CONCERNED opposition councillors are calling on Warrington Borough Council to urgently review and exit from its investment in Together Energy, with companies going bust due to the current energy crisis caused by a sharp rise in the wholesale price of gas.
Conservative and Lib Dem Cllrs have expressed further concerns over the council’s investment in the low-cost domestic green energy company which has offices in the town, although the council says it has been reassured about the company’s trading position.
But the Conservative group opposition says the council should be “divesting” its interest in the company and exiting the “high risk” investment before more money is required to keep them afloat.
Tory group leader Cllr Kath Buckley said: “The energy market is one of the most volatile markets to trade in. For a Local Authority such as WBC to take on such an enormous risk, with what is fundamentally Council Taxpayers’ money, is a big gamble.
UK natural gas prices are currently running at about £162 per therm, compared to around £100 per therm in late August.
For most of the past decade it has been nearer to £40 per therm with gas prices rising by about 455% in the past year!
“Together Energy Ltd has made over £15 million losses in two years, this is in addition to losses made previously.
“There have been, over the years, many similar companies becoming insolvent, several recently and others are currently in real difficulty. Those in charge of this Council who are making these decisions must seriously review this company. This must be done as a matter of urgency, with a view to divesting them before further funding becomes necessary to keep them afloat.”
Tory group finance spokesman Cllr Ken Critchley added: “The Conservative group has serious concerns regarding the council’s investment in Together Energy, the company continues to make losses, the latest reported loss before tax was 4.2 million, it has accumulated losses of £23 million and the council confirmed it has a £41.2 million exposure to Together Energy.
“The energy market is highly volatile and high risk, at the full council meeting last night the Conservative group proposed a motion For the council to divest itself of it 50% shareholding in Together Energy. The Conservative group believe it is in the best interests of the Council taxpayers and the people of Warrington that the council exit this high-risk investment before further funding is required from the council to support this loss-making company.”
Meanwhile Liberal Democrat Finance Spokesperson, Cllr Ian Marks says, “The Liberal Democrats have repeatedly expressed their concerns over the Council investing in Together Energy.
There have been several examples of Council owned energy companies failing. We have always been told that Together Energy is different and is a good investment. We are not convinced.
Our concerns have always been about it being too risky a way to spend public money. The present crisis simply proves the point.
One headline was ‘The carnage in the UK retail energy market continues apace’.
“Many companies have gone bust and every time I turn on the news, another has gone.
“We have asked the Council about the effect of the crisis upon Together Energy and have again been assured that safeguards are in place to guard against this company going under.
“I strongly hope for the company’s customers and the council taxpayers of Warrington this is true.”
A Warrington Borough Council spokesperson said: “We continue to monitor very closely the situation regarding the national energy supply and its local impact on residents, businesses and council services.
“As part of the continuing monitoring process, we have been reassured regarding the trading position of Together Energy, into which the council has a financial investment.
“Since its inception five years ago, Together Energy has adopted a very prudent hedging and energy purchasing strategy and is nationally one of the leading companies in energy demand forecasting. While the wholesale energy process is at an unprecedented all-time high, it is putting pressure on the company, but it is well-insulated to absorb increased costs and is not in immediate financial distress.
“Its competitive tariffs are covered and its customers need not be concerned. Together Energy welcomes key talks, alongside other energy companies, with government regarding the current demand and supply of energy to ensure that there is no disruption to the supply of energy nationally.”
Together Energy, a UK supplier of low-cost domestic green energy, and 50pc owned by the borough council reported a rise in turnover and an EBITDA profit of £1.6m in its latest set of filed accounts for the year ended 31 October 2020.
So far, four energy firms have gone to the wall, including People’s Energy and Utility Point, with more expected to follow in the coming days.
Some industry sources fear there may be only 10 energy suppliers left by the end of the year, down from 70 in January.
If an energy firm collapses, customers are automatically switched to a tariff provided by the new supplier.
This is a tariff agreed with the regulator Ofgem, but it may well be more expensive than the deal they had with the former company which went bust.
The energy cap is the maximum price suppliers in England, Wales and Scotland can charge customers on a standard – or default – tariff.
Ofgem sets the cap level for summer and winter based on the underlying costs to supply energy.
Energy bills are already due to rise by an average of £139 a year in October, but the price cap restricts further price hikes over winter.
The current price cap is £1,138 a year for standard tariffs, but will rise to £1,277 in October.
The government and Ofgem say the UK does not have gas supply problems because of a diverse range of sources “that can more than meet demand”.
But energy bills are facing particular pressures because of a dip in renewable energy supplies due to low wind, as well as the outage of a power cable supplying electricity from France.