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Nottingham Council Owned Energy Firm Hits The Skids

December 10, 2019

By Paul Homewood

 

A foretaste of what will happen if Corbyn gets to nationalise all the energy companies!

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Jeremy Corbyn’s electricity supplier has sparked financial deadlock for the council behind it, amid mounting industry anger over state involvement in the energy market.

Robin Hood Energy, Britain’s first council-owned energy supplier, which counts the Labour leader as its most famous customer, has caused a delay of three months to the publication of Nottingham City Council’s accounts.

Officials have been unable to sign off on the books because they are waiting for information about Robin Hood, which has hit financial trouble. The company’s accountant, BDO, is yet to finish its audit.

The delay is ongoing despite the council’s own auditor, John Gregory from Grant Thornton, telling a committee in September that it was “delaying a key part of the overall public accountability process”.

Andrew Rule, who leads the opposition Conservatives on the council, said there was a “veil of secrecy” surrounding Robin Hood, and urged councillors to be more transparent.

The company was set up by the Labour-run council in 2015 as a not-for-profit company to challenge the so-called Big Six suppliers. Robin Hood has grown to nearly 170,000 customers nationwide, with turnover of more than £44m. It made a profit last year of £202,000, compared to a £7.2m loss in 2017 and a £2.5m loss in 2016.

However, its finances have been under scrutiny since the council was forced to lend it an extra £9.5m earlier this year so it could pay a bill due to the industry regulator to boost green energy schemes, having missed a deadline. The council’s overall “exposure” to the company, in loans and guarantees, has been put at over £40m.

Many rival energy companies are unhappy about what is seen to be unfair state funding, while there are also concerns that the council-run companies foreshadow industry under Labour’s growing nationalisation agenda.

Robin Hood’s accounts are not legally due until the end of the year, but it has tried to produce them in sync with the council. The reason for the delay this year is not clear.

The council’s draft accounts say Robin Hood owes £26.7m as at March 31, compared to £12.4m the year before. However, council bosses admitted on Friday night that it was likely to have to make changes to its accounts once it has the information from Robin Hood. Mr Gregory told the council committee that the council’s draft finances risked being “completely inappropriate” because Robin Hood Energy’s figures had changed by millions “not in a favourable direction”.

A spokesman for the council said: “Grant Thornton has been unable to conclude their audit of the accounts because the auditor of Robin Hood Energy has not yet concluded their work.

“Further limited changes to the statement of accounts are likely to be required once that auditor has concluded their audit before Grant Thornton can issue their opinion on the council’s accounts.

“We are committed to its objectives of reducing fuel poverty and challenging the Big Six energy companies by putting people before profits.”

https://www.telegraph.co.uk/business/2019/12/07/nottingham-council-frozen-amid-row-corbyns-robin-hood-energy/

 

Regardless of claims that Robin Hood is putting people before profits, the tariffs it is offering are no cheaper than other suppliers, something I have checked myself.

And it is ironic that they needed to borrow £9.5m from the council to pay green levies! These are, of course, the payments all energy suppliers have to pay to cover the cost of green subsidies, such as ROCs, FITs and CfDs.

Nottingham’s tax payers are paying a high price for their Labour council’s obsession with state ownership.

46 Comments
  1. GeoffB permalink
    December 10, 2019 11:15 am

    Looks like Robin Hood is technically insolvent and should be wound up. The other energy suppliers that have failed to pay OFGEM the green charges all went bust. TOTO being the most recent.
    I think the green costs of electricity should be itemised separately, so consumers are aware of the cost.

    • December 10, 2019 4:26 pm

      It was technically bust, but then the council “loaned” £9.5m of ratepayers money.

      • Phoenix44 permalink
        December 11, 2019 8:18 am

        But a new loan cannot make you not bust. In fact, if you already have no way to pay your creditors (you are bust) taking on new loans is an offence, and directors can end up in prison.

        A loan only works if you have a cash issue, not if you do not make sufficient money to pay your creditors.

  2. ianprsy permalink
    December 10, 2019 11:19 am

    This the sort if issue I’m trying to get my local council to face up to as a consequence of their Zero Carbon by 2040 policy. Not showing much interest, and neither is local press.

