Agenda item

To consider the Local Electricity Bill Motion which was referred from Council and make a recommendation thereon to Executive Committee for decision.  

47.1          The Committee was reminded that at the meeting of the Council on 29 September 2020, the following Notice of Motion was referred to Overview and Scrutiny for consideration and recommendation to Executive Committee for a decision:

‘Power for People is a campaign for more local, clean energy generation that would benefit local communities.

They are a not-for-profit organisation campaigning for the Local Electricity Bill – that they authored – to become law. The Bill is currently supported by a cross-party group of over 200 MPs including Tewkesbury’s own MP Laurence Robertson.

The Bill aims to solve the current problem whereby local renewable energy generators, such as community energy groups, are unable to sell energy that they generate to local people. This is because of the huge setup and running costs involved in doing so.

The Bill would overcome this problem by establishing a Right to Local Supply that would make the costs of selling locally generated clean energy proportionate to the scale of the operation. This would benefit the existing community energy groups across the country and, even more excitingly, create the opportunity for huge growth in such groups and other local clean energy providers.

If the Bill became law it would be excellent news for public authorities that wished to set up their own energy companies to sell locally generated renewable energy to local people, as the set up and running costs involved would be proportionate and thus a fraction of what they are now. The revenues received by such authorities could be ploughed back into local emissions reduction schemes and other local services and facilities.

A full copy of the Bill and the names of the 200+ MPs supporting it can be viewed via the following link

https://powerforpeople.org.uk/wp-content/uploads/2020/09/Local-Electricity-Bill.pdf

A copy has also been emailed to all Members of the Council

In light of the above, the Council is asked to:

1. sign up to the campaign www.powerforpeople.org.uk/sign-up and

2. adopt the resolution set out below:

Tewkesbury Borough Council:

(i)    acknowledges that it has made efforts to reduce greenhouse gas emissions and promote renewable energy;

(ii)  recognises that Councils can play a central role in creating sustainable communities, particularly through the provision of locally generated renewable electricity;

(iii)  further recognises that:

a)    very large financial setup and running costs involved in selling locally generated renewable electricity to local customers result in it being impossible for local renewable electricity generators to do so,

b)    making these financial costs proportionate to the scale of a renewable electricity supplier’s operation would create significant opportunities for Councils and Community Groups to be providers of locally generated renewable electricity directly to local people, businesses and organisations, and

c)    revenues received by Councils that became local renewable electricity providers could be used to help fund local greenhouse gas emissions reduction measures and to help improve local services and facilities;

(iv)  in view of the above, the Council supports the Local Electricity Bill, currently supported by a cross-party group of more than 200  MPs, and which, if made law, would make the setup and running costs of selling renewable electricity to local customers proportionate by establishing a Right to Local Supply and will:

·             inform the local media of this decision,

·             write to local MPs, asking them to support the Bill, and

·         write to the organisers of the campaign for the Bill, Power for People, (at 8 Delancey Passage, Camden, London NW1 7NN or info@powerforpeole.org.uk) expressing its support’.  

47.2          The Chair explained that he would firstly ask the proposer of the Motion to present it to the Committee, followed by the Deputy Chief Executive presenting his report circulated with the Agenda at Pages No. 141-154. The item would then be opened up for questions and debate before determination of what response should be provided to the Executive Committee in respect of this Motion.

