TOWN Hall chiefs at Warrington are to consider the borough council’s investment in Together Energy in the light of the current turbulence in European energy markets.
Officers will seek cabinet approval to enable them to act as required to protect the council’s interests in the company.
A report by deputy leader of the council Cathy Mitchell will be considered partly in open session at the cabinet meeting on Monday, October 11 but partly in private.
The council bought a 50 percent stake in Together Energy for £18 million in October 2019 and loaned the company £4 million, which has since been repaid.
A further £20 million revolving credit facility, currently drawn in full, and an Orsted Guarantee, currently valued at £7.4 million, have been subsequently agreed by cabinet, which brings the council’s current potential exposure to Together Energy to £45.3 million.
The guarantee is currently negated – as is explained in the private section of the report – which means that at the time of writing, the council’s exposure to Together Energy is £38 million.
Cllr Mitchell’s report states that the council invested in Together Energy because of its policy objective to tackle fuel poverty in Warrington. The company employs 300 people, including 20 in Warrington, and is currently recruiting 30 more. But like all energy companies, it is currently experiencing a deteriorating trading position because of high gas prices, resultant energy prices and the price cap.
The report to be considered in private next Monday will include a full risk analysis, the legal implications and the financial implications for the council.
5 Comments
More good money after bad . It’s clear that all the spin about TE being “hedged against price increases” was pure lies. The only thing keeping this awful company afloat is OUR money. Simple maths shows they will burn through the 20m credit in about 3 months max. This is becoming a significant piece of financial mismanagement . With regard to the local jobs .. it’s 9 not 20 and where are the adverts for the next 30? A black comedy
This is a completely predictable – and predicted – problem.
Tens of millions of pounds of OUR money being used to prop up a company which always looked vulnerable. That isn’t being disrespectful – all energy brokerages are vulnerable. It isn’t exactly a secret. They regularly go bust.
No clear rationale has ever been provided for this risky investment. All we heard, at the time of the investment, was how socially conscious this Scottish company is. Great, that’ll keep me feeling warm and fuzzy when I can’t afford to feed my family.
More recently we were assured that all was well because TE was well hedged against price shocks. That may yet be true – I really hope it is. But this announcement suggests, as Redwood notes above, that our elected representatives want to fling good money after bad.
There are several reasons why councils shouldn’t invest like this. One reason is that politicians will do the wrong thing to protect their reputation – even temporarily. Just look at the contortions over revealing the cost of the new council office in Time Square. Rather than reveal the cost – which would lead to questions and perhaps outrage – they’ve persistently claimed that the £142.5 million build cost of the whole project can’t be broken down into components. We all know that this isn’t true – and it begs the question of what a council is doing handing over £142.5 million without a detailed breakdown – but they’ve opted not to ask certain questions so they can’t be forced to answer Freedom of Information questions.
This has gone too far now. We need to ask central government to step in and appoint an independent body to look into all of our investments, because if we leave it to the people whose reputations are at stake they may well engage in even riskier behaviours. I will call on my MP, Charlotte Nichols, to request this and I hope that citizens in the south of the town will ask Andy Carter the same question.
Hang on a second – WBC’s 2020/21 draft accounts state that the revolving loan facility (overdraft) is only £16 million and the Council’s total exposure to Together Energy is £41.2 million, which is frightening enough, but who authorised the additional £4 million to bring the revolving credit facility up to the £20 million mentioned in this article? (which is maxed out!!) I suspect the claim by WBC in this article that the £4 million loan has been paid off is yet more #Fakenews. The loan was due to be paid off by Together Energy in August. I reckon it’s not been paid at all but has been transferred to the revolving credit facility instead. Hence the uplift from £16 million to £20 million. When will WBC stop playing at being a bank and start behaving like a proper town council?
I see Cathy Mitchell has quietly dropped her claim that Together are 100% green (WWW 9 February 2021 and many other occasions) since not even TE claim that.
Neither are Orsted, TE’s sole supplier of electricity 100% green. They only claim 87% is from sustainables i.e. wind,
I suppose we will be treated to Absolution plus Bowden Bravura in the open council session, leaving the Crux and Details for discussion behind closed doors? Surely the time has long since passed when those most at risk are entitled to some insight into what this culpable council has got us into?