Council to expand its energy scheme

A partnership set up by Cheshire East Council and Ovo Energy is to be rolled out to a wider region and businesses.

Fairerpower was launched in March 2015 to cut people's bills and develop a local energy economy.

More than 7,500 customers have so far signed up to buy their gas and electricity via the scheme, which has helped save local residents more than £2m from their energy bills.

Cheshire East residents have saved an average of £224 on their annual fixed-tariff bills, in the past year, after switching.

However, the full potential of the Fairerpower scheme has not been realised due to contractual issues between the Council and OVO Energy.

Although Fairerpower has secured more than 7,500 customers to date this falls significantly short of the target of 6,000 customers per annum set out in the original business plan.

A report prepared for the Cabinet on Tuesday, 22nd August, said this is in a large part due to the fact that OVO have not been proactively marketing the offer or servicing key sub-markets, including businesses and registered social landlord (RSL) void properties.

The report states "An empty property without a tenant is referred to as a void. The market potential for voids is significant; across the Midlands and North West there are over 900,000 RSL homes. Should the Skills and Growth Company procure a supplier to deliver a voids solution to RSLs across the region it would provide a large market opportunity for generating bulk customer numbers.

"In 2015, a potential of 4500 void properties were secured for transfer to Fairerpower from three housing associations, on an annual basis for the next three years. Unfortunately, this was an area of the contract that OVO could not fulfil. Attempts by the Fairerpower commissioning team to sign up strategic partners have also been frustrated by the ongoing contractual difficulties. Little progress has been made against the objectives of developing a local energy economy or independent energy supply sources and it is clear that different contractual arrangements will need to be put in place if the wider objectives of the Fairerpower scheme are to be delivered going forward."

Following a decision by cabinet on Tuesday, 22nd August, Fairerpower is to be run by the council's arm's-length Skills and Growth Company under a new contract.

This will enable Fairerpower to be offered to the wider Midlands and North West region and, in the future, to businesses and social housing providers. It will also be able to develop new partnerships with several energy suppliers and other local authorities.

Councillor Don Stockton, Cheshire East Council cabinet member for regeneration, said: "Today's decision gives the 'best fit' to enable the council to sustainably deliver a cheaper fuel alternative to many more households, businesses and social housing providers – leaving more money in residents' own pockets and helping tackle fuel poverty across the whole region and not just in Cheshire.

"This was our promise when we started and Fairerpower tariffs have consistently been below the average of the 'big six' suppliers and its pre-payment tariffs among the lowest."

The Fairerpower brand may also now be expanded to include non-energy products or services.

Cllr Stockton added: "The Skills and Growth Company has the experience, skills, drive and determination to develop and expand the scheme for the benefit of the people of the wider region."

In order to transfer the Fairerpower contract to The Skills & Growth Company, Cabinet authorised the Executive Director of Place to approve a loan (on commercial terms from the CERF reserve) to fund setup costs including additional procurement, contractual and marketing expenditure, in relation to new suppliers, new partners, and marketing to new customers. The repayment of the loan is to be covered from revenues made from extending the brand to new areas.

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Comments

Here's what readers have had to say so far. Why not add your thoughts below.

Dave Cash
Tuesday 29th August 2017 at 2:12 am
Another failing CEC initiative?
A 'void' will normally only accumulate daily standing charges + cost of any fuel used.
It is for CEC to actively promote THEIR scheme to THEIR electors, not OVO to their qualifying CEC customers.
Jackie Pass
Tuesday 29th August 2017 at 8:53 am
So bottom line is it failed and now attempting to make the housing associations all buy into it - when, of course, most housing associations are effectively "insider groups" with Cheshire East.

Also yet another "loan" - will this loan mentioned in the final paragraph - be like the "loan" given to buy land for ANSA in the South of the borough? That was a "loan on commercial terms" which, I believe, has now turned out to be "a grant".
Terry Roeves
Tuesday 29th August 2017 at 9:12 pm
CEC have crossed a line. This is very wrong.
Pete Taylor
Tuesday 29th August 2017 at 10:11 pm
If a house is empty, why would it be a good idea to try to sell elec and gas to it? Are they somehow assuming that, were the property to be let, the occupant might stay with the provider?