  3. George Lawson permalink
    December 10, 2019 11:24 am

    I wonder what salary increases have been given to Robin Hood executives since the company was formed in 2015.

    • TomO permalink
      December 11, 2019 6:56 am

      pensions even?

      There’s more than one CIC / “not for profit” with Nottingham council’s involvement – tip of an iceberg…..

  4. It doesn't add up... permalink
    December 10, 2019 11:35 am

    OFGEM finally started to do something about the ongoing crash of failures of small suppliers. They started a consultation. Among the things they view as necessary are

    Ofgem proposes that suppliers demonstrate they have appropriate resources for growth and understand regulatory obligations at the following customer numbers: 50,000; 150,000; 250,000 and 500,000-800,000.

    So it seems that Robin Hood ran into trouble when they had to pay green levies from which they were exempt at under 150,000 customers.

    https://www.ofgem.gov.uk/publications-and-updates/ofgem-proposes-new-financial-checks-and-tests-existing-suppliers

    • TomO permalink
      December 11, 2019 6:59 am

      Council dunces at it again…. they could’ve split the company into geographically separate SPVs just like housing companies do….

      CIC accounting is lame – so they’d have an extra layer of obfuscation so beloved by many CIC practitioners…..

      Shame the perps won’t pay from their own pockets

  5. Phoenix44 permalink
    December 10, 2019 12:10 pm

    Its amazng how many companies that people people before profits go bust. It’s almost as if the pursuit of profit makes companies…er…profitable.

    No doubt all the local taxpayers now subsidising Robin Hood’s customers are deeply happy to be paying twice for energy.

  6. MrGrimNasty permalink
    December 10, 2019 12:29 pm

    It’s the same problem that all upstart energy companies face. The politicians push the idea that big energy companies are profiteering and you can save by switching. It’s to cover up the imposed costs of their own ‘green’ policies. In reality the margins just aren’t there for other companies to undercut the big players – even on a NFP basis it seems.
    British Gas doesn’t seem concerned about losing customers, they make better profits elsewhere, you get the feeling they might even be happy to ditch their end-user energy supply business.

    • Gerry, England permalink
      December 10, 2019 1:48 pm

      I think of lot of the suppliers are diversifying and putting themselves in a position to ditch household supply.

  7. mikewaite permalink
    December 10, 2019 12:35 pm

    The 2018 accounts are here:
    https://beta.companieshouse.gov.uk/company/08053212/filing-history
    The total director’s emoluments were £209,000 with the highest paid director receiving £99,000 – probably not excessive in the renewable energy business .

    • December 10, 2019 2:03 pm

      What is excessive directors salary for a bankrupt company ? One Pound would be too much.

    • Phoenix44 permalink
      December 11, 2019 8:20 am

      Be careful with that though – that’s directors, not management. If the CEO isn’t on the board, his/her pay isn’t disclosed.

  8. Gastromanc permalink
    December 10, 2019 1:15 pm

    Reading the accounts it appears that directors receive emoluments from a parent company, which are not shown in the accounts.
    Furthermore there is no mention of the Green Taxes, which have caused the Council to lend more monies to the company. The debt should have been declared under the heading of Creditors falling due in within one year.
    This raises the serious issue of the directors failing to disclose material information to the auditors.

  9. LeedsChris permalink
    December 10, 2019 1:24 pm

    Wasn’t there something similar in Bristol, with an electricity company run by the council?

    • Adam Gallon permalink
      December 10, 2019 3:55 pm

      Bristol Energy. Made losses on £11.2m on a 52.3m t/o, FY2017/18 Increased prices by 9% in April this year.

  10. It doesn't add up... permalink
    December 10, 2019 1:45 pm

    I wonder what the curtailment bill was for Sunday. Clearly there was some in the early hours of Monday.

    https://www.bmreports.com/bmrs/?q=generation/windforcast/out-turn

    suggests it was 2-2.5GW then at least.

    • Joe Public permalink
      December 10, 2019 3:32 pm

      National Grid ESO yesterday boasted:

      “Over the weekend, consumers up and down the nation found themselves being paid to use electricity generated from renewable sources. Why?”

