London Mayor Sadiq Khan has announced that City Hall will be partnering with Octopus Energy to launch a green energy supplier for the capital.
London Power, scheduled to begin service in December, will deliver 100% renewable electricity. It will give Londoners, who are estimated to spend a collective £3.5 billion on gas and electricity each year, “a better, fairer deal on fuel prices,” Khan said.
Over a million people in the capital face fuel poverty, meaning they struggle to heat their homes to an adequate and safe standard. Londoners are more likely to use expensive pre-payment tariffs and more likely to live in homes with poor energy efficiency. They’re also less likely to have solar panels and smart meters, and less likely to switch energy supplier. This means many are paying over the odds for their fuel.
London Power will offer a 12-month fixed tariff for gas and electricity that will always be in the cheapest 10% of comparable energy deals. The average London household will save an estimated £200 if they switch to this tariff.
Customers will also be automatically rolled over to the cheapest tariff when their fixed-rate deal comes to an end. This means they won’t be penalised for not switching or renegotiating with their supplier.
Ofgem has estimated that more than half (54%) of all British households are on expensive standard variable tariffs and default tariffs. The majority were automatically moved over when their previous fixed-rate deal expired.
Mr Khan said: “It is a sad fact that millions of Londoners struggle to pay fuel bills and are subject to inflated rates from major energy companies. My Energy for Londoners programme has concentrated on tackling fuel poverty, expanding solar energy and retrofitting homes.
“Now I want London Power to give Londoners a better, fairer deal on fuel prices, as well as the knowledge they won’t be switched over to a rip-off tariff when their contract ends.”
Stuart Jackson, co-founder of Octopus Energy, said: “With around 12% of the capital in fuel poverty, never has a vital service like energy been so desperate for a new lease of life in London. We are absolutely thrilled to work with the mayor of London on setting up this pioneering new company to help Londoners pay the right price for their power and to ensure that the energy they use is 100% renewable to boot!”
City Hall will be providing £2.4 million of the £3.8 million project. Profits made by City Hall through the venture will be invested in community projects to tackle fuel poverty and help London reach net-zero carbon emissions.
However, Caroline Russell, a Green member of London Assembly, said the scheme didn’t go far enough. She believes it should be wholly owned by City Hall, rather than linked with a private company.
Thirteen local areas, including the London boroughs of Islington and Barking and Dagenham, have launched their own publicly-owned, not-for-profit energy companies. Islington’s Angelic Energy and Barking and Dagenham’s Beam Energy work in partnership with Robin Hood Energy, Nottingham City Council’s not-for-profit energy company.