PEOPLE could be soon paying less for their energy after the city council unveiled plans to move into the supply business.
The council’s cabinet has approved plans for a licensed energy supply company between the authority and an energy consultancy.
Our hopes for the company is that it will be profit making within the next four years, however, it could well be making a profit before then.Councillor Donna Jones, leader of Portsmouth City Council
Its aim would be to combat rising real terms prices from the Big Six Energy suppliers to enable more affordable energy bills for city residents and provide an income stream to the council.
A business plan is being developed between the council and the consultancy with the authority stumping up £3.8m to start the company.
The funds are to be taken from the authority’s medium-term resource strategy reserve – allowing the decision to be made by cabinet not full council.
Councillor Donna Jones, leader of the council said: ‘The aims of this company are to, firstly, provide cheaper energy for the city, to provide an opportunity to diversify from our investment portfolio and thirdly to use the company’s potential profits to invest back into the city through providing more facilities.
The Tory leader would act as chair of a governance board for the company prior to its establishment.
With British Gas – one of the aforementioned Big Six suppliers – announcing on Tuesday its intentions to raise its electricity prices by 12.5 per cent – Cllr Jones said the company would look to provide cheaper energy for residents in Portsmouth, Fareham, Gosport and Havant.
Cllr Jones said: ‘Our hopes for the company is that it will be profit making within the next four years, however, it could well be making a profit before then.’
The council says that its £3.8m of investment would be paid back within three years and seven months.
It is not the first authority to pursue the idea with both councils in Bristol and Nottingham having launched their own supply companies.
Councillor Gerald Vernon-Jackson, leader of the city’s Liberal Democrats stated the company would ‘probably work’ but said the council need to be more transparent about the company.
He said: ‘People need to be working together on this. I am concerned that only one councillor is involved in its set-up. If the profits are used to prevent cut then that’s fine, it just needs looking at by the whole council.’
Hywel Lloyd, associate director for the environment at think tank IPPR said ‘all authorities should be thinking of developing their own energy company.
He said: ‘The energy system is becoming more and more decentralised and there is potential for some local ownership amongst these companies. Local authorities have been crippled by lack of government grants and profits for these companies could be used to pay for services such as adult social care.’