Mayor shelved full license energy company to prioritise short term political gains

  • Mayor of London’s own report reveals he scaled back his Energy for Londoners scheme to prioritise short-term delivery
  • Sets out significant costs to revenues, carbon reductions and job creation
  • Campaign coalition criticise Mayor’s short-termism

Contact:

Emma Hughes, 07801140192

emma@platformlondon.org

@SwitchedOnLDN

A newly published GLA report [1] reveals that the Mayor of London scaled back his Energy for Londoners scheme to prioritise short-term delivery. The feasibility study shows City Hall shelved plans for a fully licensed utility in order to be ‘operational as quickly as possible’. As a result, according to the study, London misses out on significant revenues, jobs and carbon reductions.

The feasibility study, conducted by Cornwall Energy, compared two options: 1) a fully-licenced energy company to be set up by City Hall and 2) a ‘white label’, i.e. a branding exercise where an existing energy company’s tariff is labeled ‘Energy for Londoners’. The feasibility study double weighted quick delivery – ensuring that the energy company can be operational within Sadiq’s term in office. [2] The Mayor gave lower priority to the delivery of revenue for London, energy efficiency, carbon reductions and local generation investment when taking his decision. [3]

The report sets out how a fully licensed company would have offered London the following benefits that a white label fails on:

  1. Higher Revenue Retention. This could be reinvested in community, renewable energy or energy efficiency measures.
  2. More control over tariffs. The white label doesn’t give London the ability to set its own tariffs. The report admits that over time an ‘Energy for Londoners’ branded tariff may become higher than prevailing market tariffs. This would mean it was not delivering on fuel poverty (key objective of the company). [4]
  3. Higher customer numbers. The study shows fully licensed companies have almost ten times more customers than white labels. [5]
  4. Supporting London renewable energy. Full license companies can offer long term contracts to renewable and community energy suppliers. These offer a stable market for London renewable producers, who are squeezed by cuts to the feed in tariff.
  5. The creation of many more London jobs, building skills and capacity in the city.
  6. The ability to innovate and adapt in the face of industry or market change.
  7. Increasing the uptake of GLA’s energy efficiency programmes.

 

Switched on London campaigner Laura Hill said,

“The Mayor’s decision to give London a half-baked white-label instead of a full licensed energy company is pure short-termism and demonstrates how little he cares about cutting emissions. His own study demonstrates that a white label does not deliver the crucial things London needs: carbon reductions, a sure route to cutting fuel poverty, controls over tariffs, revenues for London that can be invested in renewables and the creation of jobs in our city. London should be leading the low carbon agenda, instead Sadiq is shackling our city by making London a poor relation of places like Bristol and Nottingham.”

Research by Landman Economics commissioned by Switched On London earlier this year showed that a fully licenced London utility would save households £159 / year on the average duel fuel bill. [6]

Platform London researcher Emma Hughes said,

“This report highlights the Mayor’s lack of ambition on emissions reductions. Instead of giving london a green, affordable energy company that we control he’s using the London brand to support another company. A full license energy supplier could have been created in Sadiq’s term in office but a year of delays has put the Mayor behind schedule. Now he is shelving the full licensed company due to political expediency.”

 

Notes:

[1] The full report and executive summary can be found here:  https://www.london.gov.uk/sites/default/files/energy_for_londoners_feasibility_study.pdf

[2] The study concludes that a full license company could enter the market by 2019 but states that the risks to this being achieved are high.

[3] The report also double weights set up costs. A full license company was more expensive costing between £2,375,000 – £3,125,000, in comparison to £490,000 to £825,000 for a white label.  The full license costs are not prohibitively expensive and have been met buy other cities like Bristol and Nottingham who have set up their own fully licensed suppliers.

[4] Switched On London’s modelling recently revealed that Londoners could save £159 on an average dual fuel bill because Energy for Londoners would be able to set its own base tariff of £970.

[5] see figure 2.3, feasibility study

[6] http://switchedonlondon.org.uk/energy-for-londoners-bills-saving-press-release/

 

Switched On London is a campaign coalition calling on the GLA – in collaboration with London boroughs – to create a new public energy company as a people’s alternative to the Big Six. We are backed by major unions, NGOs and grassroots groups. Find out more at www.switchedonlondon.org.uk

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