47.3          The proposer of the Motion indicated that, in her view, the issue was that the Country was not meeting its climate change targets – the United Kingdom was way off track to meet its carbon emissions targets in the Climate Change Act. Community-scale renewable energy had huge potential to help solve that problem and benefit local economies, yet it was currently blocked from doing so.If someone wanted to buy electricity from a local renewable source, such as the local school or village hall that had solar panels, they could not. The United Kingdom bought its electricity from utility companies that sourced it from anything connected to the National Grid, be it solar in Wiltshire or gas fired from a power station in Yorkshire. This meant a community with local renewables could not sell the energy it generated directly to local people but must sell it to a utility company which then sold it on to customers. This was happening because becoming a supplier of energy to customers involved millions in set-up and running costs. Those costs were due to grappling with highly complex grid balancing codes and network agreements controlled by the largest six utility companies.The heart of the problem was disproportionate costs - like someone wanting to set up a business baking bread in their kitchen and delivering to people in their local area, but instead of just paying the road tax for the delivery van they had to pay hundreds of thousands of pounds to use the roads, no matter how little bread they delivered; that situation meant they could never start their business and that was the reality for community-scale renewable energy in the United Kingdom. However, there was a solution which would see the costs and complexity of being able to sell locally generated energy to local people being made proportionate to the size of the local energy co-operative or business operation. The Local Electricity Bill had been drafted to lay out a mechanism to do that. If made law, it would give electricity generators the right to become local suppliers – i.e. sell their energy directly to local people – and make it financially viable to do so. The Bill gave the task of setting up the new mechanism to the Office of Gas and Electricity Markets (OFGEM) which was the energy market regulator. Critically, it required that OFGEM ensured local suppliers faced costs and complexity proportionate to the scale of their business. The Bill also required that OFGEM engaged appropriate experts and stakeholders in the formulation of the new process.Communities would benefit from selling local renewable energy and significant additional value would remain within local economies, meaning more investment in things like local services and more efficient homes.Communities could raise funds to build more renewable energy schemes and they would have a viable business model, meaning they could help ensure the United Kingdom met its climate change targets.Communities would see knock-on local economic benefits and there would be greater acceptance of the transition to 100% renewable energy.  Local economies would be more resilient, local skilled jobs would be created and the UK’s energy supply would be more secure. To date, the Bill was supported by 228 MPs, including the MP for Tewkesbury Borough; this was a Cross Party Bill with five of the 12 sponsors being Conservative; 65 County and local authorities had already supported the Bill; and Tewkesbury Town Council and Western Power Distribution (the regional distributor) had voted to express their support. In effect, Members were being asked to agree with and support them and the proposer felt that was not controversial. She indicated that the opening headline of GFirst Local Enterprise Partnership’s (LEP) Gloucestershire Sustainable Energy Strategy Report from 2019 was that Gloucestershire, like everywhere else in the country, needed to contribute to achieving the United Kingdom’s legally binding carbon emissions reduction target while sustaining reliable energy supplies and ensuring energy costs remained or, for some, became affordable. The proposer reminded Members that fuel poverty affected 25,000 households across Gloucestershire and that Tewkesbury was supposed to be “a place where a good quality of life is open to all”.The LEPs opening paragraph stated that “our energy system needed to change and everywhere needed to play its part includinga complete shift to very low or zero carbon electricity generation, mostly renewable and much of it decentralized and that the scale of these changes required was significant. Gloucestershire currently met at least 85% of its energy needs (for heating, power and transport) from fossil fuels and that needed to be close to zero by 2050. However, a key weakness was that the county was short of initiative-takers willing and/or able to take forward the many ideas and plans for action”. In summing up, the proposer felt that Tewkesbury could show real leadership in this regard and therefore she asked Members to support the motion and to vote in favour of supporting the Local Electricity Bill - supporting the Bill did not commit the Council to do anything if the Bill did become law and, despite being called a Bill, it was not actually going to cost the Council a single penny.

47.4          In introducing his report, the Deputy Chief Executive advised that the Council had commissioned a consultant to help with its carbon reduction audit and action plan and he had been able to input to the report. The Deputy Chief Executive explained that should the Council sign up to the motion, and therefore the implications of the Local Electricity Bill, there could be resource implications. Currently the Council had a relatively small budget associated with its carbon reduction and climate change programme and the Executive Committee had previously agreed that the most cost-effective way to utilise that, in light of the absence of any internal expertise, was through the commissioning of a consultant. Should there be a need to divert some of that resource – equating to 2.5 days per week – to exploring and understanding the implications associated with the Local Electricity Bill, it was likely that would have to be at the expense of existing identified workstreams contained within the carbon reduction action plan. In addition, the Bill appeared to strongly advocate the role of local authorities as a supplier of local electricity and the Council did not currently have the infrastructure nor the mechanisms or resources in place to undertake what would be a significant variation in its current business. In terms of legal implications, part of the motion asked the Council to sign up to a campaign which it could do should it so wish; however, if minded to sign up the Council would need to be careful not to inadvertently sign up to something that was, or could be seen to be, a more binding agreement/procurement policy for the authority. There may be positive environmental benefits in terms of the provision of locally produced electricity being provided directly to local communities, and that appeared to be one of the key drivers associated with the Bill however, detail in terms of managing capacity, supply, resilience and the breadth/radius of any local communities who may be able to benefit from local electricity was not clearly defined at this stage. According to its website Power for People was a not-for-profit organisation, campaigning for the United Kingdom to rapidly transition to 100% clean energy and for that to benefit local communities. They ran grass roots mobilisation campaigns, engaging and involving citizens and local communities and calling on them to lobby their elected representatives for changes in the law or in government policy. The website made it clear that the organisations which had signed up supported the Local Electricity Bill in principle and not necessarily its exact current wording and that the wording of the Bill may change as the campaign for it progressed. The Bill, scheduled for a second reading in January 2021, was four clauses long and if it was made law it would be intended to make the setup and running costs of selling electricity to local customers proportionate by establishing a right to local supply. At this stage no further detail was provided in terms of the implications of introducing a right to local supply or how the process would operate. In considering the implications of a right to local supply, the Committee would be advised to consider those at a local level. Local considerations could include the benefits and disbenefits of the Council becoming a local energy supplier; supply resilience and supporting and managing the customer base. The Council was often seen as the ‘fourth emergency service’ by businesses and communities and, as such, the implications of managing and responding to power outages to communities served by local suppliers, due for example to adverse weather events, changes in regulation or incomplete due diligence on behalf of the local supplier etc., should be considered. The Council was doing a lot of good work with its own assets and the Roses Theatre and grant applications were being submitted to secure significant amounts of funding to offset the capital costs of replacing the in-house boiler system. The Committee would need to consider the fact that the process of how the electricity sector worked, and how costs would be created and imposed on consumers through the system, was complex and local authorities may not be best placed in terms of having the expertise and knowledge needed in order to objectively assess the proposals suggested as part of the Power for People Bill. There may be multiple ways of promoting greater community-owned, distribution network-embedded renewable generation rather than solely the proposal, as set out in the Bill, of small generators becoming ‘suppliers’ in their own right. The Committee would need to consider whether there was sufficient information within the Bill at this or future points in time, and a sufficient knowledge base within the Council to objectively consider the merits or otherwise of the specific approaches proposed in the Bill.