      As the electricity system operator for Great Britain (GB), we move electricity safely, reliably and efficiently through the system ensuring power is there when it’s needed. More and more renewable sources of power are coming online so it’s important we find ways of using as much of that power as possible, to ensure it’s not wasted and help keep costs down too.

      The blustery conditions meant a consistently high level of wind power over the weekend, in fact 5pm on Sunday saw the record for the amount of electricity generated by wind power in Great Britain – 16162 MW. That meant a surplus of wind energy, which is where negative pricing comes in.

      What is negative pricing and who runs it?

      Some energy suppliers (companies who buy energy in the wholesale market and sell it on to customers) offer flexible time of use tariffs. Time of use tariffs are designed to incentivise customers to use more energy at off-peak times, in order to balance demand. These tariffs charge cheaper rates at certain times of night or day, when demand is at its lowest, and higher rates at popular times. On Saturday and Sunday night consumers on these flexible tariffs were offered energy prices that saw them paid for every unit of electricity they used.

      Using this excess energy in homes and batteries across the country helps us in our role balancing the grid and avoids energy being wasted.

      National Grid ESO’s Director of Operations Duncan Burt explains more:

      “We’re really excited to see this weekend’s example of a smart electricity system in action.
      The high levels of wind generation, something we will see more of as we move towards our 2025 ambition of being able to operate the British electricity system carbon free, requires increased flexibility to balance the grid.
      Initiative’s such as this, encouraging increasing demand when there’s spare renewable output, help us make the most of the green energy and run the electricity system as efficiently as possible – keeping costs down for consumers too.
      As more renewable sources of power come online we’re looking to encourage more intelligent energy use and technology. Whilst small in scale, initiatives such as this are really exciting offering consumers and business financial incentives, helping them to reduce their carbon footprint and playing in helping the UK to transition to a low carbon energy system.”

      It’s a feature, not a bug. /sarc

      • It doesn't add up... permalink
        December 10, 2019 4:11 pm

        I somehow doubt that they all switched on electric fires, ran the washing machine, dishwasher and tumble dryer, blasted the stereo turned up to 11, charged the EV, gave the cat a hairdryer treatment and turned on all the Christmas lights just to make sure they took advantage of the offer. They will simply have benefited from the tariff for their normal consumption, and probably most were completely unaware they were doing so. Who is to say what their normal consumption would have been and therefore what represents extra consumption?

      • December 10, 2019 4:45 pm

        Note the HIGHER RATES AT POPULAR TIMES!

      • Mack permalink
        December 10, 2019 8:32 pm

        Em, and pray tell, how does using more electricity in off peak hours than they would ordinarily use, help punters ‘reduce their carbon footprint’ and help the ‘Uk transition to a low carbon energy system’ according to the National Grid? Do they have little pixie dust filters blocking naughty fossil fuelled electrons entering these people’s houses as opposed to the nice, fluffy green ones oming from ‘carbon neutral’ wind farms, solar panels and biomass plants perchance?

      • It doesn't add up... permalink
        December 11, 2019 12:49 am

        National Grid are now promoting their carbonintensity site.

        https://carbonintensity.org.uk/

        The idea is supposed to be to build apps that encourage you to switch on at times of high renewables, and switch off at times of low renewables (though they don’t put it quite like that).

        I’ve tried emailing them because as far as I can see their regional attribution of generation to demand is nonsense. I suppose the excuse is it’s still officially only in beta. I’ve had no response.

      • TomO permalink
        December 11, 2019 7:21 am

        Just wait until they implement Triad Charges in the retail electricity market.

        Post facto aggressive pricing ….. ransoming even?

      • Iain Reid permalink
        December 11, 2019 8:17 am

        Quote:- “On Saturday and Sunday night consumers on these flexible tariffs were offered energy prices that saw them paid for every unit of electricity they used.

        Using this excess energy in homes and batteries across the country helps us in our role balancing the grid and avoids energy being wasted.”

