News / bristol energy
Council could cut losses with possible sale of energy company
The ambitious vision to launch an ethical, publicly-owned energy company has gone on to become a thorn in the side for Bristol City Council.
Now it has been revealed that the wheels have been set in motion for the potential sale of Bristol Energy in a bid to recoup some of the tens of millions in taxpayers’ money that have been poured into keeping it afloat.
Set up in 2015 to provide ethically-sourced, low-cost energy with profits to go directly back into environmental and social causes in the city, the business has posted total losses so far of almost £30m, including £10.1m in 2018/19, its third year of trading, and is not expected to break even until 2023/24.
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With the coronavirus outbreak set to hit both public finances and the energy sector hard, the council has confirmed accountancy firm Ernst & Young (EY) has been appointed to carry out a “full assessment of the company’s structure and future business viability”.
It comes after Bristol mayor Marvin Rees recently criticised the decision to set up Bristol Energy as “not sensible” following a cabinet decision made behind closed doors to bring forward an unspecified amount of additional investment earmarked for further down the road.
But Rees also said less than a month ago on BBC Radio Bristol that he would invest in Bristol Energy himself with his own money if given the advice to do so.
The exact amount of public money that has been pumped into the business is unknown because the council papers were private due to “commercially sensitive information”, but it is thought the latest sum has taken the council closer to the £37.7m limit of agreed spend on the project.
Responding to a question last month, Rees blamed previous Bristol City Council administrations for entering the consumer gas and electricity market but said: “We have to be responsible with where we are and what we inherited.”
Memes were created when the city council briefly swapped their own energy supply to British Gas
Bristol Energy has built up a customer base of around 104,000 households, 11.4 per cent of which are based in the city. In January, the company launched a range of renewable energy tariffs, each containing 100 per cent green electricity and lower carbon gas, in a bid to support the city fulfil its pledge to become carbon neutral by 2030.
In 2018, Bristol Energy even stopped supplying energy to Bristol City Council after British Gas undercut them on price, but they later won back the contract.
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Read more: Bristol Energy launches 100 per cent green electricity tariffs
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The decision to begin the process of finding a buyer for the firm comes amid grave economic forecasts due to the coronavirus, with Bristol City Council facing an £82m black hole in lost revenue.
The financial implications of lockdown measures are expected to hit energy companies, as customers struggle to make ends meet and pay their bills.
Last month, the Department for Business, Energy & Industrial Strategy said it had reached agreement with the industry to temporarily stop disconnecting customers using pre-payment meters, saying: “This is a worrying time for people across the country and we would expect energy companies to take the current circumstances into account as they carry out their business”.
Commenting on the prospective sale, a Bristol City Council spokesperson said: “Ernst and Young has been commissioned to provide professional advice to the council by undertaking a full and thorough assessment of Bristol Energy’s structure and future business viability.
“A key objective is to mitigate the extent of any additional funding requirement from the council beyond the existing agreed funding envelope.”
Additional reporting by Adam Postans, a local democracy reporter for Bristol
Read more: ‘Bristol Energy is at a turning point’
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