47.5          In response, the proposer of the motion expressed disappointment not to have seen the report of the Deputy Chief Executive prior to publication as she could have answered some of the queries about the Local Electricity Bill. Referring to the resource implications set out, she confirmed that the Bill did not advocate for any local authority to do anything and she felt that to suggest so was misleading. She further explained that supporting the Bill did not commit the Council to do anything if it did become law. The Bill placed a requirement on OFGEM to establish a right to local supply and, as part of that, to ensure that costs faced by local energy generators wishing to sell directly to local customers faced proportionate costs which they did not at the moment due to energy market regulations. In reference to the fact that the wording in the Bill could change, she advised that this was not dissimilar to the Climate Change Act which, in its first draft, was five pages but three years later when it became law it was 125 pages long however the core principle had remained the same. In terms of the report citing Bristol and Nottingham Cities ventures as failures, she was of the view that what happened to Robin Hood Energy highlighted the problem that the Bill aimed to fix. It had struggled and ultimately failed because of fundamental flaws in the energy market rules. Specifically, the set up and running costs involved in becoming a licensed supplier of electricity were extremely high and crucially not proportionate to the size of the supply business. If the costs were made proportionate, which was what the Local Electricity Bill would do, then Robin Hood Energy and similar others would have been empowered to create sustainable and viable local energy supply businesses. In addition, the current market rules were designed when the United Kingdom had a small number of large power stations generating electricity and sending it out across the grid to customers, since then, the energy system had dramatically changed but the rules had not. The rules were antiquated and not fit for purpose which was causing problems like the failure of Robin Hood Energy and others and this had been confirmed by the Energy Minister who had indicated that a lot of the structures that the country had today reflected the conditions that had operated 30 or 40 years ago.

47.6          A Member noted that the report discussed the resilience of local suppliers and the fact that the UK’s network was set up by the national grid. He felt it was important to note that, should the generator fail, the national grid would have to supply energy so the local authorities would not be left liable. In response, another Member disagreed with that view and felt that local electricity being kept in the local area was about sectioning off the supply. He also felt that some of the criteria for the Bill were quite controversial and could result in a situation where there were dozens of little Javelin Parks. In response to a query as to whether the Bill advocated the role of local authorities as a supplier of electricity, the Deputy Chief Executive advised that there was a strong advocation on the Power for People website, and in the Bill, that local authorities had an important part to play in the process and the website made the inference that this was what they wanted to happen wherever possible. The Council’s consultant confirmed that there was a recognition that Councils had a central role to play. His view was that, in principle, the Bill was a good idea but at the moment it felt like the details were too vague and there was insufficient detail to enable the Council to make a fully informed decision. The inference was that it would not cost the Council anything but he was unsure whether there would be an expectation to move forward and how that would impact on the Council’s existing carbon neutrality commitment.

