Bristol City Council is reportedly looking to sell its non-profit, wholly-owned utility firm Bristol Energy, after investing £37.7 million of taxpayer’s money into the venture.
The council has appointed accountancy firm Ernst and Young (EY), officially to “provide professional advice to the Council by undertaking a full and thorough assessment of Bristol Energy’s structure and future business viability,” according to a spokesperson. But Sky News has reported that EY will be searching for a buyer for Bristol Energy's customer book.
Founded in 2015, the supplier was projected to turn a profit by 2019, but last year posted an adjusted operating loss of £10.1 million, taking its total losses to £29.7 million over three years of trading. The supplier is now not projected to break even until the 2023-24 financial year.
Bristol Energy has blamed “extremely challenging” market conditions, including volatility in the wholesale market, for the losses.
A council-owned green energy supplier had been touted as useful for City Leap, Bristol’s £1 billion project to build smart energy infrastructure and make the city carbon neutral by 2030. Earlier this year, Bristol Energy said it had taken "a significant step on its journey to becoming a wholly green energy supplier" with the launch of three new tariffs, supplying lower carbon gas and 100% renewable electricity sourced directly from local wind and solar farms. Currently, Bristol Energy has power-purchase agreements with 50 renewable generators.
However, two weeks ago Bristol Mayor Marvin Rees said the city would not be investing further money in the company. He blamed the previous administration on the council for setting up the supplier, a move he said was “not sensible.” Opposition leaders on the council have criticized Rees for previously defending Bristol Energy and called for an inquiry into decision-making about the supplier and its sale.
Lib Dem group leader Councillor Gary Hopkins said: “We knew this was inevitable. They were pumping money in so they didn’t have to face up to the crystallisation of the debt. They were coming up with comments like: ‘It will turn around’, but frankly they had given up on that some while ago."
It’s understood that the council will only recoup part of the money it has invested in the company through its sale.
Bristol Energy supplies around 100,000 domestic customers and 4,500 businesses, but the vast majority of them are outside of Bristol. Reportedly just 11.4% of the supplier’s customers live in the local area, which the firm had pledged to rectify with a local advertising campaign.
Bristol Energy is one of only two fully licenced energy suppliers run by local authorities, along with Nottingham Council’s equally troubled Robin Hood Energy. Nottingham is reportedly considering “all options” for its supplier after it had to be bailed out by the council to make a £9.5 million payment to Ofgem’s Renewables Obligation fund and haemorrhaged a total of £23 million last year. Nottingham City Council this week appointed Deloitte to undertake a strategic review of the company.
Other council-owned suppliers, many of which operate as white label firms, have also run into trouble. Last summer, Portsmouth City Council shuttered Victory Energy before it had served a single customer, but after spending £2.5 million on it.
Council-owned suppliers have struggled to attract customers in a fiercely competitive energy market and to stay afloat as 18 other small suppliers have gone under. Regardless other cities are pushing ahead with energy companies. In January London launched London Power—"a fair, affordable, green energy company specially designed for Londoners" according to Mayor Sadiq Khan—in partnership with Octopus Energy.
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