Increasing gas and electricity costs, falling wages, and poorly insulated homes are forcing more and more people into fuel poverty – but could local authority owned energy companies help alleviate the problem by offering households a fairer deal on energy?
While the government has been busy wrestling with the idea of imposing a price cap, some local authorities have decided to tackle head on, the problem of high energy bills – Liverpool Energy Community Company, north London’s Angelic Energy, and Derbyshire's Ram Energy, are just a few such are suppliers launched by local authorities to combat what they see as unfair pricing by the big utilities.
We asked our Twitter community if they would leave a larger supplier for a community renewable scheme, or locally-owned provider, and over three-quarters agreed they would.
But how can locally-owned energy companies succeed in offering ‘fairer’ pricing, where more established players in the energy market have failed?
Back in 2015 Nottingham County Council launched Robin Hood Energy, a local-authority backed energy company that has gone on to become one of the cheapest suppliers in the East Midlands.
But it’ not only cheaper pricing that makes Robin Hood Energy stand out among a crowded market, it’s also turned completely on its head the business model of relying on customer inertia – instead of hoping customers will simply let their deals roll over onto more expensive standard variable rate (SVR) tariffs, Robin Hood Energy contacts customers to help them move to the cheapest tariffs based on their energy use.
This proactive approach has worked in two ways – not only are customers alerted to the best deals to avoid paying expensive SVR rates, other energy companies are cutting their prices to compete, and the East Midlands now has the most competitive prices in England, with average tariff prices dropping by £87.
Gateshead Council has taken community ownership a step further by developing its own power-generation, heat and electricity networks to help reduce its carbon footprint and generate revenue by selling power to local businesses.
This energy generation model has been successfully implemented by Thameswey Group, which has used public and private funding to set up solar and gas “combined heat and power” engines that generate electricity and capture the heat created in the process.
Founded in 1999 by Woking borough council in Surrey, Thameswey Group has also installed pipes to transport hot water direct to council buildings and commercial customers, as well as a “private wire” network to take electricity from its CHP engines directly to customers. In bypassing the National Grid and local distribution networks in this way, this cuts out the network costs that usually account for about a quarter of ordinary energy bills.
Community renewable energy schemes have struggled since the government cut wind and solar subsidies and took away investment incentives, but local energy companies could offer long-term contracts and investment, and even invest in growing technologies such as smart grids and electricity storage.
They even become energy services companies – since the government’s green deal ended there has been no incentive that enables households to install energy efficiency measures and pay for them out of the long-term savings in their energy bills, but local energy companies could fill this void.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.