        But there was no excess energy, gas, coal and nuclear were running, with gas and coal doing the balancing. Yes, gas and coal output was very low but I can’t see that as being a reason to pay consumers for their power. And of course if consumers are aware of this free power, any extra use they may make of the power merely increases gas and coal output.

        What am I missing as none of the above statement makes sense?

        From Gridwatch the maximum wind output was about 13 Gwatts, isn’t that close the capacity of wind connected to the grid, so does that 16 or so Gwatts include non grid connected wind? Also is the operator not aware of the problems that low inertia levels bring to grid stability and security?

      • It doesn't add up... permalink
        December 11, 2019 11:36 am

        The more I look at the details the more the questions that arise. Settlement prices on APX which are used to set CFD payments were strongly negative overnight, as were system buy/sell prices. Many CFD contract holders will be being compensated at well over £200/MWh to over-produce. We also saw extensive exports via interconnections to France and the Netherlands, quite possibly at negative prices. I can’t see the APX group website, which appears to be either down or only permitting access to market participants. It would have been interesting to see what happened to Continental prices.

        Dinorwig had a cheap fill your boots top up, pumping at over 2GW at times. CCGT was turned right down and grid inertia must have been quite low. I suppose NG considered that curtailed wind and Dinorwig pumping provided some buffer that could be brought back into supply.

  11. Gerry, England permalink
    December 10, 2019 1:47 pm

    Perhaps they should be called Sheriff of Nottingham Energy?

    Certainly not the cheapest as I am in the process of switching away from Outfoxthemarket to….well not going to say to help keep their customer numbers down. Maybe the way forward is to have lots of small suppliers of no more than 50,000 customers.

    • December 10, 2019 4:29 pm

      @Gerry : They are Robinn’ the Ratepayers, Energy

  12. Stuart Wakefield permalink
    December 10, 2019 2:22 pm

    every time Labour gets involved with a national business it goes bust

  13. December 10, 2019 3:52 pm

    Reblogged this on Climate- Science.press.

  14. December 10, 2019 4:23 pm

    The “nationalised” regional power company
    has privileged contracts as well, cos the council signed up ratepayers to pay for tram electrity via it.

  15. December 10, 2019 4:43 pm

    Ofgem set a third target date to pay the annual Renewables Obligation Certificates
    that was November
    Now there is still £97.5 m shortfall
    meaning £4 will needed to be added to each UK households cost just to cover that debt.

    42 suppliers missed the September deadline
    21 missed the October, including 5 still active
    Now Breeze energy and Generrgy are the only still active corps that owe money .. so be careful.

    Citizens advice put the cumulative cost at £255m since 2018 ..is that 2 years ?
    So that is £10 per household
    My guess they’ll be other hidden costs.

    source : Yorkshire Post on Saturday

  16. saparonia permalink
    December 10, 2019 7:17 pm

    Men in tights pot

  17. tom0mason permalink
    December 11, 2019 12:26 am

    Dear electricity supplier,
    Please understand I wish to have NOTHING to do with unreliable sources of electrical power, or the dire blight that litter the countryside making what once was a green and pleasant land into an industrialized bird and bat killing eyesore.
    I prefer all of my electrical power to come only from reliable fossil fuel fired generation and zero from the misnamed ‘renewbles’.
    Where is the company that can offer me such a contract? Where is the company that can supply this utility with contracts that detail reliability of supply?
    Consumers need to know!

    • Gerry, England permalink
      December 11, 2019 1:48 pm

      When people chunter on about the ‘free market in electricity’ and saying its failure is a reason to nationalise the industry, just remember that no company could offer you 100% reliable, non-wind or solar electricity because the rules don’t allow it. A free market it most certainly is not.

  18. December 11, 2019 8:05 am

    Reblogged this on ajmarciniak.

  19. Oliver King permalink
    December 11, 2019 9:12 am

    I’m one of the mugs that’s paying for this farce. £2.5k a year council tax for the privilege of living in a very average area.

    Problem is the last time there was anything other than a Labour council was the mid 80s. The people of Nottingham would vote for a chimp if it wore a red rosette and an ex-Labour councillor is likely to be my MP come tomorrow.

    These are the same people that put the city’s money in Icelandic banks. They have no fear of ever losing power so can get away with wasting tax payers money with impunity.

