Tackling Fuel Poverty
Decision Maker: Cabinet
Decision status: For Determination
Is Key decision?: Yes
Is subject to call in?: Yes
To approve the Business Case to proceed with the development of a Wirral Energy Company.
Councillor Phil Davies, Leader of Wirral Council, said:
“Fuel poverty is a growing issue throughout the UK, with people finding it more and more difficult to properly heat their homes and afford the rising costs of gas and electricity. 1 in 10 people in Wirral are in this same situation.
We must do everything in our power to support our residents to live safe, healthy and fulfilling lives. This report proposes we create a new energy company, which would – at no cost to the tax payer – put us in a position to sell gas and electricity to residents at a much lower rate.
I am delighted we have been able to produce such an imaginative proposal to help every resident in our borough save money on their energy bills”.
Councillor Phil Davies introduced a report which informed that across the country, local authorities were taking action to improve energy security, lower energy bills and support community economies by seizing opportunities to get involved with energy supply. By doing this they were able to provide customers with an alternative to the “Big 6” utility companies.
The Cabinet noted that as fuel poverty continued across the UK, consumers in the most need continued to be faced with a lack of choice from the energy industry. Local Authorities had been exploring various models to tackle this, from collective switching to energy efficiency measures and a number of them had already entered the energy market, mainly as either a Fully Licensed Operator, a White Label Provider or as a License Lite operator.
The Council now wanted to take action to reduce the number of people paying too much for gas and electricity. It was believed the best way to achieve this was to establish a new local energy supply service offer, which could provide competitively priced energy supplies supported by a programme of smart meter installations.
It was reported that research recently published by the Citizens Advice Bureau showed that people who had to use pre-payment meters, paid on average, an extra £226 a year on their energy bills, compared with those paying the cheapest direct debit tariff.
The Council was seeking to help address the issue of fuel poverty, as it was noted that it was an issue that affected a large number of Wirral residents (10.9%), and setting up an energy supply service would help alleviate this by enabling residents to obtain cheaper gas and electricity.
The Cabinet noted that there were three main Energy market considerations, each with differing levels of risk:
· Fully Licensed Operator (Example: Nottingham City Council)
The Local Authority applied to Ofgem for a license to become a gas and electricity energy supplier. It had to comply with a number of industry codes.
· White Label Provider (Example: Liverpool City Council, Cheshire East)
The Local Authority doesn’t hold a supply license itself, but partners with an already established licensed supplier to offer gas and electricity under its own brand (e.g. Wirral Energy). The Partner will already possess an energy license together with the relevant statutory and compliance infrastructure.
· License Lite (Example: Greater London Authority)
The Local Authority took on the role of an electricity supplier with an existing senior energy supplier. The LA applied to Ofgem for an electricity only licence and had to comply with all aspects of the electricity licence except for compliance with industry codes.
The Cabinet was informed that this project would enable residents, who were currently less able to switch energy providers, to do so more easily, as the option proposed did not require residents to pay a switching fee. There was a key piece of work to be under taken with landlords to encourage them to take advantage of the cheapest tariffs available.
This project would contribute economically by maximising household income for the most vulnerable and low income tenants and by supporting more households out of fuel poverty.
It was intended to provide the Cabinet with further reports as the work developed.
Councillor Bernie Mooney considered this to be a fantastic initiative and was an extension to what the Council did to look after the most vulnerable people who lived in the Borough. Councillor Stuart Whittingham drew the Cabinet’s attention to the fact that an estimated 15,568 Fuel Poor Households in Wirral.
(1) the setting up of an Energy Company as recommended be approved;
(2) Transformation Programme Office be requested to explore the possibility of working in partnership with other local authorities to establish an Energy Company;
(3) the Transformation Programme Office be authorised to assemble a project team to progress work on the establishment of an Energy Company;
(4) a partnership agreement (if required) in respect of the energy supply service be set up;
(5) Officers be requested to carry out a procurement exercise in order to find a licensed supplier; and
(6) the contract be awarded to the preferred supplier following the conclusion of the procurement exercise.
Councillor Phil Davies vacated the Chair and left the meeting whilst the next item of business was under discussion.
Councillor Ann McLachlan in the Chair.
Report author: Joe Blott
Publication date: 13/04/2017
Date of decision: 27/03/2017
Decided at meeting: 27/03/2017 - Cabinet
Effective from: 27/04/2017