THE cost of gas and electricity for the domestic consumer is a matter of concern. Hence the decision of the government to apply a cap to energy prices.
Fuel poverty can contribute to ill health, and is a burden upon the NHS.
Therefore a number of local authorities have been looking into setting up a publicly owned not-for-profit energy company. There are no middlemen, no private shareholders, no dividend, no profit. Any surplus goes back into the business.
Robin Hood Energy Company has emerged in Nottingham, and a number of other local authorities have shown interest in such a project, such as Bristol, Birmingham, London, West Sussex and Portsmouth.
Southampton has created a company Citizen Energy, acting in conjunction with Robin Hood Energy Company.
However, there are risks.
The market is competitive and challenging. Substantial capital is required. Set-up costs are high. Technical requirements are very challenging. Good management skills are needed. Elected members and local government officers are not noted for business acumen. The energy industry is heavily regulated, e.g. multiple licence conditions and demanding safety and pollution standards. The generating and wholesale price of energy is extremely volatile, frequently changing, requiring long forecasting skill. Profit margins in the industry are not high.
The Robin Hood Energy Company reportedly lost £7.6m in a recent trading year.
The regulators OFGEM and the Competition and Markets Authority may be called upon by the private commercial energy companies to adjudicate upon complaints of alleged unfair “state aid” from public funds, namely the council tax payer.
The public need to be warned of the risks.
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