    • dave permalink
      December 11, 2019 9:40 am

      Ryan Maue, the meteorologist, has updated all his indices and charts for tropical storms:

      http://climatlas.com/tropical/

      2017 was a below-average year for activity, 2018 an above-average year, and 2019 can now be counted as an average year.

      2019 was a poor year for American “hurricane pornography”, of course, since the Atlantic disturbances mainly veered off, and churned the North Atlantic, instead of washing Trump away.

    • Gerry, England permalink
      December 11, 2019 1:52 pm

      An interesting question might be how many of the electorate pay council tax or income tax? if you don’t pay why would you worry.

      • dave permalink
        December 11, 2019 3:42 pm

        Heads up! (Or down!). There is a new, shock-horror, “tipping point,” publicity blitz starting in the MSM. Apparently the Bering Sea is going to hell in a hand-cart. There will be less pollock in our fish-fingers. Thank God for that.

      • dave permalink
        December 11, 2019 4:13 pm

        “Somebody” obviously saw the potential in this “Return of the Blob!” factoid:

        https://www.fisheries.noaa.gov/feature-story/new-marine-heatwave-emerges-west-coast-resembles-blob

        I would imagine that (literally) not one person in a thousand knows that sea-surface-temperature anomalies can have a persistent pattern, largely as a result of fluctuations in the winds and changes in upwelling. For a few years, one vast area of the ocean is warmer than usual while at the same time another vast area is cooler than usual. It all evens out in the long run.

        The Pacific Decadal Oscillation has become somewhat “indecisive” in the last decade or so.

      • Oliver King permalink
        December 11, 2019 4:33 pm

        Judging by the area down the road from me not many.

        This is the same council that was shocked that council tax receipts had declined in the city centre where the only accommodation being built is for students.

  20. December 11, 2019 12:54 pm

    Robin Hood Energy, Britain’s first council-owned energy supplier, which counts the Labour leader as its most famous customer, has caused a delay of three months to the publication of Nottingham City Council’s accounts.

    WOW a three month delay
    The European Union accounts have never been audited
    The USA Federal Reserve accounts have never been audited
    America has Trillion dollar debts
    How Is any of this possible
    Trillions of imaginary money is traded every day on
    Wall Street , The City of London ,The Bank for International Settlements
    Brexit is about a fight over who has more control over the trading of this imaginary money.
    China has invested the equivalent of trillions in infrastructure
    I guess there not worried about balancing there books
    The fallacy that imports and exports or gross domestic product or any of the phoney yard sticks that are used to determine what is or is not solvent.
    Trillions of credit could be made available just as it can be restricted.
    The whole climate change is a multi trillion dollar stock market scam just like junk bonds in the 70’s or derivatives now
    The government need to nationalise the money supply and like China invest in the UK.

  21. Nigel Corrigan permalink
    December 11, 2019 9:23 pm

    I could watch this for hours. Go Aussie!

  22. December 11, 2019 9:51 pm

    Socialism at work. Always ready to take your money and blow it up into nothingness. Let’s see what the voters decide.

  23. George Lawson. permalink
    December 12, 2019 12:32 pm

    When has a local authority or government agency ever been successful in running a profit making business? People at management level in public or local authorities are invariably those who have failed in the real world, such as Architects, Accountants, Environment Managers, Transport Managers etc., right up to Chief Executives. They see secure employment in the local authority as a way to obtain a salary, which they could not command in the private world, a good pension and long holidays with little chance of the sack for incompetence because their bosses are also incompetent. An incentive for hard work does not exist. They do not understand or have to worry about profit centres because their salaries are guaranteed by every member of society. They are not encouraged to cut costs or reduce staff in their departments, indeed their is an inbuilt incentive to increase the size of their departments since a bigger department means a bigger salary for the head of department. In return for all this, we are all managed by second rate decision makers, devoid of logic, and often imposing rules on our everyday lives that defy understanding. The time must be approaching when public employees are rewarded for cutting cost, reducing budgets and staff, and encouraged to work harder to achieve a better standard of management of public finances on behalf of us all.

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