Agenda item

Report of Corporate Director Commercial & Operations

For the duration of this item Councillor Steve Battlemuch passed the Chairing of the meeting to Vice-Chair Councillor Cate Woodward to enable him, as Chair of Robin Hood Energy, to participate in the presentation.

Rob Bain, Finance Director for Robin Hood Energy (RHE), delivered a presentation on the development of RHE as a not-for-profit energy company which was established as a direct result of the City Council Plan objective to ‘tackle fuel poverty’, which is a significant issue within the City.

The report and presentation provides details on the establishment of RHE and the achievements to date, particularly when compared to other similar energy companies and the statistics by ward across the City of fuel poverty, with Wollaton East and Lenton Abbey ward ranking 9^th and Wollaton West ward ranking 20^th for fuel poverty out of 20 wards in the City.

The following points were highlighted and questions responded to:

(a)  Having been established for only 3 years, RHE now has over 115,000 customers (23,000 are in Nottingham City) and has made a surplus of £202,000, which will be reinvested in the company, including voluntarily signing up to the ‘warm home discount’ scheme ahead of the required timescale;

(b)  RHE is also operating as a white label company, which is where a service is produced by one company that other companies rebrand. As listed in the report, RHE currently delivers energy services to nine white label partners which are then able to deliver cheaper energy to their citizens, whilst making a small profit;

(c)  Fuel poverty is summarised as having required fuel costs above the average and if those costs are met, it would result in a residual income below the poverty line;

(d)  RHE voluntarily introduced a cap on pre-payment meter charges which the energy regulator, Ofgem, then applied across the industry;

(e)  By the nature of the company, energy prices are very competitive, citizens of the City are eligible for the lowest price fuel tariffs and it is estimated that City households can save an average of £87 per year by joining RHE;

(f)  RHE is consistently priced cheaper than all of the big six energy companies. Whilst some energy companies offer an initial low-priced transfer incentive to energy customers, this is often provided at a loss and prices rise significantly once the transfer period is finished. RHE is requesting that Ofgem regulate this practice, as it is misleading to customers, and where some companies operating this practice have then collapsed, it has resulted in additional costs to the energy industry and customers;

(g)  RHE has a focus on the environment and can now announce that it has a wholly green offering for fixed tariffs, with energy provided from wind or solar generation;

(h)  It is a misconception that the City Council has had to cut budgets and services as a result of lending start-up funds to RHE. RHE borrows money from Nottingham City Council at a higher rate than the City Council borrows that money, so in effect the City Council is gaining an income whilst providing RHE with an interest rate lower than would otherwise be available;

(i)  RHE does offer the installation of smart meters in customer’s properties and aims that all customers will have a smart meter installed by the end of 2020. Some of the older model smart meters have received poor publicity recently as they revert to manual operation when customers change suppliers. However, this does not apply to the modern meters which RHE is installing;

(j)  The scheme is currently operating whereby if a customer recommends a friend who joins RHE, then that customer is entitled to a £20 reduction to their next RHE bill;

(k)  Guidance on reducing few bills is issued to customers;

(l)  RHE is based in Nottingham City and employees 170 local staff. Business is rapidly expanding so new premises are being sought but will remain within the City;

(m)  BFI Consulting recently valued the business at between  £35-£70 million, but following detailed consideration figure of £30 million value has been identified;

(n)  Wards within the City with the highest level of prepayment meters include Bestwood, Sherwood, St Anne’s, and Bilborough;

(o)  Wards within the City with the highest level of direct debit payment for their energy bills include Wollaton West, Mapperley, and Berridge;

(p)  RHE is working with social housing providers including Nottingham City Homes, and where void properties appear prepayment meters are removed and smart meters are installed;

(q)  the leaving rate of customers is approximately 5%. Whilst this is difficult to explain, it may partially be due to the loss making transfer offers provided by other energy companies. RHE is not involved in energy switch sites which can cost £50 per new customer gained. Instead the focus is on organic customer growth;

(r)  57% of customers have a dual fuel account of both gas and electric;

Councillor Steve Battlemuch commented that he has been involved in the Robin Hood Energy Board since the company’s establishment and is proud to be associated with the company, its ethos, practices and the benefits to citizens. The growth of the company during the past three years has been impressive and is very satisfying.

The energy market is huge and whilst the six main providers are massive, if RHE, as a not-for-profit company, can attract a fraction of their customers, it will be able to lower prices yet further.

All Councillors on the Committee welcomed RHE as a huge benefit to Nottingham’s citizens and encouraged citizens to consider joining Robin Hood Energy to benefit from cheaper energy prices and the money saving opportunity available to them.

RESOLVED to record the Committee’s thanks to Rob Bain for his attendance and presentation, and Councillor Steve Battlemuch for his contribution.

Following the conclusion of this item, Councillor Battlemuch resumed the Chair.