Politics: Russell Slams Mayor on Energy Deal

Caroline Russell, Green Party Member of the London Assembly, writes for Felix Magazine and criticises Mayor Sadiq Khan’s decision to seek a new privately-owned energy supplier for London rather than setting up an energy company owned by the city…

The Mayor often boasts that London is “the best city in the world” but we’re being left behind when it comes to good ideas on energy.

I warmly welcomed the Mayor’s promise to start a not-for-profit energy supply company but since then Londoners have been frozen out – and the Mayor has scrapped the idea of publicly owning the company that provides Londoners an attractive alternative to the Big Six energy compani

This past week I was due to quiz the Mayor on the delay in publishing a report on why the public ownership option was rejected – the report, due last month, was published the evening before I got to ask my question.

Bristol has its own energy company, as does Nottingham. Manchester and Birmingham are gearing up to launch their own too and all will be publicly run and publicly owned. Why not London? Londoners are missing out on, in the report’s own words:

“The main advantage of fully licensed supply over the other two options (a “white label” firm using the mayor’s brand but owned by a private firm) is that Energy for Londoners (EfL) would have complete independence, able to capture the full value of customer energy spend for regional reinvestment, set tariff contracts and product terms, install smart meters, and purchase power from local generation.

“It offers the greatest scope for creating local skilled jobs, and as the traditional route to market for an entrant, it is also the most proven path with the greatest level of support and experience from consultants and service providers. For this reason, fully licensed supply offers EfL greater flexibility and greater revenue compared to White Label Plus.”

A fully-licensed mayoral energy company would make a real difference to Londoners, providing residents, schools, hospitals and businesses with affordable low-carbon energy.

It could set its own tariffs to combat fuel poverty – 348,000 London households, which is one in every nine, are officially fuel-poor. This doesn’t include people who struggle to pay the rising bills of the “Big Six” energy companies.

Energy Costs Could Dive

Campaign group Switched On London recently revealed that Londoners could save £159 on an average dual fuel bill because Energy for Londoners would be able to set its own base tariff of £970. As energy bills go up and customers feel ripped off, we desperately need a fairer alternative.

The Mayor’s backtracking and lack of ambition will cost Londoners – not only will they lose out on controlled tariffs but with a private profit-making company there will be much less to reinvest in building skills, green energy and renewables.

The white label option chosen by the Mayor means using an existing energy company and branding it as his own. Other major cities have firmly rejected this for its obvious shortcomings.

The report identifies the weaknesses of white label; lower levels of revenue, limited scope in reinvesting in local energy, low potential for innovation and an exposure to reputational risk.

Councils in London – including Islington where I’m a councillor – are starting to set up their own white label companies, buying energy from other suppliers to sell on at affordable tariffs to people living in their borough. There is an opening for the Mayor to take, councils want cheaper, greener energy. But the Mayor claims that negotiating with 33 boroughs to have access to their potential customers would be too difficult.

Even if contracts to provide energy to the councils’ white label companies are difficult to negotiate the Mayor has a whole raft of opportunities to find customers in the GLA’s own estates – the fire brigade, TfL and the Met. City Hall could be powered by his own energy company, the Mayor could have stepped in to provide it and begin something really new and revolutionary.

We aren’t asking for the impossible. Other cities have shown it can be done, councils are showing the appetite is there and the report calculated the annual numbers of people who would switch to a Mayoral energy company would be 312,129 for electricity and 248,500 for gas.

When I raised these other cities with the Mayor last June he told me “that is not the limit of our ambition”.  But the Mayor’s current push for short-term gains shows he has got cold feet and limited his ambition.

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