Investment in local energy company could see £300k pa for the council

Investment in a local energy company could see over £300,000 pa in revenue for the Isle of Wight council (from year five), as well as, potentially, call centre and support staff jobs being created.

Call centre operators

The Isle of Wight council (IWC) executive will next week be considering plans to invest in a local energy company with the aim to increase revenue for the council, as well as offer a more sustainable energy system and financial benefits for residents.

Papers for next week’s Executive meeting explain the IWC has been investigating how it can become involved in the provision of energy services to residents and business.

Several other local authorities – such as Cheshire East Council, Peterborough City Council, Nottingham City Council and Bristol City Council – have already set up local energy supply companies.

Possible joint venture
The council has received a proposal from Reenergise Ltd “to establish a local energy company as a joint venture”.

The organisation already holds gas and electricity supply licences and according to the paper (see below) has the systems in place to comply with the licence requirements.

Initial appraisals predict the local energy company (IOWEnergyCo) could bring in over £300,000 per year from year five onwards.

Executive members will be asked to confirmed the terms for a joint investment (£208,250) with Community Energy Exchange Holdings Ltd in the local energy company as well as, potentially, a further investment of £200,000 in the Community Energy Exchange (CX) – which could see a call centre and support office being set up on the Island.

Summary of the terms
Full details can be found in the paper below, but a summary of the terms read:

  • An investment from the council of £208,250.
  • A shareholding in IOWEnergyCo of 49 per cent.
  • Isle of Wight Council to have two seats on the board of directors out of a total of four. Board approvals with a simple majority.
  • IOWEnergyCo to be an approved agent of CX.
  • IoWEnergyCo or Isle of Wight Council may enter into power purchase agreements (PPAs) with local energy generators to supply energy onto the grid for consumption on the Isle of Wight.
  • When appropriate, to expand its activities possibly to include heat supply, water supply, internet and telephone supply, demand side response services (including time of use tariffs), energy storage, energy efficiency measures, electric vehicle service and other suitable services.
  • An annual dividend will be payable provided that the payments do not exceed cumulative profit and allow for sufficient cash to be retained in the business to ensure the annual cycle can be covered.
  • Once the business is operating profitability both parties can consider offering a proportion of their shareholding for community investment.

Officers state the investment will be subject to “full due diligence and the preparation of a business case”.

Click on the full screen icon to see larger version.



Image: alanclarkdesign under CC BY 2.0

Any views or opinions presented in the comments below must comply with the Commenting 'House Rules' and are solely those of the author and do not represent those of OnTheWight.

Leave your Reply

22 Comments on "Investment in local energy company could see £300k pa for the council"

newest oldest most voted
yjc

If something sounds too good to be true it usually is.

odavido

its not the first of april already is it

Colin

What a load of tosh. Money down the drain. If it is such a good idea then those looking to do it should get off to the bank for a loan and see how far they get. Not and very spring to mind.

Colin

And another thing.

Why is it that the council seem to think that they are capable getting involved in business propositions? Is it the carrot of possibly tuppence halfpenny at the end of the rainbow.(or five years in this case?)

One thing Mr. Pugh said that was absolutely right when disposing of Shanklin Theatre and Ryde theatre, was that the council hadn’t the experience.

The same still applies.

Fazza

I do hope that none of the councillors have a hidden interest in this newly created company. If it sounds too good to be true then it usually is.

pieinsky
I’m reminded of PFI. The effect has been great expense to us; with limited, rather than the unlimited applicability heralded at the time, with great savings as I recall. Result the perpetrators of this great scheme have left, couldn’t get out fast enough. No the IWCC have no business acume, they can’t even manage planning, schools, welfare, you name it. Whats so very difficult about running a… Read more »
Island Monkey

So the council gets two seats on the board, the same as the company? And yet it owns just 49% of this joint venture scheme. In other words, it can always be out voted!

They really haven’t a clue have they?

Wise words

That is another £208k flushed down the pan then when will they learn they are no good at business and stop trying

Colin
This is not an Island Company. Reenergise head office is in Surrey. The founder is Tarquin Henderson. They are more consultants. Read their website. The offshoot may be based on the Island, but this is just another get rich quick scheme that is not going to produce anything. I do hope that individual councillors find time to do their research on the company and read exactly what… Read more »
electrickery

Does IWC really believe it has the right to put our money at such risk when it can’t meet fundamental commitments?

m coakley
I’m not quite sure when the IOWC reinvented itself as a bank giving out loans and a business. Tarquin has a number of “Reenergise” companies. A couple are dormant, but all these companies are basically consultants or engaged in financial management, not energy. I would have thought that the Council had its fingers burnt too many times to reach into the flames again. PTEC have gone cap… Read more »
Fazza

After looking at the “Reenergise” website a scam comes to mind.

richardshanklinite
Is looking that way as they don’t advertise the fact that they have set up a project like this before so its probably a case of try it on the IOW (how did this offer come up in the first place?).As anyone that holds a minority share holding you haven’t got much control and of course there will be directors salaries (uncontrollable) expenses etc to pay so… Read more »
Island Monkey
Fundamentally, I think the real problem is (always) that the kind of people elected as councillor’s, tend to have almost no real world business experience. The idea that some of these people can understand the complexities of legal documents and schemes of this nature is preposterous. If you won 495 of a company the person owning the 51% can effectively do as they please. Whatever is promised… Read more »
Island Monkey

Oops, that should read

if you own (not won) 49% of a company, the person owning 51%

steve stubbings

Come to the meeting where this proposal will be discussed, Island Monkey. There is so much you have failed to understand and if you keep on pontificating you’re likely to embarrass yourself.

Islander

I agree with Island Monkey.
Are the County Councillors overwhelmed with reports etc full of jargon-speak, the meaning of which for the lay-man is surely often opaque.
They are expected to read, fully comprehend and then vote on it. Can’t be done.
The paper workload must be reduced and simplified.

No 7

That is why there are group meetings and briefings to make sure councilors understand what is in front of them .Most of the interesting arguments are had in the group room

Islander

Hello No7. Do Group Mettings and Briefings go far enough, can they fully explain the complexities and sometimes hidden disadvantages/advantages of complex issues?
It’s a difficult one, especially if the topic under discussion isn’t in your area of expertise.
Regarding the Budget Consultatio it must be a disappointment so few people have responded.
Being a Councillor is a thankless but necessary task; good luck to you

richardshanklinite

If you look ReEnergise Limited up on the free trial companies house site https://beta.companieshouse.gov.uk/company you can pick up lots of interesting info but I am not sure if I can publish it.

Island Monkey
The report opens; ‘The council has been investigating how it can become involved in the supply of energy.’ Why? What I think it should say is; ‘We failed to keep the loo’s open, or the libraries, we are in special measures with most other services, but we have decided to ‘invest’ half a million of what little we do have, (or can borrow) in to something we… Read more »
Colin
And another thing. There are currently around 40 energy supply companies vying for your custom. The similar direct competitor would be Nottingham City Council who have set up Robin Hood Energy. NCC is dominated by Labour councillors who have all the seats apart from three. (in your dreams Mr. Lumley,lol) This is the council that built a tramway and then to encourage people to use it introduced… Read more »