Energy companies are cheaper and cleaner when run by the council. Sadiq Khan’s pledge to establish a municipal energy company, Energy for Londoners, is one of his most striking mayoral election commitments. London will not be the first authority to set up such a not-for-profit company – Nottingham and Bristol got there first – but it will be the largest, and potentially the most ambitious. The energy market is notoriously uncompetitive, dominated by the big six utility companies, whose pricing practices have led them to be investigated and criticised by the competition watchdog. Most consumers have little trust in these companies, but are reluctant to switch suppliers for a better deal. At the IPPR, we’ve argued for local authorities, and London in particular, to set up municipally-owned energy companies that can supply electricity and gas at competitive prices and don’t have to distribute profits to private shareholders. By targeting those on low incomes, they can help tackle the problem of fuel poverty. With the big energy companies so widely distrusted, we believe the local authority “brand” can encourage otherwise reluctant low-income households to switch suppliers and save money. Since Robin Hood Energy was launched by Nottingham city council in September 2015, it has become one of the cheapest suppliers in the East Midlands. By actively contacting customers and helping them move to the cheapest tariffs based on their energy use, Robin Hood confounds the logic of traditional suppliers with business models that rest on the inertia of their customers. This has not only benefited its own growing customer base, but has forced other companies to cut their prices to compete. Bristol Energy has even wider goals. Fully open since earlier this year, the company aims not just to supply energy at competitive prices – it reckons its tariffs can save customers an average of £250 a year – but to invest in community-based renewable generation and ultimately in renewable heat supply as well.
Guardian 3rd June 2016 read more »