Utility Week

UTILITY WEEK | 26TH OCTOBER - 1ST NOVEMBER 2018 | 13 Policy & Regulation market. We have people on the ground who understand the partnership we have in place already, and that will allow us to reach dis- engaged customers and show them how they can save money." But while some local authorities appear interested in pursuing white label deals with existing suppliers, not everyone is convinced they offer the best deal for councils, particu- larly in the long term. Consultant Stephen Cirell, who has worked on a variety of local authority energy projects around the country, says councils will not make "any money at all from a tradi- tional white label deal". "All you get is a cheaper tariff in your area with your name on it," he says. "You can't sell the brand at the end of the contract and depending on what's in the agreement, you could have very few rights at the end. "The customers under a white label are a customer of the licence holder, not the brand. At the end, they go back to the licen- see. That's why I'm very unhappy with tradi- tional white label deals – you get no money, you don't develop anything with value and you don't control the tariff." Cirell says a fully fledged local authority energy service company remains the "Holy Grail". "It is harder to get going. There is a com- mercial risk. But once it is up and running and the investment has been paid off, it will generate a six-figure sum per annum for the local authority. "The brand and the company both have a value," he adds. "When you start to look at the success companies like Robin Hood Energy have had, you realise there is a modus operandi and a demand for civic energy companies." Looking forward, Cirell says he can see between six and twelve regional local authority companies covering the entire UK. "Within the next five years, you can expect at least six more energy service com- panies to launch," he says. "You'll end up with regional coverage, similar to local authority purchasing organisations. "There will be one in Scotland, whether involving the Scottish government, local authorities or both," he predicts. "There's bound to be one in Wales. There will be another in the South West. A group of authorities are talking about the potential of creating one in the North East and a group of councils across the English and Scottish border are also looking at doing a licensed company as well." Ryan Thomson a partner in Baringa's energy practice tells Utility Week he believes The main players Robin Hood Energy and Bristol Energy are currently the only two fully licensed energy suppliers run by local authorities. Robin Hood Energy Robin Hood Energy was the first local authority-owned energy com- pany to be launched in the UK, in 2015, and is based in Nottingham. The company says its ambition is to reduce fuel poverty across the country. Robin Hood Energy came 15th out of 31 energy firms rated by 8,761 members of the general public in the annual Which? satisfaction survey. In October, it announced a 14.8 per cent price increase for customers on its standard variable tariff. Robin Hood Energy has white-labelling arrangements with eight other energy sup- pliers – most of them council-owned – whereby Robin Hood's tariffs are repackaged by its partners under their own branding. They include: White Rose Energy in Leeds, Ram Energy in Derby, Angelic Energy in London, Great North Energy in Doncaster, Citizen Energy in Southampton, and Leccy in Liverpool. Bristol Energy Bristol Energy is a municipally owned energy company founded in 2015 by Bristol City Council and began trading in 2016. It describes itself as a "force for social good" and aims to deliver non-profit energy using renewables at lower prices than large profit-making energy corporations. Bristol Energy offers six simple tariffs at competitive prices, including a green option that provides 100 per cent renewable electricity from local sources. Bristol Energy was ranked 11th out of 31 energy firms rated by 8,761 members of the public in the annual Which? satisfaction survey. Defeat for Victory Energy Local authority energy is not always profitable, as was found out by Victory Energy in August. The Portsmouth Council-owned company was scrapped before it even became operational. Having already cost £2.5 million, the council, headed by Liberal Democrat councillor Gerald Vernon-Jackson, said at the time it could require many millions more to get up and running. The scheme, which was approved by the previous Conservative administration, had already received significant investment, and the current cabinet felt it "more responsible to cut the council's losses" rather than risk spending further money with no guarantee of it being returned. PwC was asked to compile a report into the profitability of the company and report- edly said the scheme could be profitable. In another report to the cabinet written in July last year it was suggested Victory Energy would require a total of £3.8 million investment from the council, but PwC's current estimate is that it would take at least £15.2 million with no guarantee that changes in the market would not increase this amount further. The same report forecast that 25,000 customers per year would be needed to make the company viable, a figure that has now risen to 50,000 according to the com- pany's business case. continued overleaf Robin Hood Energy advertising Bristol Energy at launch

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