I honestly do not know what planet Don Stockton and his ilk are on. Surely the electorate expect councils to provide essential services, not play at being businessmen. How many more failed initiatives do we need?
Pete Taylor
Thursday 31st August 2017 at 7:55 am
If there are 900000 empty homes across the Midlands and North West, as CEC Caninet seem to accept, why do we need to build all these new houses?
Rod Menlove
Thursday 31st August 2017 at 10:51 am
A saving of £2m for 7500 local households sounds like a success. The majority never previously switched so self-evidently trust the Fairerpower name backed by Cheshire East.
Prepayment meters are commonplace in Housing Association (RSL) properties and the charges are far higher than standard meters. This is a stated concern to central government and local government. The Fairerpower prepayment meter charges are among the lowest on the market. So during the brief time that an RSL property is void (ie vacant) the energy supply would be switched to Fairerpower thus reducing the cost of energy to the property. The new tenants have total freedom to switch energy suppliers should they so wish.
Other Local Authorities in the region are in the final stages of discussions to take on the Fairerpower offering for their residents.
Another LA has an alternative to Fairerpower and that is Robin Hood Energy. This is wholly owned and run by the socialist controlled Nottingham City Council who also see the benefits to their residents from offering competitively priced energy.
The above article states that there are 900,000 RSL homes not voids.
Pete Taylor
Thursday 31st August 2017 at 7:21 pm
Robin Hood Energy is a Local Authority owned not for profit organisation; sounds like a great idea.

OVO appears to have a different business model: http://bit.ly/2dwGskk

Of course there has been a lot of hot air talked about energy prices, some of which comes to nothing: http://bbc.in/2emd9ks

I did get a quote from Fairerpower when the scheme was launched but, sadly, it was rather more expensive than my (then) provider. Having then moved to one of the relative tiddlers I made a considerable saving and that price was fixed, until very recently; in the same period Fairerpower appear to have had several price rises.
Jackie Pass
Thursday 31st August 2017 at 10:12 pm
Don't know about price rises, but the statement on the tariff, "£951 is the annual cost of Fairerpower’s fixed 12-month energy plan for a dual-fuel medium user (3,100 kWh electricity, 12,500 kWh gas". Does this medium user live in a rabbit hatch?
Rod Menlove
Friday 1st September 2017 at 2:29 pm
Fairerpower is a local authority not for profit organisation, therefore a great idea.
The Fairepower model is based on price and service. The price will be below that of the 'big 6' and the service is that of Ovo that was judged the best by Which.
New entrants come in to this market frequently. Some operate on loss-leader prices to build the customer base. Some fail with the customers rescued by an established operator as organised by Ofgem. It is a competitive market that benefits those who switch whether for price or service or a combination thereof.
Ofgem decides the structure of consumptions so that there are constants for price comparisons hence 3100 and 12500.
Terry Roeves
Saturday 2nd September 2017 at 11:33 am
It's quite simple Cllr, a conservative local authority has no business either within the borough or beyond to compete in any free market. It's defies
the free market ethos. Ovo Energy can sink or swim of its own accord.
Surely shunting this off into a Skills and Growth department merely confirms it's not meeting targets. That's not the end of the world for CEC.
I'd rather hear that CEC got it wrong. It's no big deal Cllr. Man up as some non pc people might say.
Jackie Pass
Saturday 2nd September 2017 at 12:45 pm
Spot on Terry - except that the Skills and Growth is not a department but one of those separate but linked companies - wholly owned by Cheshire East but subject to less restrictions and less visible auditing and oversight.
Rod Menlove
Sunday 3rd September 2017 at 4:55 pm
Differences of opinion are healthy and clearly I am not going to change the views of the above two contributors. However, any assertion lacking an evidence base deserves challenge.
Skills & Growth is a limited company wholly owned by CEC and subject to the legal requirements of the Companies Act including visible audit. The same applies to the other CEC companies including ANSA that has rightly received praise for the bin collection service in the thread of the 29 August article.
Jackie Pass
Sunday 3rd September 2017 at 8:00 pm
Thank -you Councillor Menlove. There is a distinction between the requirements of the Companies Act and the issue of governance. As the leading shareholder in the Company good practice is that leading shareholders do not have an operational role. Directors duties to the Company and duties to the Council should not conflict. There is the question of accountability to the electorate.
Stuart Redgard
Sunday 3rd September 2017 at 11:45 pm
CEC Councillor Rod Menlove states "Differences of opinion are healthy" and goes on to say "any assertion lacking an evidence base deserves challenge." I totally agree, but what evidence should be used. Evidence that only supports your claim or other evidence as well.

He referes to "ANSA that has rightly received praise for the bin collection service in the thread of the 29 August"

My experience with ANSA bin collection services over the past 12 months has also bucked the trend of the previous 21 once of living at the same address.

In the last 12 months I have had to complain about NOT have my bins collected on three separate occasions. In the previous 21 years I didn't have to complain once.

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