Agenda item

To receive a report in respect of the Council’s progress toward changing energy providers.

Consideration was given to a report regarding the Council’s proposed scheme to reduce the number of households in the Borough that pay high tariffs for gas and electricity. This was part of the Council’s efforts to reduce fuel poverty. In 2019, the Council went out to tender to secure a partner to deliver the scheme, and Robin Hood Energy (RHE) was awarded the contract in September. In the end, however, the contract could not be agreed formally because RHE could not deliver the specifications. Insights garnered through this process informed subsequent amendments to the specifications, as the Council tried again to tender a partner to deliver the scheme. Cabinet gave permission in July.

Finding a partner to help deliver the scheme was noted as the best way to reach a high number of residents with cheaper tariffs. At the same time as going back out to the market, the team also prepared a secondary plan for delivering the scheme without a partner if a suitable one could not be found. This way, the team was able to ascertain what would be possible to provide internally as well as from external partners. Since July, the primary focus had been on the retendering exercise, and on a smart meter scheme to maximise benefits especially to residents over 65 years of age. At the time of the meeting, the team was currently still assessing whether any compliant bids had been received.

In discussion, Members sought clarification whether Options 1 and 2 would be counterintuitive. The response averred that the Community Energy Scheme includes supporting smart meter conversion for residents over 65, but this scheme, which runs out in the coming months, can feed directly into whichever scheme the Council ultimately implements.

Members also hoped to hear more about the kinds of actions that would make practical implementation of Option 2 work. The response from officers conveyed that if the scheme were so popular that it could not be managed by one person, a second person would be recruited. The scheme would be supported at that scale of demand as required.

Members also inquired about retention of customers if the scheme available is not the most inexpensive for the customers; therefore, some unique draw might be provided to help keep subscribers. In response, Officers noted that any customers who signed up would not be put on a standard variable rate, but would have the advantage of being moved onto a best available tariff rate. Discounts were not possible because of volatility in the market.

Members requested further clarification around the amendments to the specifications and contract timing. Elements that no energy company would likely comply with had had to be discarded. One such specification that been discarded was that the provider be among the top 20 suppliers across the country. Some criteria like these were deleted, others added to make the contract more attractive to potential suppliers. Contract timing is multifaceted and therefore a length of contract could not be stipulated. The partner would likely change the contract length continually based on the variety of contracts offered. This stipulation would have therefore closed down the market considerably.

Further information was also requested regarding smart meters for residents over 65 whose properties may be incompatible with smart meters in general. The response suggested that sometimes incompatibilities had technical causes, and there were often technical solutions in kind. Part of the advantage of the scheme, the response further noted, was to dispel the myths associated with smart meters.

Members inquired as to the results of the initial equalities impact assessment associated with this scheme. Officers emphasised that the goal of the contract’s equality impact is to make the service equal for everyone in Rotherham. There may be specific areas that need extra effort, and in the further in-depth assessment to come, the team will be working with the equalities team to continue to ensure that everyone’s interests are equally represented in the scheme.

Members asked to know more about why it would not be possible to ask the original contractor to apply for the contract. The reasons were that the company had helped to compose the specification and would therefore have unfair advantage, and because the company was currently being sold off by its owner, Nottingham Council.

Members asked for a rationale as to why it could not be stipulated that our tariff be lower than others. The response confirmed that the partner awarded the contract would have to agree not to have a tariff for Rotherham that is higher than their best tariff. It was affirmed that while this scheme would not yield the lowest tariff to be found anywhere in the country, the scheme was not aimed at users who are able to switch schemes themselves. It was aimed at those who are unable to switch on their own. The purpose behind designing our own delivery scheme was to provide a failsafe in case the market was not fruitful again.

Members requested reassurances that the Council would not be taking on any risk by implementing these schemes. Officers summarised the difficulties and challenges that had been encountered by various Councils that had chosen to become direct suppliers and had therein taken on risk, sometimes losing millions of pounds. This scheme positioned Rotherham Council in the role of broker, the go-between who facilitates getting the residents a better deal. It would not make a profit, it would cost the Council money, and it would be a service to the residents.

Members asked if any neighbouring authorities in the region have done something similar, and if the SCR has any input in the arrangements for these kinds of schemes. Officers described the situation of Sheffield, Doncaster, and Barnsley, Leeds, Bradford, and others. All of the neighbouring authorities’ energy schemes are currently up in the air until the future of RHE becomes clear. It was clarified that the proposed contract is a concession contract, so, except for paying for officer time, all risk sits with the supplier and not the residents or the Council. All the customers are moved on to another supplier and do not lose out. Risk had been incurred by other authorities who had developed their own brand, which Rotherham did not propose to do. The reputational risk exists in the potential for the customer to have a problem with a provider, and even though the provider would not be the Council, it was possible that the customer could be dissatisfied.

Members asked about opportunities for green energy. Officers provided assurances that most all suppliers provided green energy tariffs, and the Council was exploring additional avenues for green energy.

Clarification was also requested around the responsibilities of the Community Energy Officer. The response described the duties of the officer, who had been recruited and in post since September of last year. This officer had been working on the community energy and energy efficiency work. Beyond this, the officer provided advice on energy efficiency and the voucher scheme. Some residents were adept at going online to manage their access, but some residents need more help, which the officer was available to provide. The officer would also provide workshops as needed in future. COVID had interrupted the marketing work that had been planned, but these efforts had shifted to digital contexts. The officer also worked with charity groups.

Members inquired as to the further benefits of the smart meter. The response described that residents could monitor how much energy they were using and what they were spending at any given time and at varying times of day. Studies had been carried out by government and the NEA that had shown that smart meters help save energy consumption.

Resolved:-

1.    That the report be noted.

2.    That a further update be presented in early 2021, that provides a plan for managing any potential risk to the authority, including reputational risk, posed by the new scheme.