is remarkably competitive, contrary to popular myth. The introduction of publically owned and cooperative companies as competition appears to make little difference to market prices, even when they are heavily subsidised as Bristol Energy is.
Meanwhile, Bristol’s citizens pay the cost of their leaders’ green pipe dreams.
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