47.7          A Member advised that there was a need to consider the facts carefully along with the possible financial implications. He understood the local MP and the Town Council were supportive of the Bill in principle but there were concerns about the need for further details. Javelin Park was an energy from waste plant so was making electricity and reducing carbon emissions already meaning the county was already doing something towards sustainable energy. He also noted that, if the Bill was made law, then all of the details would be available and the Council would have no choice but to meet its requirements. In response to a query as to how the costs of local energy compared to current providers, the proposer of the motion indicated that the motion was about the principle of the Bill not about the facts and the question of costs etc. would be down to the details which OFGEM would be specifying. To date no local authorities had signed up to anything in terms of funding. In addition, another Member indicated that there were a lot of rural communities in the Borough, many of which used gas or oil as energy and he felt bringing in local suppliers to help local communities would help to heat those homes and would be appreciated by residents. The proposer of the motion felt that, if the Bill was passed, it would enable local provision which would help the local economy by providing more local skilled jobs, more viable local businesses, creation of greater public support for renewables and provision of more secure energy with less reliance on imports. She was of the view that this was not just about the Council but about the opportunities for its communities. In response, the Council’s consultant indicated that there were potentially opportunities for local residents to benefit on the basis of joining up to the scheme but there was concern about what that might mean for those not in the scheme e.g. whether standing charges would be higher for those that remained on the normal supply. This was a very complicated issue; there was a need to achieve 40% demand reduction to support renewable energy and the cheapest way of doing that at the moment was by energy efficiency. In terms of the implications of the Bill, a Member expressed the view that it appeared to increase the opportunity for competition, gave residents other options and enabled local electricity, all of which were good things. He also felt that the more producers of electricity the better as it would lead to less outages etc. In essence, he felt supporting the Bill could only be a good thing for residents.

47.8          The Deputy Chief Executive agreed that the principle made a lot of sense and he felt everyone could agree on that. However, the report was looking at the detail and the Committee needed to determine whether there was enough detail and information at this point in time for the Committee to recommend that the Council signed up to the Bill. A Member recognised that the Council had been making progress with its efforts towards climate change, and that there were some questions about the detail, but the reality was that supporting the principle of the Bill would show the Council understood the direction of travel that the Country would inevitably be going, at some point.

47.9          In offering an alternative view, a Member felt it was important to look at the detail of the Motion – he would not be happy to sign up to the Power for People campaign as he did not feel that would necessarily be a good thing for the Council in time to come; he was happy to acknowledge the Council had done well and the crucial role it played but, in terms of support for the Bill, he felt it did not mention renewables which was a concern and there were some seriously high risks given that it did not cover infrastructure, costs on what individuals would produce and there was no security with a back-up supply. For those reasons, he proposed that, while the Committee was appreciative that the motion recognised this Council’s climate change work and it also recognised the important role locally produced electricity can provide if properly integrated, it found the motion, at this current time, lacking in information on how it could work and it raised serious concerns over the infrastructure to deliver it, security of power supply delivery, cost and the potential financial and reputational damage implications for this Council. Consequently, this Committee recommends that the motion be rejected.

47.10        In concluding the debate on this matter, the proposer of the Council motion referred to the situation in Germany, whereby the big four companies controlled only about 40% of the market with the remainder through 1,000 mostly community led and mainly renewable, suppliers. In contrast, in the United Kingdom, the big six companies controlled around 80% of the market with only 50 other supply companies. Currently the United Kingdom’s centralised system was dominated with fossil fuels and national/multi-national companies. She was extremely concerned about fuel poverty across Gloucestershire and she felt the Bill offered opportunities for cheaper energy for those that really needed it. Local energy generators were about enabling local provision which surely must be a good thing. In terms of the Bill, she advised that it had been drafted by Power for People and they were coordinating the national campaign but the three Directors of the organisation had written the original version of the Climate Change Act and ran the successful campaign for it as well as several other environmental laws including the Warm Homes Act and the Municipal Waste Recycling Act so they would not write a Bill that was likely to lead to non-renewable generators being promoted. In addition, the Bill could be amended to ensure any potential loopholes were closed that could lead to anything but renewable energy generation being promoted.

47.11        The motion proposed earlier, as set out in Paragraph 47.9, was seconded and upon being put to the vote, it was

                 RESOLVED           That, while the Committee was appreciative that the motion                                recognised this Council’s climate change work and it also                                      recognised the important role locally produced electricity can                            provide if properly integrated, it found the motion, at this current                           time, lacking in information on how it could work and it raised                             serious concerns over the infrastructure to deliver it, security of                     power supply delivery, cost and the potential financial and                                 reputational damage implications for this Council.                                               Consequently this Committee recommends that the motion be                           rejected.