Agenda item

Report from the Strategic Director for Adult Care, Housing and Public Health.

Recommendations:

That the Cabinet note the content of the report and recommends that Council:

1. Notes the decision Council took in March 2023 to increase the District Heating unit charge to 20.68 per Kwh for 2023-24 so that an average bill was equivalent to the heating element of the then Government’s Energy Price Guarantee, leading to a proposed District heating budget deficit of £2.592m.

2. Notes that the actual cost to the Council of purchasing energy to supply District Heating schemes is lower than the cost assumed in March 2023; and that the agreed unit charge now exceeds the Energy Price Guarantee and the Office of Gas and Electricity Markets(Ofgem) price cap for July 2023 onwards.

3. Agrees that in light of these changes, the District Heating unit charge per Kwh for 2023-24 is reduced to 15.94 pence per kwh and weekly prepayment charges are reduced by 59% to 67% depending on property size (Option 4 in this report), bringing prices into line with the Ofgem price cap for July 2023 onwards and well within the Energy Price Guarantee.

4. Agrees that this charge should be backdated to 3^rd April 2023.

5. Agrees that the decision to reduce the price further during 2023-24 be delegated to the Assistant Director of Housing in conjunction with the Assistant Director of Financial Services following consultation with the Cabinet Member for Housing. The delegation would only be used to respond to a change in Government policy or a significant change in the Ofgem price cap that has the effect of necessitating a lower unit price, and the approved budget deficit of £2.592m cannot be exceeded through a delegated decision.

Consideration was given to the report which recommended a revision to the District Heating charges for 2023-24. In March 2023 Council agreed as part of the annual budget setting process to increase charges in line with what was then the Governments energy price guarantee. There had now been a change in policy therefore the proposal was to reduce bills by a quarter meaning the unit price would come down to 15.49p per Kwh. The change would mean lower bills for customers and lower operating costs for the Council. The report also included a recommendation to provide delegated authority to enable the Council to respond to any changes in price without delay.

The Leader noted that he could not remember a time when District Heating charges had needed to be changed in year however that reflected the uncertainty within the energy market that everyone was feeling in their bills. When the charges were set in March, following the usual process, the Council was nearing the end of its gas procurement contract in order to fuel the District Heating schemes and the prices were exceptionally high at that moment in time. The Council took a view not to pass the full costs of that increase on to District Heating users, but that it would cap the amount they had to pay at the same rate the Government was capping energy bills for everyone else. That required around £2m of subsidy at that time. Since purchase of the gas, the price had lowered enabling the Council to bring bills for District Heating users’ in line with that. The proposal was that this would be backdated to the start of the year to enable users to get the full effect of those changes. This was subject to ratification by Council so the recommendations would be passed to Council for its consideration in July.

The purpose of the delegation was clarified noting it was important for Council to retain responsibility for setting fees and charges year to year, however in this instance, given the volatility described, a time limited delegation was proposed. This would enable officers, in the event that OFGEM significantly reduced the price cap again in year to pass those benefits on to customers as quickly as possible on behalf of the Council.

The proposal would make a huge difference to families given the current pressures on cost of living.

Resolved: That the Cabinet noted the content of the report and recommended that Council:

1.    Notes the decision Council took in March 2023 to increase the District Heating unit charge to 20.68 per Kwh for 2023-24 so that an average bill was equivalent to the heating element of the then Government’s Energy Price Guarantee, leading to a proposed District heating budget deficit of £2.592m.

2.    Notes that the actual cost to the Council of purchasing energy to supply District Heating schemes is lower than the cost assumed in March 2023; and that the agreed unit charge now exceeds the Energy Price Guarantee and the Office of Gas and Electricity Markets(Ofgem) price cap for July 2023 onwards.

3.    Agrees that in light of these changes, the District Heating unit charge per Kwh for 2023-24 is reduced to 15.94 pence per kwh and weekly prepayment charges are reduced by 59% to 67% depending on property size (Option 4 in this report), bringing prices into line with the Ofgem price cap for July 2023 onwards and well within the Energy Price Guarantee.

4.    Agrees that this charge should be backdated to 3^rd April 2023.

5.    Agrees that the decision to reduce the price further during 2023-24 be delegated to the Assistant Director of Housing in conjunction with the Assistant Director of Financial Services following consultation with the Cabinet Member for Housing. The delegation would only be used to respond to a change in Government policy or a significant change in the Ofgem price cap that has the effect of necessitating a lower unit price, and the approved budget deficit of £2.592m cannot be exceeded through a delegated decision.