Agenda item

Gail Scholes, Head of Energy and Robert Purdon, Contracts Manager from Nottingham City Council gave witness evidence.

In the presentation and the discussion which followed, the following points were made:

·         Nottingham had a long history in municipal energy. It had a district heating scheme in 1970s and was now one of the more energy sufficient cities with high local generation. There was large scale photovoltaic solar installation with 2,300 homes equipped with solar panels over the last three years. The council paid for, installed and maintained the solar panels and retained the feed-in tariff with the residents getting electricity. The scheme included both social housing and private sector housing.

·         Nottingham City Council would be extending the solar panel scheme to 3,000 additional homes from 2015. Once this was complete, 5,300 out of approximately 150,000 homes in the city would have solar panels. Whereas the feed-in tariff for the first 2,300 homes had been secured when it was at the highest rate, the feed-in tariff for the next 3,000 homes would be at the lower rate.

·         Nottingham City Council had set up an in-house installation team of accredited installers. This reduced costs and created jobs.

·         Most of the homes with solar panels were three bedroom semi-detached houses. Lower income areas were targeted.

·         There was a mixed model approach in Nottingham. External wall insulation had been undertaken and residents were encouraged to undertake energy efficiency measures.

·         The first solar panel scheme in Nottingham outperformed by £120,000 per year and the additional money went into the council’s general fund. Following this scheme, it was decided that more panels should be put on each roof.

·         In Nottingham, 12% of the energy demand was met from Combined Heat and Power (CHP) and 3% was met from a waste plant. The district heating scheme included a council office building, offices, a hotel, an apartment block, a concert venue and a biosite. The scheme provided a more secure supply than the national grid would. There were four means of supplying buildings and many were willing to pay a premium for this.

·         The district heating scheme was controlled by the council and run as a limited company.

·         Most of the day-to-day running of Nottingham’s Energy Services Company was undertaken in-house.

·         There was a new energy park in Nottingham and planning consent had been given for a 160,000 tonne gasification plant. This could as much as double Nottingham’s energy generation capacity.

·         Other councils paid Nottingham to take their rubbish and Nottingham had a large commercial waste business. Waste disposal costs were minimal. Emissions were monitored.

·         In order to create a cheap energy tariff, the council first set up a switching site and researched the market. The aim was to reduce fuel poverty. Nottingham Council then set up a fully licensed energy company by buying a pre-accredited licensed company. This was quicker to set up than if the council set up the company itself. The council had approved the first year’s operating costs of £11 million. The company had to use the national grid and pay transmission and distribution costs as it only had one block with private wire and extending this would be too expensive. The cost model showed that Nottingham’s energy company was likely to be one of the cheapest suppliers on the market.

·         In response to a question asking how many staff worked on the project, the committee were advised that six managers managed the process.

·         In the first year, Nottingham had 50,000 customers, in the second year the figure rose to 150,000 and in the third year it was 250,000.

·         Nottingham City Council had found a meter asset provider who would enable the council to rent or pay for the use of smart meters and a smart meter pre-payment system would be put in place.

·         Although Nottingham City Council would trigger ECO Energy Company Obligations once it reached the criteria for this, this would provide the local authority with the opportunity to invest.

·         Other councils could use Nottingham’s white label offer. Nottingham could provide four tariffs and the other council could label and promote them to residents. Nottingham had spent £1.5m on systems to enable this to happen and for other councils to capitalise on the work Nottingham had done. This approach would also create local jobs e.g. call centres, when the number of residents using this supply reached a certain volume.

·         At the moment, Nottingham was undertaking controlled market entry. This meant a small number of customers were being taken on to prove the processes worked. In October 2015, this would be rolled out.

·         Nottingham would become the first local authority energy company.

·         Nottingham would not sell debts to debt collection agency. The first three stages of debt collection were undertaken by the council and if these were not successful, a debt collection agency would be used, although the council would retain control. A fixed fee would be agreed for each stage and there would be an agreed set of principles.

·         Pre-payment smart meters were being installed and those in fuel debt were signposted to advice centres and were helped to manage their debt.

·         Switching to the Nottingham supplier saved a typical household £200 per year. The council had a tool on its website so potential customers could see how much they could save by switching.

·         Nottingham aimed to treat people fairly and offer them the best possible price.

RESOLVED:

That the evidence be noted.